Hump Day Herald: Bike Month is Here

Bikes at rest at a local university.

Sorry for the hiatus. I've been busy working working working. I literally am gone from the house for 14+ hours almost every single day. Two jobs, including a decent amount of overtime at one, has me running. Unfortunately, it also means I can not able to commute by bicycle as often as I'd like. Although I participated in the 30 Days of Biking challenge this year and only missed riding on my bike one day out of the entire month it wasn't until the very last day the challenge that I was finally able to actually bike to work. The rest of my participation consisted of rides done recreationally.

However, we've now moved into May, which is officially Bike Month. Today was Bike to School Day and several area schools had nice bike trains to commemorate. My own laziness got in the way of my participating, but that's a completely separate topic. Next week is designated Bike to Work Week, with Friday the 17th being the designated Bike to Work Day.

I try to ride my bike as often as possible and practical and you should too*. But with it being bike month, the urgency is doubled. January might be icky (which is a sorry excuse), but May is generally pleasant enough for biking during major portions of all days. Special clothes and expensive bikes not required and might actually be detrimental. Just get out there and pedal to work, the store, school, etc. It saves massive amounts of money, which is really why we're here.

Have you gone out biking recently? Did you participate in Bike to School Day and/or plan to participate in the Work Week festivities? Is your Bike Month Bingo scorecard filled? Leave a comment and share your experiences on two wheels!





*Although this isn't meant to scare you, note that people get injured or even die while cycling in Amsterdam and Copenhagen, the gold standards for bike infrastructure. Riding here in America is usually a chaotic crapfest on roads that are poorly designed to provide safety. Accordingly, please use any and all cautions necessary. However, in the event that something does happen, I am not liable for any injury or death that may occur due to your biking. If need be, attend a safety class to learn the rules of the road and how to stay safe on it.

5 Things to Tidy Up as You Finish Your Taxes

They're almost upon us!

Well hello there, guess who suddenly feels like writing again? This guy! So that's what's going down now. Today being April 12 means that the "dreaded" day has basically finally arrived. For those of you who don't live in the USA, our tax return papers are due on April 15. The last two years, the date was pushed back due to a holiday and being on a weekend, but it's back in force on the 15th this year. That means that if you've yet to complete (or start!) your taxes, there's no time like the present. In the meantime, here are a couple other things that you might as well get together while you're here.

1. Organize your documents. This could be quite a stack of paper. You should have a W-2 from each employer. If you received money from a plethora of other places, gather the appropriate 1099(s). If you're reporting charitable deductions, make sure you have the receipts to support them. Ditto for any business expenses. Store everything in an orderly fashion for the off chance that the IRS wants to audit you.

2. E-file. Despite the concern of e-file ID theft, e-filing is still what I and most of my fellow Americans do. It drastically cuts down the refund time and allows less room for error on either end. You don't have to use tax preparation software to be able to e-file and it's available free for everyone. In addition to the stamp you save, you also ensure that Murphy's Law doesn't kick in on Monday. Though it doesn't mean as much if you're expecting a refund, being late means you'll get slapped with penalties and fees if you owe.

3. Update your retirement contributions. Down below, I've included an infographic (which I did NOT create!) breaking down the contribution limits and options for you. Just in case. That's because April 15 is the last day to make contributions for the 2012 tax year. However, you might also want to adjust your contributions in general. Raise or lower the frequency or amount, change funds or plans, maybe even change providers. While you have all the stuff at the ready, put it to use.

4. Review your bank information. Another place for opportunistic updating is your bank account. You might have to dig up information in or about your bank account, so this is a good time for some questions and reflection. Have they (recently) started charging fees for previously free services (e.g. teller fees, check writing fees, etc.)? Is their website/app easy to use? Can you access your money without hassle? If you answered "no" to any of those and it bothers you now could be a good time to move your business.

5. Review your cyber security. One way to minimize your risk of identity theft is to keep your documents under wraps. In this digital era, that includes making sure that your computer is secure. Seeing that no place can keep itself safe, even with staff paid explicitly to keep them safe, your chances are even smaller. However, this is a good time to figure out what you have stored on your computer and move it to a non-connected location. Since just about anything can be loaded on a flash drive or other removable media, that's a good place for prior year tax returns, credit reports, or anything else with sensitive information. You might also want to clear out your email stored on company servers. The IRS has been making it known that they want to spy on your emails and apparently they can legally do so for messages that have been opened or are older than 180 days old.

