I've been talking to friends, and I'm constantly surprised at the amount that they spend money to have their taxes done. Especially, when I well know that they have very simple transactions (for example, no capital gains, no business, ect...)
I prepare and efile both my federal and state returns for free.
For the federal return, I use taxact software, it's free no matter how much you made in 2008.
I'm a bit old fashion, I still download the software to run on my computer locally. When you run the software, it's a bit annoying with the constant popups that try to get you to upgrade to the deluxe version, but hey... It's free! ;)
In my state, you can prepare the return online, and efile with them for free too. There is probably something similar in most states.
Open your eyes and look around, you'd be surprised at the deals you can get with just a little bit of effort.
- D
Sunday, March 15, 2009
Saturday, February 28, 2009
Google to save money first
Google is great for searching for your favorite topic of interest, but did you know you could use it to save money too?
Just last month, my dryer started making a horrible metal grinding sound. I didn't want to buy a new dryer (this are hard time afterall), so I decided to give google a try. so for the search criteria, I entered "whirlpool dryer squeak" and I was able to find some good site on what the problem may be and how to fix it.
I didn't even know how to get the dryer apart to check it out until I googled it. It turned out to be the felt gasket? that the drum twists over. It cost my $20.00 to google the dryer, order the part (off of ebay), and install it. Normally, to get a repairman out, it would probably cost me at least $150.00 to do exactly the same thing.
I was also able to do this with my car brakes and with other car parts.
During one of the coldest days this winter (-10F), my heat pump decided to stop working. I was able to quickly figure what the problems was, but I didn't have time to order the part. From a few websites, I was able to determine what to do, and I was also able to determine that the part would cost me only $26. Unfortunately, I didn't want my pipes to freeze, so I called a repairman so they could get it fixed today.
The repairman did exactly what the websites state to do, but instead of costing me $26 to do it myself, the repairman's fee cost me over $200.
The moral of the story, the internet (using google to search it) is a great resource for saving money.
-D
Just last month, my dryer started making a horrible metal grinding sound. I didn't want to buy a new dryer (this are hard time afterall), so I decided to give google a try. so for the search criteria, I entered "whirlpool dryer squeak" and I was able to find some good site on what the problem may be and how to fix it.
I didn't even know how to get the dryer apart to check it out until I googled it. It turned out to be the felt gasket? that the drum twists over. It cost my $20.00 to google the dryer, order the part (off of ebay), and install it. Normally, to get a repairman out, it would probably cost me at least $150.00 to do exactly the same thing.
I was also able to do this with my car brakes and with other car parts.
During one of the coldest days this winter (-10F), my heat pump decided to stop working. I was able to quickly figure what the problems was, but I didn't have time to order the part. From a few websites, I was able to determine what to do, and I was also able to determine that the part would cost me only $26. Unfortunately, I didn't want my pipes to freeze, so I called a repairman so they could get it fixed today.
The repairman did exactly what the websites state to do, but instead of costing me $26 to do it myself, the repairman's fee cost me over $200.
The moral of the story, the internet (using google to search it) is a great resource for saving money.
-D
Saturday, February 21, 2009
Being Frugal the green way
People associate being frugal with being green, but that not necessarily true. You can also be frugal in a way that's not very environmentally friendly. I'm just going to focus on the green frugal ways that I'm going both though. I believe you will more bang for your buck and feel better about yourself if you can do both.
1.) When gas went high, a co-worker and I started to car pool. Now since the price of gasoline has gone down, driving alone would be nice again. But, since we both realize the value to the environment, we are continuing to car-pool.
2.) Instead of using trash can's for our smaller waste baskets, we use plastic grocery bags. I also line a used kitty litter bucket with 2 plastic bags (one inside of the other bag), and put the cat refuse in the bucket and put the top on.
This save my trash bages, and I get additional usage out of the grocery store bages I use.
3.) I like to extend the life of my appliances and machines as much as possible. My lawnmower handle has been welded 3 times, and I even use tape to hold it in place in some spots. My snowblower is over 20 years old. I just fixed my dryer, the felt liner at the top was wore to the metal. I do my car maintenace myself: change line, change brake shoes pade.
4.) I save the junk mail envelopes and use them to write throwaway notes on. Not a big savings, but still good...
-D
1.) When gas went high, a co-worker and I started to car pool. Now since the price of gasoline has gone down, driving alone would be nice again. But, since we both realize the value to the environment, we are continuing to car-pool.
