20 SomethingFinance | Personal Finance Blog By G.E. Miller
20somethingfinance is a personal finance and lifestyle blog catered towards young professionals to help them pursue financial freedom. Its Mission is to unite & assist young professionals in the fight for financial freedom.
If you’re not familiar with “lifestyle creep”, here is my official definition:
Lifestyle Creep (ˈlīfˌstīl krēp), noun: the very real, very unnecessary, and very self-defeating personal finance phenomenon of increasing one’s lifestyle spending as a direct correlation to an increase in one’s income over time.
With lifestyle creep, your spend rises as, one-by-one, purchases once considered as luxuries to an individual have a way of slowly but surely being redefined as necessities. Buttered toast seems great until you meet avocado toast – and henceforth, buttered toast is for “suckas”. And one day soon we shall all pity the fools with smartphones that are deprived of facial recognition capabilities instead of fingerprint recognition.
Lifestyle creep is so prevalent in our society that it can almost be viewed as personal finance scientific law, where it is a given that the more money you will make, the more money you will spend.
This is evidenced in the fact that a large section of the financial planning and retirement industry (foolishly) still utilizes a multiplier of income as retirement guidance (i.e. “you should aim to save 12X your annual income in order to safely retire”). Why not just use, um… actual spending to calculate how much you will need to save up to spend in retirement? Because people spend most of what they earn and most people know what they make and spend all of it, so… shortcut!
It’s also evidenced in the fact that the average personal savings rate is a meager 2%. Many people basically spend what they earn throughout their entire lives.
Lifestyle Creep Does Not have to be a Given
Indeed, the gravitational pull of lifestyle creep is pretty darn strong. And freeing yourself from the pull requires constant effort and attentiveness, with occasional pitfalls along the way. The more you practice, the better you get, but even the best among us occasionally shank one into a water hazard.
But it’s not a given. It can be hacked and beat. And doing so may just be the secret to personal finance success.
The benefits of doing so can have a profound impact on the trajectory of the rest of your life.
Lifestyle Creep: The Calculated Impact
I haven’t seen anyone do this, so I wanted to actually put some realistic calculated math to show the impact of lifestyle creep (and beating lifestyle creep).
Let’s imagine 2 individuals, “Creeper” and “Non-Creeper”.
Both start with the same $50,000 salary and through a series of raises and promotions, average a 7% income increase per year.
Both start with a personal savings rate of just 2% per year ($49,000 spend).
Creeper’s spend increases 7% per year (100% of her income gains are spent).
Non-Creeper’s spend increases at the average rate of the Consumer Price Index (CPI) – at 2% per year. Non-Creeper saves the rest.
For further impact, we’ll assume a modest 7% return on savings for both.
Here are the results.
Saved in Year
Cumulative Saved w/ 7% Return
Saved in Year
Cumulative Saved w/ 7% Return
You’ll notice that even with starting with a very minimal savings rate, Non-Creeper is able to save almost 10X Creeper’s savings over the 10 years, $199,058 versus just $19,672. Fending off lifestyle creep has a massive impact, even with a minimal personal savings rate to start.
Now what if Non-Creeper also was also able to save 50% of her income right from the start, with total annual expenses starting at $25,000 (similar to my household annual expenses), that go up 2% per year? Here’s the math on that.
Saved in Year
Cumulative Saved w/ 7% Return
Saved in Year
Cumulative Saved w/ 7% Return
Hot damn! Avoiding lifestyle creep in addition to a high personal savings rate results in Non-Creeper amassing over 30X the savings of Creeper ($583,312 vs. $19,672) over the 10 year period. Now imagine how this scenario plays out over the next 10, 20, or 30 years when the power of compound returns really kicks in.
Hopefully these numbers show the importance and impact of fending off lifestyle creep (and boosting your personal savings rate).
So the next question one should naturally have is: “how can I beat lifestyle creep?”.
Monitor Lifestyle Creep (Personal Inflation Rate)
Lifestyle creep can be measured with an actual calculated metric: personal inflation rate. And by tracking and monitoring your personal inflation rate down to the category, you can get a good sense of where your spend is creeping so you can stop it dead in its tracks.
Personal inflation rate = cost of all personal expenses in most recent year/cost of all personal expenses in year prior
Here’s an example in action:
Your 2017 expenses totaled $51,000
Your 2016 expenses totaled $50,000
Your personal inflation rate = $51,000/$50,000 = 1.02 (or, 2%)
If you can keep your personal inflation rate at or below the consumer price index average, or CPI (which has typically been around 2% per year the last decade or so), then you’re winning.
Trim and Trade Expenses
Monitoring your spending by category also gives you the intel you need to find opportunities to trim the fat. And this gives you an opportunity to figure out exactly what it is that you do care about.
Really want to improve your work wardrobe? Cut back on your telecom spending.
Want more fresh produce in your diet? Trim your alcohol tab.
Want to take a vacation this year? Start biking to work 2-3 times per week.
Bonus points if you decrease spend on monthly recurring expenses, as doing so is the equivalent of giving yourself a monthly raise of the same amount.