That clip is how the IRS makes me feel. Anyway, enjoi your weekend! Hopefully, you've long finished your taxes (like I have), but if you are doing them, good luck. Don't forget to give yourself plenty of time at the Post Office for the line. Although 80% of filers are e-filing now, 20% are still sending in paper returns in envelopes and will all wait until Monday to do so. Don't give Murphy a chance. Auf Wiedersehen!

Image sourced from 401(k) on flickr.

Created by Tax Code 2013

Hump Day Herald: Cyprus

It's Wednesday again, so I've prepared another haiku. But first, there's a topic that is simply too big and important to go unnoticed: Cyprus. If you haven't been keeping up with the news, Cyprus has finally reached a deal to address their financial crisis. But that leaves questions. What is Cyprus (as opposed to cypress)? What crisis? How could such a tiny place have such a big splash? And most importantly, how does it affect you? (Assuming you're not a Cypriot or Russian business(wo)man. If you are, it's time to call your accountant.)

Cyprus

Cyprus is a small island nation in the Mediterranean off the coast of Turkey. With only 1.1 million citizens, they're a rather small country. Accordingly, their entire economy is almost smaller than the monthly savings under sequestration. Their economy is only 0.2% of the Eurozone. So how have they been holding the news spotlight so effectively after never being heard of since Isaiah?

The situation

As it so happens, Cyprus was a popular tax haven for Russian business(wo?)men, akin to places like the Bahamas are to America. This has led to an inflated sector of the economy, namely banking. Much like in the American financial crisis we recently exited, banks were very prominent in the economy despite not actually doing very much of anything. Things were humming along as the economy grew, but the slowing and recession caused the problems to become painfully obvious because perpetual growth can't exist.

A large portion the money in the banks was being used to make loans to Greeks. Greece has its own set of problems, and those had a big impact on the Cypriot banks when the loans started going bad. At length, it became evident that the banks were going to fail, but as part of the European Union, Cyprus doesn't have its own central bank. So unlike America, they couldn't just print more money to  make the problem go away kick the can down the road and must instead actually face the music now.

The bank is being raided.

The "solution"

To resolve the problem, the EU is going to loan Cyprus some money. But they need collateral. Lots of it. And about the only place to find it was bank accounts. As a result, the first solutions proposed included a "one-time" tax of about 10% on all bank accounts. This was quickly changed to be about 7% for bank accounts with under €100k. The final deal spares the lower accounts completely, but any amount above €100k might see up to 30% 40% of the balance disappear to fund the bailout. They also won't even be able to remove what's left over to another more solvent bank elsewhere.

The aftermath and YOU

Finance, accounting, law, economics, banking, and plenty other professors now have fodder for years worth of lectures. But even if you do not plan to be sitting in their classes (or reading their blogs), this was not just another story in an otherwise mundane day. It has very real implications for everyone, namely the security of funds held in account and access to those funds.

Make sure you know how your money is (not) insured. We put our money in the bank to keep it safe, both from personal attacks and from inflation. But what about from the bank itself? Thousands of banks have failed since 2007, when the financial crisis first started bubbling up and more continue to fail every day. Whether at a bank or credit union, deposit accounts are federally insured, but only up to $250k. That means that if the institution fails, you'll get up to that much back for each qualifying account. What makes the Cyprus situation disturbing is that they were essentially going to only insure 90% of the account balances. In the future, that could happen here. YOUR hard-earned money that has already been taxed would be taxed yet again to fund bad decisions by management. So that they and bondholders don't have to lose money. Doesn't sit well with me.

Keep some cash on hand. As they say, "cash is king". You're only as rich as the amount of money you can actually get to. Access to the funds is a major issue. All the insurance in the world is no good if you cannot access the funds. While I don't believe that things are going to completely fall apart (yet), there are plenty things that could lead to being unable to access your funds in the bank. The banks in Cyprus have been closed for over a week. No one has been able to get money from an ATM in about that long and their debit cards also are not working. (I experienced the same thing once when my bank decided to upgrade their computers. On a holiday weekend.) As a result, those caught unprepared have had to find ways of making do, whether by borrowing from friends/family members or begging what few businesses were even open to be merciful. Neither is a position you want to be in.