2.) Instead of using trash can's for our smaller waste baskets, we use plastic grocery bags. I also line a used kitty litter bucket with 2 plastic bags (one inside of the other bag), and put the cat refuse in the bucket and put the top on.
This save my trash bages, and I get additional usage out of the grocery store bages I use.
3.) I like to extend the life of my appliances and machines as much as possible. My lawnmower handle has been welded 3 times, and I even use tape to hold it in place in some spots. My snowblower is over 20 years old. I just fixed my dryer, the felt liner at the top was wore to the metal. I do my car maintenace myself: change line, change brake shoes pade.
4.) I save the junk mail envelopes and use them to write throwaway notes on. Not a big savings, but still good...
-D
Saturday, January 31, 2009
Free distraction/entertainment
And it's called Facebook.
If you open account at www.facebook.com, you'll be amazed at how much fun it can be. Basically, it's social networking kind of program, but not necessarily only business based. It's very nice to reach out and discover what has happened with old friends.
In a nutshell, you have a personal site called a Wall, and friend post messages to it. It also include email, chatting, posting pictures and video, and a bunch of other stuff.
Very cool! I highly recommend it!
- D
If you open account at www.facebook.com, you'll be amazed at how much fun it can be. Basically, it's social networking kind of program, but not necessarily only business based. It's very nice to reach out and discover what has happened with old friends.
In a nutshell, you have a personal site called a Wall, and friend post messages to it. It also include email, chatting, posting pictures and video, and a bunch of other stuff.
Very cool! I highly recommend it!
- D
Tuesday, January 27, 2009
What a year!
WOW, 2008 was really horrible for me.
I lost about half the value of all my financial assets and now layoffs happening at where I work. Well, looking on the bright side, my car is 2 months away from being paid off, and my house is 1 year away from being paid off. That will cut my monthly expenses by almost half.
Call me a fool, but I still believe in the stock market, and will continue my normal contribution rate to my 401K at work.
Now I bring up my 401K plan because I'm really worried about the baby boomers out there moving all of the money from mutual funds to cash. That could keep the market down for years... I wish I knew the statistics around those numbers.
Either way, it's still a great idea to have a good chunk of change in cash, just in case...
Now for a little bang for your buck. if you need microsoft office (esp. excel or word), but can't afford it at this time, or you need to roll it out to many users, why not consider OpenOffice 3.0 at http://www.openoffice.org/ I've been using it for over a year, and I think it's great!
- D
I lost about half the value of all my financial assets and now layoffs happening at where I work. Well, looking on the bright side, my car is 2 months away from being paid off, and my house is 1 year away from being paid off. That will cut my monthly expenses by almost half.
Call me a fool, but I still believe in the stock market, and will continue my normal contribution rate to my 401K at work.
Now I bring up my 401K plan because I'm really worried about the baby boomers out there moving all of the money from mutual funds to cash. That could keep the market down for years... I wish I knew the statistics around those numbers.
Either way, it's still a great idea to have a good chunk of change in cash, just in case...
Now for a little bang for your buck. if you need microsoft office (esp. excel or word), but can't afford it at this time, or you need to roll it out to many users, why not consider OpenOffice 3.0 at http://www.openoffice.org/ I've been using it for over a year, and I think it's great!
- D
Tuesday, October 21, 2008
Learning with pain.
I've down 32% in all my investments, ouch. My house is down in value too, but it doesn't bother me as much since there isn't anything I can do about it.
This is a very painful, but exciting experience. I hope I learn from it and remember how to balance my 401K before retirement.
I've found a great article that Ben Stein wrote:
This is my most serious column yet. So let's get to it.
I get a fair amount of mail about the economy. Lately, much of it asks the same questions:
* What the heck happened to our economy so suddenly and powerfully that it caused the immense uproar and fear and stock market crashes we have had lately?
* Why didn't I, Ben Stein, famous so-called braino, get what was happening and why did I remain optimistic so long?
* What is the future going to bring?
First of all, obviously, I don't know what the future will bring. If I knew the future, I would be the richest man on the planet very soon and I assure you I am very far from that.
But I now see what has happened and I can explain that, and it might give a tiny bit of insight into what will happen in the future.
Start around 1995. Groups involved with civil rights issues and activities for poor people began to complain that poor people and especially non-white poor people got mortgages much less often than white well to do people. Many economists, including me, explained that it was not at all surprising that poorer, less credit worthy people were often turned down for credit. That's how credit is supposed to work: you lend to people who will pay you back.