Practice Gratitude & Question Every Purchase
It is undeniable that even those among us with incomes that fall into lower and middle tiers have an extensive army of luxuries available to us that did not exist 1,000, 100, 50, or even 20 years ago. We have the medicine, communication, technology, clothing, transportation, health care, and entertainment that even the wealthiest royalty of just 100 years ago never could have dreamed of.
Yet, paradoxically, it seems that the more we have, the harder it becomes to please us. That is, unless we frequently practice gratitude and limit our indulgences.
The best way to practice gratitude is to discuss and document (journal or otherwise) what you are grateful for daily. And avoid the temptation to compare yourself to others (which may even mean avoiding those who don’t have a sense of gratitude and “enough”).
Your career would be abnormal if you didn’t get a few promotions and raises along the way. And many of those raises will outpace inflation.
When you do get them, the wisest thing you can possibly do is to save them from yourself. If you’re not underwater on cash flow, immediately put as close to 100% of your newfound earnings directly into increased debt payments, increased retirement savings (especially 401K matching), emergency savings, or untouchable funds for future goals via automatic direct deposits.
Remind Yourself of Your Goals
Clearly understand just why you’re doing this. If you don’t have short, medium, and long-term goals documented and in mind, it can be extremely easy to fall into the lifestyle creep trap.
Maybe it’s paying off your school or credit card debt, saving up for a down payment on a home, hitting certain retirement savings goals, or wanting to reach financial independence.
Know your goals, document them, and hold yourself accountable to them.
Do you have an old credit card just sitting unused in your wallet, sock drawer, or wherever you keep credit cards that has left you wondering “should I shut down that old credit card”?
A 20somethingfinance reader, Emily, writes in with a similar question,
“Should I close an old credit card that I no longer use? What is the impact on my credit score?”
It’s a great question – one that I have myself wondered previously as my credit card collection grew well into the double digits. And as with most things finance related, the answer is not so simple.
More important than credit score impact, in my mind, is the following:
do you pay an annual fee for the card?
is the value you get in return worth the fee?
Many credit cards that come with an annual fee offer some sort of value – even if you rarely or never use the card (check out a few of my favorites on my “money saving products” page). For example, many hotel cards grant you a certificate for a free night each year or a certain number of points that could be equivalent to a free night. If that is something you value, and the value is definitely more than the annual fee of the card, then the answer is simple: “keep the card”.
On the other hand if you are paying an annual fee and getting less value in return than the fee you are paying, then close the card.
Then there are the credit cards that have no annual fee and little to no usable perks. These are the cards that maybe offer 1% cash back and you thought that was awesome at the time (before realizing they almost all at least offer that), or they came with a nice signup bonus but little incentive to use the card beyond an introductory period. From a credit score standpoint, should you just leave these cards around to collect dust?
The answer is usually, “yes”. Here’s why.
There are 2 factors that are part of the credit scoring calculation that would be negatively impacted by closing a credit card:
With FICO’s calculation, length of credit history makes up 15%. And credit utilization ratio is a significant part of the “amounts owed” category, which makes up 30%.
Length of credit history (aka “average age of accounts”) is interesting because even closed accounts “age” after they are closed in FICO’s calculation. They age until they’re removed from credit reports 7-10 years after the date of closure or the last reported account activity, whichever came later. So the short term impact on length of credit history is zero, but the long term impact of a dropped account can be significant as your average age of accounts would decline.
Credit utilization ratio is more clear. If these were unused cards, then your credit utilization ratio would increase (a bad thing), because your total amount of usable credit would decline by the amount of credit line that card carried.
VantageScore, a competitive rating service to FICO, has similar rating factors, but will look at only open and active accounts instead of open and closed. The impact to average age of accounts is more immediate with VantageScore.
So keep those no annual fee cards open! The positive impact to your credit score should outweigh the very minor annoyance of an extra card sitting around.
In belated honor of Earth Day and as a show of appreciation for our one and only planet, I wanted to do a little something special. Reducing my negative impact on this planet and saving money are both things that I care very deeply about. So, I thought it would be a worthwhile to create a list of environmentally friendly products that also save you money. Many of these products I have used some variation of for years. Others come highly recommended from family or friends. I guarantee you’ll find at least 1 thing you didn’t know about before.
I have added much of this list to my popular money-saving products page, and hope to curate and refresh it over time. I’d also love to see what your suggestions are to add to this list in the comments, and if you have some good numbers and justifications behind a suggestion, there is a good chance I will add it to the list.
To make this list of eco-friendly products, along with saving money, at least one of the following criteria must be met:
Let’s get started.
Home Energy Use Reduction
Emerson Programmable Thermostat (with wifi): this is one of the top selling, highest rated, and least expensive wifi enabled programmable thermostats out there. Versus a non-programmable thermostat, it could save you upwards of $180 per year. They also provide a huge convenience factor in that you don’t have to mess with the thermostat every time you go to bed, wake up, go to work, or get back from work. And you can monitor and change temperature in your home if you are traveling.
