Floods and the Tooth Fairy April 23, 2001January 26, 2017 FLOODS Rob, re floods: ‘This was a MONDAY kind of column, not a FRIDAY kind of column! But thanks for not blaming the Republicans for hurricanes.’ ☞ Global warming is currently considered a wash in its expected effect on hurricanes, Bryan tells me. Chuck Smith: ‘According to my State Farm agent, flood insurance does NOT cover water damage caused by a tropical occurrence. Damage in this case would be covered by the windstorm policy which, in Florida, may be issued by the Florida Windstorm Underwriting Association in certain areas.’ ☞ Ah, the FWUA. I know it well – and should have been less generic Friday. I believe what usually happens after a hurricane is a lot of wrangling between flood insurers and windstorm insurers, and, yes, you need both. THE TOOTH FAIRY Some of you helped with my story in yesterday’s PARADE – ‘Teach Your Child to be Smart about Money.’ Thank you! Unfortunately, almost all your wonderful stories were left on the cutting room floor. I hope I may have a chance to use them elsewhere someday. In the meantime, six of my favorites: Mike Hanlon: ‘When our younger son, Tim, was 8, he still got visits from the Tooth Fairy. He’d put the tooth under his pillow, and when he was asleep my wife would roll up a dollar bill, tie it with gold thread, sneak into his room when he was asleep and replace the tooth with the money. One day Tim lost a tooth and had another that was very loose. He put the lost tooth under his pillow when he went to bed, but when my wife tried to exchange the money for the tooth, she also found this note: Dear Tooth Fairy, If I can get more money by giving you two teeth at once, please don’t take this one yet. Love, Tim ‘My wife decided the Tooth Fairy doesn’t give multiple-tooth bonuses, and left the dollar. Tim never mentioned the note or the response to us – but I think he may be headed for a career in finance.’ Marian Calabro: ‘Best thing my parents ever ‘taught’ me about money was by this example: They never spent a dime they didn’t have. So I’ve never spent a dime I didn’t have, unless you count the mortgage (paid off last August, hooray). This valuable lesson has helped me survive and even thrive as a full-time freelancer writer for half my career. There’s a certain security in being debt-free that is very satisfying.’ Vicki Walters: ‘My wonderful but spontaneous parents taught me that, unless you do a little planning and saving, when the money runs out, you will have people from the bank show up at your house one day (as they did at ours when I was in the fifth grade) and walk around appraising everything you own. A really sad moment for my parents and all of us kids. I am happy to say that Mother and Daddy did finally recover and eventually (over years) paid off all of their debts without going bankrupt – a real point of pride for my father. So I would say that they taught me to always have an emergency fund and to not live beyond your means and to be responsible for your debts. They also taught us to tithe and share our good fortune (they weren’t always broke – when they had money, they gave generously). I can remember collecting for UNICEF on Halloween and being exasperated with Mother for signing us up for this. But now I understand and am so proud that she gave us the gift of a social conscience. While my tithing goes to environmental and women’s rights groups instead of the church, I still can’t feel good about myself unless I make those donations. And, lastly, being the child of my parents, I think that sometimes you just have to spend some money to have a wonderful time – my husband and I just put the deposit down on a cruise to Alaska and I can hardly wait.’ Vine Crandall: ‘I was lucky. When in First Grade or so, in the early 1950s, I was fascinated with Scrooge McDuck and his roomful of money, which I always envied. My parents pointed out that if I saved all the bits of cash relatives gave me, that would be a good start. Then they introduced me to the stock market, and we first bought 5 shares of Pepsi Cola, which I was then swilling, followed by 5 shares of Corning Glass, which was only 40 miles away and could be visited. That prompted me to start following prices in the Wall Street Journal, which led to actually reading an occasional article. I still don’t have the room full of money, but do still have the Corning (now 120 shares) and a few other issues which enable me to keep the wolf from the door without gainful employment. Executive summary: find some way to catch their interest early, teach them about compounding, and set an example of living within your means in the first place.’ Robert Merrill: ‘My father offered to pay me $1000 on my 21st birthday if I did not start smoking cigarettes before that day. As a ten year old, that seemed like a fortune and something I wanted. It was truly motivating. Unfortunately he died before then but I have never started and was never tempted (the smell was bad enough)! Even before I was 21 though, I saw the real value of his offer and stopped caring about the money. Neither of my parents was very disciplined financially but I feel like that was his best ‘investment’ ever. I have, of course, saved thousands of dollars as well as my health. I just found out that my mother has lung cancer from her 50 years of smoking. I’m not sure how I became such a saver but that trait will serve me well to help her pick up what Medicare doesn’t.’ Dan Nachbar: ‘Allowance isn’t pay. Don’t link allowance to specific tasks. Work around the house is a responsibility. An allowance is a privilege. Give an allowance once a month rather than once a week. The dollar amounts will be higher, and lessons on managing your cash more real.’