But the advocates for poor and black people had immense political clout. Under President Bill Clinton, they passed legislation that called on banks to be required to lend to non credit worthy borrowers. The laws, including the Community Reinvestment Act, the CRA, required two large government sponsored enterprises, Fannie Mae and Freddie Mac, to buy those lower quality mortgages from the banks, guarantee them, and sell them to the public. These were bundled into immense pools of subprime mortgages as they were called, and sold all over the world.
Soon, the private sector got into the act in a vast way. They also went to banks and bought their subprime loans, packaged them, and sold them as Collateralized Mortgage Obligations all over the world.
Supposedly, the subprime collateralized mortgage obligations (CMOs) were sliced up in such a way that buyers could have a very high likelihood that they would be repaid even if many of the mortgages in the portfolio defaulted. This assumption was based on a misunderstanding of poor quality credit that had been popularized during the era of the junk bond investment powerhouse, Drexel Burnham Lambert.
As it happened, these low quality mortgage bonds were recognized as highly likely to have real problems very soon after they started to be issued by private banks in the billions. The people who recognized the high likelihood of defaults were able to profit from that likelihood:
First, they could sell the mortgage securities short, a straightforward wager that has long been available.
Second, they could buy credit default swaps (CDS) from financial entities. These were essentially a side bet that anyone could make about a certain mortgage bond (or any other kind of security). It paid off fantastically if the bond went into default or was close to default. The people who sold these CDS were banks and insurers, especially Merrill Lynch and A.I.G., that believed the mortgage bonds would not default and therefore charged very little to the other side, the counterparty, to make the bet.
Things went along well for everyone on the long side for several years as the housing market boomed. Even if borrowers could not repay their mortgages, they could refinance the mortgages for more money than was owed on the original mortgage, pay off the first mortgage and live happily in their new home. The mortgage in question in the bond would - again-- be paid off and the bond would continue happily in its owners hands.
Then, the housing market started to stabilize and soon fall, as housing prices do. They move in cycles, although around a rising mean, as we economists say.
Now, when the subprime mortgage holder could not pay off his mortgage, he could not refinance. Instead, he had to default. When a lot of these mortgages defaulted, the bonds into which they had been lumped declined in value.
So far, I, your humble servant, followed the deal just fine. It was extremely similar to the collapse of the Drexel Burnham Lambert junk bond empire. This had caused barely a ripple in the national economy when it fell apart in the early 1990's. I assumed that the same would happen with junk mortgages. There would be some failed banks and insurers, but the Federal Reserve, the Federal Deposit Insurance Corporation, and the Treasury could make all of those losses good. The total amount of subprime mortgage bonds was large but not compared with bank capital or the regenerative powers of the Fed.
So, I assumed, and wrote, things would be fine.
Where I missed the boat was not realizing how large were the CDS based on the junk mortgage bonds. They were not only large, but absolutely staggeringly large. Where the junk mortgage bonds were in the hundreds of billions, the CDS were in the tens of TRILLIONS. If the sellers of the CDS had to pay off in large part, the liability greatly exceeded the total bank capital in the United States and maybe in the world. That is, the derivatives based upon the junk mortgage bonds could be - and were - not in any way limited to the size of the mortgage bonds themselves, and this I did not know until a few months ago.
It is this liability that swamped the banks, investment banks, and insurers. It is the CDS liability that broke AIG and Lehman.
When I realized the extent of this problem, I wrongly thought the federal government would step in and in some way rescue everyone who had sold CDS. They did, except they ‘forgot' to rescue Lehman. Lehman was so large that when it failed, it was like a torpedo striking an ocean liner below the water line. A gaping hole was left in the whole world finance system.
Bankers panicked. If Lehman could fail, then anyone could fail. In that case, the banks that were still solvent figured they had better hoard their assets and stop making loans. This led to the ongoing credit freeze. This led to a rapidly gathering economic downturn and a drastic fall in prices of all kinds of securities, real estate and commodities. It also led to a severe credit squeeze on hedge funds, which saw credit dry up and their asset prices fall suddenly, and were forced to sell stocks and other assets on a dramatic scale, leading to still greater falls in securities prices, and the worldwide panic that it still unfolding.
In turn, this led to huge infusions of liquidity into the banks of the world, the semi-nationalization of the banks of the United States and of many other nations to shore them up, thaw credit, and bolster world markets and economies. These were drastic steps for drastic times, all generated by derivatives. Warren Buffett had warned us against them, and he was dead right, as always.