P3 Kill A Watt Energy Monitor: this nifty little device that tells you how much energy each of your electrical devices is using. You plug it into the wall and then your device into the monitor to get the readout. The goal in using the device is to figure out how much that electrical item is costing you if you keep it plugged in (on or off). Standby powered appliances ratchet up your energy use. This device will actually tell you exactly how much money and CO2 you are wasting with each device. Ignorance is not bliss when it comes to energy use.
Niagara Energy Saving Power Strip: a surge protector that allows you to control if your TV peripherals are getting electricity. You simply plug your TV into the master control outlet and if your TV is off, it shuts down standby power to the other outlets so they aren’t draining energy while your TV isn’t even on. If it’s on, it turns on standby power. It could save you $67 per year.
Delta Low Flow Showerhead: a 2.5 gallon-per-minute (gpm) unit can save a family of four $260 per year in heating costs alone vs. an older 5.5 gpm unit. That’s a 640% ROI in one year! Not to mention the huge amount of water savings. The Delta low flow showerhead can switch between 2.5 gpm and a super economical 1.8 gpm, without you feeling like you’re not getting enough water.
LED Bulbs: at prices that are now below incandescents and CFL’s, and with one-tenth of the energy use of incandescents and less than 50% of the energy use of CFL’s, we’re at the point where every light bulb purchased should be LED. The cost and energy savings will be immediate.
Philips A19 LED bulb: a great bulb that I personally use that has similar light qualities and appearance to an incandescent, but one-tenth of the energy use and a cost of just over $1/each.
Dimmable LED Bulbs: use only 6W of energy each, but just 3 of them light up my entire kitchen. Their prices have come down significantly – and they are long lasting.
Clothesline: cheaper and less impactful than the dryer.
Drinking Water: I once calculated that the cost of bottled water can be more than $1,000 per year more than tap water. That’s ridiculous! The following items will save you serious money almost immediately.
Water Bottle: cutting down on the waste and cost of individually bought bottled beverages should be considered mission critical.
Water Pitcher: I drink a lot more tap water (vs pricier alternatives) if it comes nearly ice cold from the refrigerator versus from the tap. A simple water pitcher does the trick. If you prefer a filtered pitcher, this is a good option.
GE Water Filtration System: if your water smells or tastes not so great, and that is preventing you from drinking it, get a system like this.
Woodbridge Dual Flush, Water-Saving Toilet: this toilet has an option of 1.0 gallon or 1.6 gallon flush – depending on… you know. This toilet could save you tens of thousands of gallons of water over its lifetime.
Food & Other Consumer Goods Waste Reduction
Bulk Foods: where you buy your food and what food you buy determines the amount of packaging waste that you produce. The average American produces 4.43 lbs. of trash per person per day. Much of that comes from food packaging. So start bringing your own reusable packaging to purchase food in bulk. For stuff you can’t buy in bulk, shopping at Costco or wholesale stores can also help reduce packaging. I.e. a 36 oz. jar of mayo, for example, produces 3X less waste than 3-12 ounce jars.
Reusable Grocery Bags: plastic bags are a scourge on this planet – many states are starting to ban them altogether. And paper bags are resource intensive. Reusable bags are stronger, bigger, and can last a lifetime. Many grocery stores are now giving discounts per bag used if you bring your own. You’ll quickly make your money back, have a better experience, and reduce your impact.
Composting: food waste may be the biggest environmental disaster that nobody talks about. Food waste in landfills produces massive amounts of methane gas, which is 34 times stronger a heat-trapping gas than CO2 over a 100-year time scale.
Compost Bin (indoors): having in indoor bin, in between trips to the outdoor bin encourages more composting.
Compost Bin (outdoors): if you have a garden and want healthy soil, you need an outdoor compost bin for your food scraps. This will save you money on soil additives and with many municipalities charging for disposal pickup by the bag, a bin will save you from those fees.
Coffee & Tea: almost needs its own category, doesn’t it? The average worker spends over $1K annually on store-bought coffee. And there is so much waste in coffee and tea production and drinking these days, and a conscious effort here can make a huge impact.
Cold Brew Pitcher: I only drink cold brew these days. I like the taste of cold coffee better, the cold brew process is less acidic (easier on the gut), and it saves money. Pitchers like this have a mesh filter, so you can cut down on the cost of filters. This can also be used for fruit/water infusion, loose leaf tea, and other concoctions. Be sure to throw your grinds in the compost bin!
Reusable K-Cups: people love their Keurigs. Once you realize you can create even better results with fresh ground coffee and your own reusable filters, without all the waste, and at a fraction of the cost, you’ll love them even more.
Loose Leaf Tea Infuser/Strainer: tea, if made from individually packaged tea bags, is also a huge waste. Buying loose leaf tea in bulk and making your own is a much cheaper/less wasteful/more satisfying process.
Vegetarian Diet: what is the #1 contributor to atmospheric CO2 and man-made global warming? Food production. It takes 16 pounds of grain/soy and 5,214 gallons of water to produce 1 pound of edible beef (the same amount of water one American uses on showers in a year, on average). It takes 78 calories of fossil fuel to produce 1 calorie of protein from beef, while only 2 calories of fuel to produce a calorie from soybeans. By switching a few meals a week (and eventually most meals) to a plant-based diet, you will significantly reduce your personal impact on the environment. Even better, the cost of a vegetarian diet is typically $2-3K cheaper than a meat-based diet per year.
