Don't Quit Your Day Job…

Here’s an interesting move on the part of Bank of America… account holders who use their debit card at any time during a month will be expected to pony up $5.00 at the end. The fee doesn’t apply if you use your debit card at ATMs, just when you use it to make purchases. It’s just the latest of the big banks to make waves with debit card fees – and, with the fee scheduled to roll out to Bank of America account holders next year, it’s the largest of the debit card fee programs. Wells Fargo and JP Morgan Chase are also toying with the idea to tack on monthly debit card fees.

Australia, Austria, Canada, Denmark, Finland, France, Germany, Guernsey, Hong Kong, Isle of Man, Liechtenstein, Luxembourg, Netherlands, New Zealand, Norway, Singapore, Sweden, Switzerland, and the United Kingdom.  What do all of these sovereign states have in common?  As of yesterday, Standard and Poor’s rates their debt as a lower default risk than debt from the United States.

A recent article reviewed the new debt agreement as follows: “It’s like a 400-pound man boasting that he plans to drop 20 pounds over a decade, while his doctors warn about the risks of losing weight so fast.” I found that analogy grossly misinformed. It’s much more like a 400-pound man who is gaining 50 [...]

In 2006, Former President George Bush signed a well intentioned law which allowed companies to automatically enroll employees in the company retirement program – and to automatically choose the investment in which they were enrolled. The Pension Protection Act of 2006 authorized companies to automatically enroll new participants and enroll them in three types of funds – lifecycle funds, balanced funds, and managed accounts – while absolving the companies of any financial liability for losses in the funds. As expected, the law has effectively increased the rate of participation in company 401(k) accounts.

Sorry to miss the news cycle (I bought a house, as I alluded I might in my slightly pessimistic earlier real estate postings), but I wanted to share the perfect example of the incentives and disincentives of tax laws.  As predicted a while ago, California finally passed a law which stated that any out of state businesses which had affiliates in California would have to collect taxes when consumers in California purchased goods from the mother company.  A few other states have already passed similar laws, nicknamed ‘Amazon Taxes’.  Overstock.com and Amazon.com (disclosure: this site was technically an Amazon affiliate) immediately announced plans to cut off California affiliates.

‘Conventional’ knowledge, until the last couple of months, was that home prices bottomed in late 2009.  Recent data on home sales shows a local maximum in 2010 followed by a further decline – leading some economists to believe we are now in a “double dip” where housing prices will continue to decline in the immediate future.  The most recent data point is from Zillow, estimating that (a record) 28.4% of all single family homes are currently underwater – meaning mortgage holders owe more than their house would sell for on the market.  Full disclosure: I’m currently testing the real estate market on the buy side.

The earthquake and tsunami disasters in northeastern Japan have the entire world buzzing about disaster preparedness. This usually entails a disaster kit complete with water jugs, flashlights, radio, canned goods, and bags of kibble for the cats and dogs, but there’s one aspect the media has beenneglecting: financial preparedness.

Here at DQYDJ, we like to write about things that have unintended consequences – a perfect example is the Alternative Minimum Tax, which was intended to stop the very rich from having a 0% tax rate.  Of course, since that tax was not indexed for inflation, it has creeped its way into the middle class’s check book.  Today we’ll link you to an article on another distortion of the AMT – deepening the “Marriage Penalty”, a situation where two singles would be better off, tax-wise, staying single as opposed to marrying.

High oil prices and a declining dollar – the complex interaction between a war in Libya and a declining dollar (and a strengthening Euro, go figure!) means all commodities priced in dollars which are declining slower than the dollar, remaining the same, or increasing in price, are increasing for us Americans using dollars.  This sort of rise isn’t included in inflation measures - fuel and food prices are considered too volatile so are left out of the ‘core’ inflation rate.  However, we need food to survive and fuel to get around, so you’re definitely feeling the effects.

The Alternative Minimum Tax, a tax enacted in 1969 to set a minimum level of taxation, has had major mission creep – especially in the last 10 years. The Alternative Minimum Tax is a secondary set of tax brackets which disallow certain deductions which are allowed under the normal tax code. The tax was enacted since 155 rich households avoided paying tax altogether back when the tax was started. Today, even with annual ‘patches’ by congress, the alternative tax bracket is hitting more and more people – 4.5 million tax payers last year. Hope you’re having fun doing your taxes this year!