Now, these acts should help. But it might not do the job all by itself. Major lender solvency issues remain. If housing prices keep falling, more mortgage bonds will default and the liability attached to the credit default swaps based upon them will still be in the trillions or even tens of trillions.
I might well be too alarmist here, but I think the only rational possibility is for the federal government or the New York State government (because most of the CDS were entered into in New York) to simply annul the credit default swaps as void as being against public policy. After all, there was no insurable interest in most cases, which tends to void insurance contracts, which is what a CDS is.
Once that happens, the banks can breathe freely again, take risks, and the economy can revive. Or, perhaps the housing market will stabilize, mortgage based bonds will rally, and the CDS will be out of the money and will not be a threat to the lenders. But something has got to happen to defuse these deadly derivatives.
In any event, we now know a lot we did not know before. Credit default swaps are way too dangerous. Derivatives generally are dangerous. There is much that Ben Stein does not know. I hope this explains some of how we got to this precarious place, I apologize for not seeing it sooner. But I am still optimistic that the government will save us from the CDS, and we will go on to renewed prosperity. In other words, I am still buying.
click here to read the original article.
- D
This is a very painful, but exciting experience. I hope I learn from it and remember how to balance my 401K before retirement.
I've found a great article that Ben Stein wrote:
This is my most serious column yet. So let's get to it.
I get a fair amount of mail about the economy. Lately, much of it asks the same questions:
* What the heck happened to our economy so suddenly and powerfully that it caused the immense uproar and fear and stock market crashes we have had lately?
* Why didn't I, Ben Stein, famous so-called braino, get what was happening and why did I remain optimistic so long?
* What is the future going to bring?
First of all, obviously, I don't know what the future will bring. If I knew the future, I would be the richest man on the planet very soon and I assure you I am very far from that.
But I now see what has happened and I can explain that, and it might give a tiny bit of insight into what will happen in the future.
Start around 1995. Groups involved with civil rights issues and activities for poor people began to complain that poor people and especially non-white poor people got mortgages much less often than white well to do people. Many economists, including me, explained that it was not at all surprising that poorer, less credit worthy people were often turned down for credit. That's how credit is supposed to work: you lend to people who will pay you back.
But the advocates for poor and black people had immense political clout. Under President Bill Clinton, they passed legislation that called on banks to be required to lend to non credit worthy borrowers. The laws, including the Community Reinvestment Act, the CRA, required two large government sponsored enterprises, Fannie Mae and Freddie Mac, to buy those lower quality mortgages from the banks, guarantee them, and sell them to the public. These were bundled into immense pools of subprime mortgages as they were called, and sold all over the world.
Soon, the private sector got into the act in a vast way. They also went to banks and bought their subprime loans, packaged them, and sold them as Collateralized Mortgage Obligations all over the world.
Supposedly, the subprime collateralized mortgage obligations (CMOs) were sliced up in such a way that buyers could have a very high likelihood that they would be repaid even if many of the mortgages in the portfolio defaulted. This assumption was based on a misunderstanding of poor quality credit that had been popularized during the era of the junk bond investment powerhouse, Drexel Burnham Lambert.
As it happened, these low quality mortgage bonds were recognized as highly likely to have real problems very soon after they started to be issued by private banks in the billions. The people who recognized the high likelihood of defaults were able to profit from that likelihood:
First, they could sell the mortgage securities short, a straightforward wager that has long been available.
Second, they could buy credit default swaps (CDS) from financial entities. These were essentially a side bet that anyone could make about a certain mortgage bond (or any other kind of security). It paid off fantastically if the bond went into default or was close to default. The people who sold these CDS were banks and insurers, especially Merrill Lynch and A.I.G., that believed the mortgage bonds would not default and therefore charged very little to the other side, the counterparty, to make the bet.
Things went along well for everyone on the long side for several years as the housing market boomed. Even if borrowers could not repay their mortgages, they could refinance the mortgages for more money than was owed on the original mortgage, pay off the first mortgage and live happily in their new home. The mortgage in question in the bond would - again-- be paid off and the bond would continue happily in its owners hands.
Then, the housing market started to stabilize and soon fall, as housing prices do. They move in cycles, although around a rising mean, as we economists say.
Now, when the subprime mortgage holder could not pay off his mortgage, he could not refinance. Instead, he had to default. When a lot of these mortgages defaulted, the bonds into which they had been lumped declined in value.