Toilet bidet: I know this sounds like an unnecessary luxury. Once you get one of these, you will view it as a necessity. A bidet significantly cuts down on toilet paper, which is very resource intensive and pricey these days. And your bum will thank you.
Environmentally Friendly Cleaning Products: with a little water, lemon, baking soda, white distilled vinegar, rubbing alcohol, hydrogen peroxide, and witch hazel, you can make home-made cleaner combos that will clean just about anything, are 100% safe, cheaper, and probably more effective than the store-bought toxic garbage. Here’s an article on how to make non-toxic cleaners.
To help with the biking part, I wrote a post on bike maintenance 101. Every serious biker should own the following gear to be able to repair and maintain their bike:
Bike pump: rubber is porous and air molecules will escape at high pressure over time. You need to refill them periodically, even if there are no visible leaks. Make sure you get a pump that can work with both presta and schrader valves.
1-2 extra tubes: matched to your tire size (which is listed on the side of your tire).
Chain lubricant: make sure you use an actual lubricant and not a de-greaser solvent like WD-40.
Bike wheel rim tape: inside your bike wheel, you will find little screws for the spokes. You must cover these in tape or with a plastic strip to prevent tube puncturing. Measure the inside rim width to match up to the tape width.
Wedge pack: fits comfortably under your saddle, and can hold all of the following.
Multi-tool: that includes that includes screwdrivers, wrenches, etc., and allows you to make any adjustments on the fly.
A tire lever tool: to help you get the tire off the of the wheel and back on, in the event of a flat. A bike mechanic turned me on to Quik Stik – and I will not go back to any other lever.
Tube patch kit: these are cheap, but you can make your own. They consist of a piece of sandpaper, rubber cement, and patches – and when used properly, can seal tube leaks and holes.
CO2 inflator: to re-fill your tube with cartridge air when you get a flat on the road.
bike fenders: because nothing is worse than biking to work in the rain. Make sure they fit your tire size.
All other bike stuff:check out Nashbar.com. They have excellent deals on complete bikes, clothing, wheelsets, etc.
Buy used whenever you can to save money and greatly reduce your impact. Get familiar with local 2nd hand stores, flea markets, Craigslist, EBay, and Facebook marketplace. Look for refurbished goods with warranties.
Disclaimer: some of these products have affiliate links. No recommendations were influenced by such.
The tax deadline is fast approaching, but there are still a few tools left in the tax toolkit that can be used to lower your tax obligation, even at this late stage. To be eligible for the vast majority of tax deductions and credits, you typically have to take an action within the calendar year that you are filing your return for in order to claim them. However, there are 3 big notable deductions and credits that I am aware of that are exceptions to that general rule. These 3 credits and deductions give you an opportunity to hack your
The post Last Minute Tax Deductions & Credits that... [Read the rest of the story at 20somethingfinance.com]
Long-time readers may be quite surprised to find the subject header of Xfinity Mobile Review to hit their email inbox or feed, given my extensive collection of diatribes against Xfinity (Comcast) in recent years.
Despite my prior denunciations of its parent company, I am an actual Xfinity Mobile customer now – we have been testing Xfinity Mobile on one of our mobile devices for months now. And so far, so good!
Xfinity is not holding me hostage. Nor did they compensate me to do this review in any way.
No, I’m not crazy or drunk (most of the time).
Let’s jump right in to this Xfinity Mobile review.
What is XFinity Mobile?
Xfinity Mobile is the new mobile service from ISP/Cable TV conglomerate, Comcast Xfinity. It somewhat quietly launched to customers in May of 2017, and was live in all Xfinity markets in August, 2017.
In addition to nation-wide 4G LTE coverage, Xfinity Mobile also boasts 18 million+ wifi hotspots, and attractive and flexible low-cost plans.
Can I Get XFinity Mobile?
In order to become an Xfinity Mobile customer, you must first be a residential Xfinity Internet service customer. If you reside within Xfinity’s market map, you probably don’t have much of a choice on that to begin with (unfortunately), as Xfinity often has monopolistic coverage of cable/Internet lines in most of the markets it is in.
Xfinity Mobile is a mobile virtual network operator, or MVNO. As an MVNO, Xfinity Mobile doesn’t own its own wireless spectrum, it buys wholesale priced access from one of the 4 big wireless spectrum owners in the United States.
Xfinity Mobile runs on Verizon’s Network.
Making a call? You’re calling on Verizon’s network. Using mobile data? Verizon’s network. You’re basically getting all of the touted benefits of Verizon’s network at a fraction of the price.
Xfinity Mobile Coverage Map
Xfinity Mobile, by virtue of running on Verizon’s Network, has tapped in to the largest 4G LTE network in the US. Verizon touts that it covers 322 million people, 98% of the country’s population, and more square miles than any other network. Here is an interactive 4G LTE coverage map.