So in conclusion, two major realizations have come out of Cyprus:

1. We cannot be so sure of the safety of our money, even in "insured" accounts
2. Cash. Keep some. Probably at least a week's worth of living expenses. In smaller bills.
3. Now haiku.

Failed

The banks failed today

People waiting with much fear

Everyone lost.

Image from 401(k) 2013 on Flickr.

Considering College: Go or No?

As previously mentioned, college is all the rage these days. But, several questions need to be answered before you run down to give all your money to the first institution claiming to give out a 'degree'. The first and most important question that must be answered is should you even go at all? Looking all around, one can easily get the idea that college is now mandatory. We're often told that not going to college means you're a failure.

Where do I sign up?!

However, don't make the decision based solely on what society is telling you. Not going to college doesn't have to mean a life of misery   and poverty. Plenty people who have a bachelor's degree (or higher) still got laid off during the Great Recession and ended up on food stamps.

In light of that, it's no surprise that several prominent figures in our society didn't finish college. However, it's also worth noting that they dropped out of college. In other words, they started college, presumably with the ambition to finish, but found a profitable venture that dragged them away. Despite all that, I still would recommend going, though with some very heavy qualifications due to changing market conditions.

Most importantly, even though I think you should go to college, your parents might be expecting you to go to college, and society thinks you will, it doesn't mean that you need to sign up at the most expensive place. There are plenty other options available for getting college knowledge that don't require a sackful of cash or a mortgage worth of student loans.

This time of year is high time for college preparations in families all across the country. Visiting campuses, figuring out 'financial aid', wrapping up the high school transcript on a good note. However, if that is not an accurate description of your spring, you still have other options. Maybe your high school transcript isn't "good". Or perhaps, you didn't get accepted to the school you wanted. You might have run into a financing issue. All are issues, but they shouldn't be insurmountable. In future discussions, we can look at what to do in those situations and more. Until then, keep calm and study on.

Hump Day Herald

Lo and behold, it's Wednesday again! As luck would have it, it also happens to be the first day of spring for those of us here in the Northern Hemisphere. It's also very nice to see the sun again. It was missing the entire time I was on vacation last week. Now I know why people from the Midwest run around in Speedos in the 50 degree weather when they come out here to CA. On the flip side, biking in a snowstorm didn't phase me, but my girlfriend was less impressed. Despite being a native.

No shortage of offers here...

Anyway, I arrived back home to a stack of mail. A few books that I'd ordered, credit card statements, and a big pile of fireplace kindling credit card offers. I already have more cards than I really need, but they still keep sending me offers nonstop. I've been getting them for years, but being gone for a week gave them time to pile up and I really got to see exactly how much and how frequent they send me junk. And this is in addition to what slips past my spam filter and bombards my email address.

As you can see to the right, I got six offers (three from the same company!) while gone directly into my mailbox. I delete several more from my email every single day. I can already hear the protests. "Why don't you just remove yourself from the mailing lists?" I would, but the offers do serve a purpose: a crude barometer of my credit score.

But how does it tell my credit score? I've noticed over the years that the terms offered fluctuate. I'm sure it may have been partly due to the economy, but it still ultimately is a barometer of credit scores. When my credit card balances are higher, the 0% offers taper down from 12 months to the 6 month range or even disappear completely. So as I've recently gotten my cards paid down (as well as my car loan), the offers have been getting better. Of course, it doesn't tell me an actual number and it's no substitute for checking your credit report regularly. If you want to know your actual* number, use Credit Karma. I'd sign up, but I haven't felt a big need to really follow my "score" that closely yet. Going forward, we'll see what happens.

The haiku! I haven't forgotten about it. This one is for everyone who is currently on, about to take, or just ended spring break.

Spring Break

Spring break time is here

Don't blow all your funds on beer!

Debt will last too long.

*I understand that everyone is now coming up with their own number, so finding out your "true" score may very well be an exercise in futility.