So far, I, your humble servant, followed the deal just fine. It was extremely similar to the collapse of the Drexel Burnham Lambert junk bond empire. This had caused barely a ripple in the national economy when it fell apart in the early 1990's. I assumed that the same would happen with junk mortgages. There would be some failed banks and insurers, but the Federal Reserve, the Federal Deposit Insurance Corporation, and the Treasury could make all of those losses good. The total amount of subprime mortgage bonds was large but not compared with bank capital or the regenerative powers of the Fed.
So, I assumed, and wrote, things would be fine.
Where I missed the boat was not realizing how large were the CDS based on the junk mortgage bonds. They were not only large, but absolutely staggeringly large. Where the junk mortgage bonds were in the hundreds of billions, the CDS were in the tens of TRILLIONS. If the sellers of the CDS had to pay off in large part, the liability greatly exceeded the total bank capital in the United States and maybe in the world. That is, the derivatives based upon the junk mortgage bonds could be - and were - not in any way limited to the size of the mortgage bonds themselves, and this I did not know until a few months ago.
It is this liability that swamped the banks, investment banks, and insurers. It is the CDS liability that broke AIG and Lehman.
When I realized the extent of this problem, I wrongly thought the federal government would step in and in some way rescue everyone who had sold CDS. They did, except they ‘forgot' to rescue Lehman. Lehman was so large that when it failed, it was like a torpedo striking an ocean liner below the water line. A gaping hole was left in the whole world finance system.
Bankers panicked. If Lehman could fail, then anyone could fail. In that case, the banks that were still solvent figured they had better hoard their assets and stop making loans. This led to the ongoing credit freeze. This led to a rapidly gathering economic downturn and a drastic fall in prices of all kinds of securities, real estate and commodities. It also led to a severe credit squeeze on hedge funds, which saw credit dry up and their asset prices fall suddenly, and were forced to sell stocks and other assets on a dramatic scale, leading to still greater falls in securities prices, and the worldwide panic that it still unfolding.
In turn, this led to huge infusions of liquidity into the banks of the world, the semi-nationalization of the banks of the United States and of many other nations to shore them up, thaw credit, and bolster world markets and economies. These were drastic steps for drastic times, all generated by derivatives. Warren Buffett had warned us against them, and he was dead right, as always.
Now, these acts should help. But it might not do the job all by itself. Major lender solvency issues remain. If housing prices keep falling, more mortgage bonds will default and the liability attached to the credit default swaps based upon them will still be in the trillions or even tens of trillions.
I might well be too alarmist here, but I think the only rational possibility is for the federal government or the New York State government (because most of the CDS were entered into in New York) to simply annul the credit default swaps as void as being against public policy. After all, there was no insurable interest in most cases, which tends to void insurance contracts, which is what a CDS is.
Once that happens, the banks can breathe freely again, take risks, and the economy can revive. Or, perhaps the housing market will stabilize, mortgage based bonds will rally, and the CDS will be out of the money and will not be a threat to the lenders. But something has got to happen to defuse these deadly derivatives.
In any event, we now know a lot we did not know before. Credit default swaps are way too dangerous. Derivatives generally are dangerous. There is much that Ben Stein does not know. I hope this explains some of how we got to this precarious place, I apologize for not seeing it sooner. But I am still optimistic that the government will save us from the CDS, and we will go on to renewed prosperity. In other words, I am still buying.
click here to read the original article.
- D
Tuesday, October 7, 2008
Another down DOW day
Amazing, the Dow fell 508 point again today!
Okay, I'm still going to get in the market, but very slowly and by small amounts at one time. According to what I'm hearing lately, we might be entering a recession that might last more than 1 year. I don't know if I totally believe that, but I will start putting an extra 500 to 1000 dollars in the stock market every 1 to 2 months. I'm going for that dollar cost averaging technique.
After all, how much more can the DOW drop? 1000 point? 2000 points?
Of course, I have over 20 years before retirement, so I can take that risk...
I really need to learn how to use options are protection for the stocks I own... In an insurance kind of manner.
It's still exciting, but very intimidating too...
- D
Okay, I'm still going to get in the market, but very slowly and by small amounts at one time. According to what I'm hearing lately, we might be entering a recession that might last more than 1 year. I don't know if I totally believe that, but I will start putting an extra 500 to 1000 dollars in the stock market every 1 to 2 months. I'm going for that dollar cost averaging technique.
After all, how much more can the DOW drop? 1000 point? 2000 points?
Of course, I have over 20 years before retirement, so I can take that risk...
I really need to learn how to use options are protection for the stocks I own... In an insurance kind of manner.
It's still exciting, but very intimidating too...
- D
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