XFinity WiFi Hotspots
In addition to offering up Verizon’s Network for prices that are much cheaper than Verizon (more on that in a bit), Xfinity Mobile sets itself apart from the competition in that you can tap in to over 18 million wifi hotspots. Xfinity makes this possible through using modems it leases to customers as wifi hotspots. Devilishly clever.
Here’s where things get really interesting. Xfinity mobile plan costs are extremely low and flexible. Lower than any of the big 4 carriers, but lower than even most of the cheapest of bare-bones MVNO’s (who often have close to zero customer service).
For starters, everyone gets:
Unlimited nationwide talk and text, for free (say whaaaat?)
No line access fees on up to 5 lines
Free access to the 18 million+ wifi hotspots
100 MB shared data for free, each month
It’s hard to beat free pricing. Well, almost free. Is Xfinity Mobile really free? No. You do have to pay regulatory taxes and fees – similar to Ooma. Xfinity states,
“The “Taxes and Fees” section of your bill includes sales, excise, and other taxes and government surcharges that we are required by law to collect from customers on behalf of local, state, and the federal government.”
For me, that totals up to $2.06/month. Good luck finding a better deal than that.
Beyond talk, text, & wifi – if needed (and I plan to only need it if on an extended trip), you have a choice between 2 data plan options:
By the gig: $12/GB of shared data
Unlimited: $45/line/month (after 20 GB of monthly data use, speeds are reduced to a maximum of 1.5Mbps download/750 Kbps upload.)
Both options are extremely competitive from a price standpoint. For comparison’s sake, you’d pay $35 for 1 GB and $120/month if you purchased directly from Verizon. And you can switch from “by the gig” to an “unlimited” plan within the same month or from “unlimited” to “by the gig” at the start of the next billing cycle. You can find lower price per GB data plans out there, but you typically have to pay for talk and text with those plans, which would wipe out the benefit.
The Xfinity Mobile app shows you where your data usage is each month, in order to keep your data usage in check.
Does Xfinity Mobile Have Contracts?
No. There are no contracts with Xfinity Mobile. You can leave at any time, if you’re not happy, without penalty or early termination fee. However, you may have to pay off the remaining balance on your phone and plans (which is fair).
Xfinity Mobile Phones
Xfinity Mobile has a solid offering of mobile devices (mostly on the higher end). You can either buy the phone outright or spread out the cost of the phone over 24 months (at 0% APR).
They have been offering a rotating discount in the form of Prepaid Visa cards on a number of their devices. For example,
$150 card on the $180 LG X-Charge (the device we bought)
$200 card on any iPhone (including the reasonably priced iPhone SE)
$250 card on the Galaxy S9
I would like to see more of a selection of lower-end priced Android phones.
Xfinity Mobile BYOD (Bring Your Own Device)
There was no Xfinity Mobile option to bring your own device (BYOD) until recently, but now you can bring your own iPhone device (iPhone 5 and later). They state that they are working on Android, but there is currently not an Android BYOD option.
If you bring your own device, there are no added fees. And yes, you can still access the wifi hotspots.
I do see the broader company making serious efforts to improve its customer service and experience. For example:
With Cable/Internet pricing, they have started offering existing customers extended contracts at prices previously only accessible to new customers (having to quibble over pricing and continual increases has long been a complaint of mine and others).
Their customer service reps do seem much more accommodating in recent years, which is a reflection of company policy.
Their revamped Xfinity stores are much closer to an Apple store than the DMV these days (I recently visited one and was shocked).
I looked long and hard for gotchas with Xfinity Mobile. I couldn’t find any. The pricing is fair, honest, and cheap. There is flexibility to switch plans. You can get 0% APR financing on phones if you can’t afford to buy outright (at the same total price). And you can BYOD without added fees.
Am I skeptical Xfinity Mobile will always be this fair and cheap? A little, yeah. If things take a turn for the worse, I’ll be the first to let you know.
Final Thoughts on Xfinity Mobile:
If you’re already an Xfinity Internet customer, Xfinity Mobile is a hell of a deal. A few minor quibbles are:
lack of low priced Android phone options
inability to bring your own Android phone (at this time)
stock on popular phones seem to be hit or miss
On the flip side, I really appreciate:
the nearly free (taxes aside) unlimited nationwide talk & text on Verizon’s network
no line fees
the option of 2 low-priced and flexible data plans, plus a little bit of free data each month
the extensive wifi hotspot network to keep data costs low
clear, fair, and transparent pricing, with no contracts
It’s almost like Xfinity wants its customers to be happy. Hmm… imagine that.
The tax deadline is fast approaching, and if you haven’t filed your taxes already, you’re probably looking for the cheapest and best tax software prep program out there.
If you’re locked in to a particular tax prep program you love, this may be an easy decision for you. If you haven’t filed your own taxes, or are looking to make a switch, finding the best and cheapest tax software program online is not as easy as it may seem.
For starters, the paid versions of various programs don’t align – even if they have the same name (i.e. “Deluxe” or “Premium”). You’ll want to review what forms are covered and meet your personal filing needs, based on how complex of a form you file. And with free versions, what forms each program covers can be dramatically different (and you have to watch out for state filing fees).
Additionally, no two programs have all of the same features. Tax advice support differs, audit protection differs, in-person support differs, data import differs, and so on.
