Don't Quit Your Day Job…

We here at DQYDJ are constantly scouring the internet for gems which will help you with the financial aspect of your life. This post is no different and we even extend the courtesy to your family as well…

A very interesting study out of Texas Tech University asks the question: How is Financial Literacy Affected By Age? The results are very interesting. Even though the paper reports that households with ages over 60 years possess more than half of the wealth in the United States, a decidedly younger crowd, the 45-49 year olds, possess the most financial knowledge. The implications: while we know that there is a decline in physical and cognitive capabilities which comes with aging, we should also note that with those cognitive changes may come curious financial decisions as well.

“In this world nothing can be said to be certain, except death and taxes.” – Benjamin Franklin

What is less certain is what those taxes will be called – the tax code continues to get more and more complex every year. The IRS puts out a data report annually about their fiscal year which includes tax collections by the type of tax (Table 6). These numbers are not the final numbers – those numbers are arrived at once all credits and refunds are complete. However, the chart that results is instructive, and it allows us to visualize how the tax code has change over the years to collect revenue from the country in different ways.

In the chart that follows, you can turn off individual categories so you can see how individual categories stack up. Note the relative size of the estate and gift taxes. For the amount of interest they receive, they are an insignificant portion of total tax collections.

When it comes to guaranteed returns, there is a list of investments perhaps as numerous as your fingers.  The most famous example is the 401(k) with an employer match.  In order to charm you into investing some of your money in the company’s 401(k) account, most employers tend to put up a bit of their own money as an incentive.  The return is immediate, guaranteed, and something that should be captured.  The bottom line is – in almost all instances you should make sacrifices elsewhere in order to receive the full employer match.

Tying to an article earlier that my colleague PKamp3 wrote, personal finance seems to have taken a dive in popularity in more recent years. As a writer for a confessedly self-aware personal finance crowd, this assertion may seem irrelevant, surprising, or, at worst, alarming. As a young college graduate, many of my fellow coworkers (as well as I) have student loans as one of their more significant financial obligations on top of car loans and (soon) mortgages. Some plan on paying down their student loans as fast as possible to deleverage themselves and then start saving for a home. I am of a different and not necessarily correct opinion: to hold onto the student loans for as long as possible due to their incredibly low interest rate and tax-deductibility for incomes up to $60,000 (partial deductions up to $75,000).

In a recent article here at DQYDJ I posted a chart which graphed worldwide interest in ‘Frugality’ and ‘Personal Finance’ based upon the amount of interest registered by Google. There’s actually another interesting takeaway from that picture – interest in the term ‘Personal Finance’ is losing steam in the United States. Interest understandably grew during the recession, and it spikes in the beginning of every year, but interest is definitely trending downward. It opens up an important discussion: Are Americans losing interest in personal finance?

This guest post is contributed by Hope Nardini, who writes about frugal travel and personal finance on Money Crashers. Check them out when you’re done with the article!

I paid my rent for the month online as I always do, and since my roommate owed me half, she dug out her checkbook from the bottom of her desk drawer. She grabbed a pen, and then looked at me blankly. “How do I do this again?” she asked, laughing.

We’re slowly forgetting how to write and cash checks, and the once-crucial habit of balancing a checkbook is practically becoming a thing of the past. With the increasing popularity of credit cards, online bill payment, and PayPal, will paper checks soon become obsolete?

It’s a topic we’ve covered here at DQYDJ before, and we’ll definitely do it again in the future. Every once and a while everyone needs a reminder: if you qualify, open a Roth IRA. If you have one and you aren’t funding it: do it. Here’s a rehashing of why!

There is a mortgage strategy variously described in different corners of the internet where a mortgage is refinanced… and payments stay steady. For this strategy, a borrower is currently paying some monthly payment, and will continue to pay the exact same monthly payment after their mortgage is refinanced. The benefits are usually explained as an acceleration of mortgage payments and a “guaranteed investment return”. You may find yourself in a situation where you are considering this form of accelerated mortgage payments. Is it worth it? Let’s run the numbers and find out!

Writers on personal finance blogs and websites are, on the whole, a frugal bunch. The reasons we started our respective sites are varied – influence, to chronicle paying off our debts, the spread uncommon knowledge, altruism, or merely to build a stage to have our financial opinions heard. Our readers are a much more diverse bunch. While most all people have to deal with their own finances, our readers come to us with their finances in various stages of disarray. While us writers, as a whole, have our finances in order (or at least on the right track), some of our articles tend to preach to the converted. I feel there is an overabundance of frugality articles in our corner of the internet – so I ask, “Is Frugality Overrated?”.

Conceptually, it’s easy to grasp why and when you should refinance your mortgage. In practice, inertia is the main reason people hold back from refinancing. With that in mind, we present these mortgage calculator which will allow you to see how your current mortgage will compare with the mortgage you are considering. Perhaps if the math is enticing, you’ll shop around? Enjoy!

We’d like to thank Hugh Chou for compiling the equations that we needed to create this calculator, and Ironman at Political Calculations for providing the calculator framework.