So what I’ve tried to do in this review is give you a quick and easy cost comparison breakdown of all federal and state filing costs, key features, limitations, and even a few affiliate links with heavy discounts so that you can get the cheapest price available.
Here’s my comparison of the cheapest and best tax software prep programs out there:
Comparison of the Cheapest & Best Tax Software Prep:
If your goal is strictly to find the cheapest tax software available, H&R Block, TaxAct, and Credit Karma each have at least 1 version that offers both free federal and state filing. The scope among those varies, however:
H&R Block covers: 1040EZ, 1040A, & 1040 with Schedule A
TaxAct covers: 1040EZ
Credit Karma covers: all forms
If you have a very simplistic return, you may be able to file without any up-charges with H&R Block and TaxAct. If you want to be safe with all forms, Credit Karma may be your best bet.
However, you may want to beware that Credit Karma’s program has often been reviewed as being a bit buggy, lacking in features, and it apparently does not cover state returns in Georgia and New Mexico (though this is rumored to be in the works).
The Best Tax Software Prep:
Cheapest is not always best – particularly when it comes to something as essential as filing your taxes.
If you have a more complex return, it’s hard for me to recommend anything but H&R Block or Turbotax as the best tax software out there.
the broadest feature sets of all tax programs
prior year returns
free audit support
free live chat and telephone support for technical issues or tax questions
the ability to have a tax professional personally review your return (for an added charge)
And if things get real crazy, H&R Block even has office locations for in-person reviews and support.
I’ve personally used both programs and highly recommend both (in recent years, I’ve exclusively used H&R Block because they are slightly cheaper and offer more support). It’s hard to go wrong with either.
Imagine that an uncontrollable fire has unexpectedly started to rage in the very back corner of your home or apartment. You have to act quick. You have enough time to safely remove 5 living creatures and inanimate objects (all family = 1 total and all pets = 1 total) before the flames and smoke overtake the interior of your dwelling and you must completely evacuate. Everything else is completely lost to the flames. What do you rescue? In what order? And why? Let’s dub this the “House Burning Down Exercise”. Take a few minutes to think about it, then read
The post The House... [Read the rest of the story at 20somethingfinance.com]
No other metric is as apt at diagnosing your current “personal business” of household cash flow management. In its simplest form,
Personal savings rate (over a specified period of time) = net savings (or losses) / total income
If you can boost your personal savings rate up to high enough levels, you can start to make some crazy fast progress in paying down debts or saving for retirement. For example, at a 75% personal savings rate, you’d be saving 3 years of living expenses for each year of work you complete. Just 10 years of that, and you could virtually retire!
But Americans don’t do that, or anything close to that.
According to recent Federal Reserve data, the U.S. personal savings rate has plummeted to just a hair above an all-time low of around 2.5 to 3%.
A 2.5% savings rate would be alarming at any time. If averaged throughout one’s career, it would take approximately 40 years of “savings” to equal one year of living expenses. It’s no wonder Social Security is quite literally a life-saver for many. Most Americans hit retirement age with shockingly low average retirement savings, after a lifetime of work.
But it’s particularly alarming to see personal savings rates this low right now, given that the last (and only) time it had previously reached these depths was just before the Great Recession, in 2008. And it’s even more alarming that it’s at these depths during a time when we just reached the highest median household income level in history.
In short, we’re making more money than at any point in recorded history, but we’re saving a smaller percentage of it than at any point in recorded history. That’s a problem.
The Short-Term Psychology Behind Personal Savings Rate
It’s hard to pinpoint exactly why this phenomenon is happening. Among other things, a few likely contributors to this overall downward trend in personal savings rate include:
the continuing rise of wasteful consumerism and bigger homes in our culture
companies are better at marketing, advertising, and separating our money from us than ever before
the ease of a swiping a card and paying it off later
housing prices are indexed near all-time highs
education costs and tuition debts are at all-time highs
health care costs are at all-time highs
But I think that there is one thing, more than any other, that explains this phenomenon: Americans have developed an extremely short-term focus on their finances.
In the graph above, take a look at what happened in early 2009, at the bleak depths of the Great Recession. Unemployment had skyrocketed to 10%, median household income was declining, and what happened to the personal savings rate? It tripled to 7.5%!!
The money was there to be saved and knowledge was there to do it, but it took the fear of another Great Depression to scare people into actually giving a damn about how much they were saving. The short-term focus was FEAR, and it scared a lot of people into improving their savings quite a bit, regardless of all those listed challenges.
Fast forward to 2018. We’ve seen job growth in every month since 2010, unemployment has been steadily dropping since 2010, we’re at a time of record high wages, and people are generally feeling good about the economy. So what are they doing? Spending, of course! Again – short-term focus.
Here’s the thing – it would be wise, very wise to do just the opposite in expansionary times.
It can be difficult, very difficult to raise your personal savings rate in a recession (and impossible if you lose your job). The easiest and most common sense time to do it is during times of economic expansion. Governments (wise ones) raise revenues and run surpluses in times of expansion, smart businesses stockpile profits. THEY prepare for rainy days, and YOU should too, by ratcheting up your personal savings rate.
After 9 years of economic expansion, the next recession could be right around the corner. Don’t wait until then to remember what it’s like to save.
Tax and economic policy is a key contributor to personal finance. And it’s important for us to know what kind of policy we’re helping enact when we vote – for our economic future and for our country’s future.
I’m a bit of an enigma when it comes to tax policy opinion. I’m a fiscal conservative in favor of progressive taxation. Irresponsible tax cuts that blow up deficits may win voter favor, but they will be passed on to present and future generations (including ours). That’s a real concern for me. As are effective tax rates that are lower for CEO’s than their secretaries or janitors. We’ve seen a major decline to historically low tax rates in the highest individual brackets and for corporations, and the end result has been massive budget deficits and a decline in desperately needed infrastructure, education, and other funding.
I wrote about the Republican tax plan in detail prior to its passing. The majority of what was in that article made it made it into the signed law, so I’ll just provide a short recap here of the main points before focusing on the early results. Additionally, there’s a lively discussion going on in my tax brackets and standard deductions article as some readers are starting to come to terms with the numbers.
Here are the basics of the tax plan:
The tax rate for large corporations was lowered from 35% to 21% – a drop of 40%. And the corporate alternative minimum tax was repealed.
A 20% deduction of qualified business income from certain pass-through businesses was created. Specific service industries, such as health, law, and professional services, are excluded from this deduction.
The individual tax rates decreased anywhere from 0% (in the lowest tax bracket) to 6.6% (in the highest tax bracket). The bottom 90% of income earners would see less than a 2% increase in after-tax income, while the top 10% of income earners would see an increase between 2% and 5%, on average. Middle-income taxpayers will see an average tax change of less than $1,000, while the top 1% will get a tax break of $51,140. It’s been projected that over 80% of the total tax cut benefits will go to the top 1% of income earners.
The standard deduction was almost doubled, but personal and dependent exemptions were eliminated.
On its face, this tax plan fails on who gets the bulk tax cuts (the highest income earners and corporations). That’s called “trickle down economics”. But it also fails from a fiscally conservative standpoint. It’s not revenue positive or even neutral. It will result in $1.8 trillion in new debt over the next 10 years and a massive decline in revenue from corporate taxation that will last indefinitely, (if not repealed by a future Congress).
The promise in the pitch to Americans was the trickle down. But is the plan actually trickling down to workers in the form of wage gains? The early results are not promising.
Shortly after the legislation passed, a number of companies announced $1,000 employee bonuses that now total more than $3 billion paid to workers. These bonuses (planned prior to or after the tax cut passed) were often attributed to the tax cut, and resulted in a flurry of positive PR for the plan. Give me an actual sustained wage increase over a one-time bonus any day, but any bonus is a good bonus, right?
Well, what hasn’t been in the news as much is where the rest of the corporate tax cuts are going. According to several estimates, corporations have already announced roughly $200 billion worth of stock buybacks this year – a dramatic increase over any previous full year. That’s a 67-to-1 ratio of stock buybacks versus worker gains.
Furthermore, 84% of corporate stock is owned by just 10% of Americans and the richest 1% own 40%. Why are corporations so fond of investing in stock buybacks versus workers? An analysis of the compensation of the 500 highest-paid executives found that stock-based gains accounted for 82% of their pay.
When it comes to the actual tax cut for workers, there was this infamous (now deleted) Paul Ryan tweet, celebrating the windfall that everyday Americans will enjoy from this plan:
$72 a year? Huh.
Oddly, the common defenses I’ve seen of this plan often follow some variation of this talking point.
“Every little bit helps.”
“Hey, it’s a little more money in my bank account.”
But this sentiment shows a lack of awareness of the bigger picture here. The thing is, this isn’t a free handout – you are being lent the cut from your future self. An apt analogy that I heard recently was,
“You go out for dinner with a wealthy acquaintance. “I’ll take care of everything,” he says, and orders you a hamburger. Then he orders himself an expensive steak and a bottle of wine, which he doesn’t share. And when the waiter comes with the check, he points at you and says, “Charge it to his credit card.””
Since this is not a revenue neutral tax plan, you’re not only going to have to pay back the pittance you’ll receive (with interest), but you’re also paying for the tax cut for the wealthy and corporations (who will most likely continue to pay lower effective tax rates than you in the future), with interest.
And in the meantime, the looming deficits will almost surely inspire the very same people who added to them when they voted for this tax plan to also call for Medicaid, Medicare, and Social Security cuts. So in addition to paying for yourself (with interest), your wealthy acquaintance, and his corporation, you could also see many of your essential benefits meet the axe.
Part of the insanity of all of this is that legitimate economists almost universally all believe that you should raise, not cut revenues, at times of full-employment and economic growth in order to cut budget deficits.
Yet here we are – building massive credit card debt, with a Costco membership in hand.
I considered titling this post “CD’s: Nuts to Hold on to Them”, but figured a few 90’s gangsta rap fan pop culture LOL’s weren’t worth the otherwise poor title. See – I’m cool and funny. Jokes aside, if you have a bunch of old compact discs laying around, collecting dust, I think you will be pleasantly surprised at how much they could potentially be worth, with a few selling tips. So let’s get started.
At one sad, girlfriend-less point in my life, almost 100% of my income went to pay for media – CD’s, video games, sports cards, and VHS tapes. And I grew quite the collection.
Over the years, the remnants of that media collection had dwindled, but a library of over 200 CD’s had survived. Today, with a growing appreciation for minimalism and the advent of streaming services joining a vast library of MP3’s that I’ve purchased over the years, I almost never muster the will to physically hunt down and take a CD with me anywhere anymore. So the collection has sat, unused, collecting dust, and taking up space – when it could be doing what it was created to do: delightfully reverberating in the ear drums of fine human beings who share a similar kickass taste in music as yours truly.
At first glance, selling your CD’s probably seems like a fruitless money-losing endeavor. For some unworldly reason, there are people on Amazon and EBay willingly selling CD’s for as low as $0.01 each. Note: I can’t fathom why this phenomenon exists – you could donate the CD’s and get far more than $0.01 each with a charitable tax deduction, without the hassle of shipping and having to pay for any packaging materials to ship.
However, even despite this market absurdity, I believe I’ve cracked the code on how to profitably sell off your CD collection, and do it in a relatively painless way. Here’s what I’ve discovered…
Step 1: Price Out the CD’s to See if you Have Any Rarities or High Value Titles
Do this by searching for the CD on Amazon and/or searching for sold and completed listings on EBay.
Surprisingly, within my CD collection, I found 3 CD’s valued at over $50 – far more than I paid for them. Two of the 3 were imports and the third was a limited edition collector that is no longer in production.
Additionally, I found 5 other CD’s with a value of $20 or more – all of which were no longer in production and from smaller labels. That’s $250 for just 8 titles, within my ~200 title collection.
Step 2: Sell the Rare/High Value CD’s Individually
In the CD world, I’d consider a CD that has a value of $5+ a rare/high value SKU. You’ll find that a lot of “greatest hits” albums sell for more than other titles (I assume because it is cheaper than buying MP3’s individually at ~$1 each). Sell these CD’s individually on EBay versus packaging them with others, as this is how you’ll get the best total value for these titles and your entire collection.
There is the matter of how to sell them. I’ve found that the best platform/method for selling CD’s is EBay, with 30-day “Buy it now” listings. If you sell less than 50 items per month on EBay, there are no insertion fees and total basic fees are 10% of the value of the sale. EBay even offers discounted USPS postage, which lowers the total cost of sale. ALWAYS ship “media mail”, as it will be cheaper than any other service. If selling 1 CD, I usually set the postage at a flat media mail rate of $3 and ship to the United States only.
Find out the average price these items have sold for recently, then list it at the average price.
Step 3: If 3+ Titles from 1 Artist, Bundle Them
Bundling by artist (minus the high value discussed prior) is the best way to unload your collection, for 3 reasons.
It’s a convenient way to sell through your collection quickly. Multiple titles lumped with 1 photo, 1 listing, less packaging and shipping.
It’s a more profitable way for you to sell.
It’s a cheaper and more convenient way for buyers to buy.
#2 and #3 are linked. If you’re a buyer, why not go and find a used CD on EBay or Amazon for $0.01 – $3 and buy it individually? Because the cost of shipping for each individual purchase (typically at a minimum of $3) adds up quickly. Instead, why not pay more for the CD’s, but spread your shipping cost across 3, 5, or more CD’s for an artist that you want to dig in on?
Selling in this manner to these informed buyers, I’ve averaged $3-$4 per CD and even banked a little bit of profit on the shipping, which can add up to a tidy little sum. If 3+ CD’s, I set the USPS media mail shipping at $5. I bump it up to $6 if 7+ CD’s. At these amounts, I almost always come out ahead on the shipping.
Step 4: “You Pick”
One clever way that I’ve seen sellers boost sales values is to create a list of all remaining albums they want to sell, by genre, and ask buyers to, for example, “Pick 4 for $10”, until their list dwindles to a few titles.
I sold quite a few this way before EBay took my listing down. I don’t remember what the policy justification was for doing so, but you may want to be aware they didn’t like it (my account was not suspended or anything like that). If you’re worried about that, you could try Craigslist or elsewhere.
Step 5: Bundle by Genre or Donate
To get rid of the remaining CD’s, you have a choice:
Option 1: bundle by all low value CD’s that you cannot bundle by artist by genre and sell them as a “lot”. For example – classic rock, hard rock, R&B, rap, indie, grunge, jazz, electronica, etc. Similar to how buyers might be exploring a particular artist, they might also be exploring an entire genre. Doing this, you can typically average $1 per CD. Not great, but better than nothing. And it keeps them out of the landfill. Even better, you can…
Option 2: Donate.
If you will still itemize your taxes in this new tax-reform world, you’re probably going to be better off financially by donating your remaining CD’s (and it just feels better). Make a list for your records.
And that’s it – follow these tips and watch the cash roll in. I’m in the mid-hundreds thus far – not bad! Please share your success stories and any other CD selling tips in the comments below!