Are You Ready for the Flood? April 20, 2001March 25, 2012 It’s always fun to talk with my friend Bryan Norcross when he comes back from a hurricane conference. (Bryan is the guy widely credited with minimizing the loss of life and property damage from Hurricane Andrew – NBC even made a TV movie of his story.) It seems, there are a few places you really don’t want to live if a hurricane is headed your way. You think you’re OK living in Manhattan? Read on. But let’s start with New Orleans, the worst of them. New Orleans sits 13 feet below sea level, with a huge levee around it, so that the city is like a dry soup bowl. Dry, that is, until a serious hurricane, driving massive volumes of storm surge over the levee, hits dead on and fills it up. Even after the storm, there’d be the small problem of draining the bowl so those who survived could come down off their roofs and out of the trees. Imagine a night or two spent in complete darkness on top of your roof, with nothing but snakes and insects to keep you company. The city’s massive pumps, if they could all be made to operate, could drain the bowl – more than 13 feet deep, because of course the lip of the bowl, the levee, is purposely built higher than sea level – at the rate of about half an inch an hour. So it would take a mere three weeks or so, in optimal conditions, to get rid of the water . . . beginning, I suppose, only after you dynamited the levee, so that the extra water, now trapped inside the levee, could rush back out to a once-again tranquil sea. And what if everything isn’t working optimally? We are talking about a pretty massive catastrophe. Let’s hope it’s 50 hurricane seasons, rather than this next one, before – as is bound to happen sooner or later – it hits. Then there’s South Florida. Broward County (Ft. Lauderdale), for example, had a population of 14,000 in 1926, I think Bryan told me, versus 1.6 million today. And New York? If a hurricane identical to the one that hit in 1938 were to hit again this summer, Long Island would be toast. (Very soggy, salty toast.) Nor would many of its 2 million residents evacuate. You try persuading some guy out on a languid, sunny beach, after working hard all week and fighting traffic to get out there – you try to persuade him to pack up, turn around and go home, just because there’s a hurricane down around Daytona Beach, Florida, that could be headed north. Not gonna happen! He’s not gonna go. Yet do you know how long it took the 1938 hurricane to get from Daytona Beach to New York? About 24 hours. Even if everyone would evacuate, how would you get 2 million people off Long Island in 24 hours? And of course, most of the time, the hurricanes around Daytona don’t hit Long Island, or aren’t fifty-year type storms – so the guy who didn’t evacuate had a nice sunny weekend after all, and feels even less inclined to evacuate the next time there’s a scare. Plus, he could always go to a shelter or a Home Depot or something. (Big boxy flat-roofed buildings don’t do well in hurricanes.) Yet most of the buildings on Long Island, Bryan tells me, were not built to withstand a hurricane. I’ll get to Manhattan in a minute, and a link to a map. But what, exactly, can reasonable people living along the hurricane coast do? Well, be certain their flood insurance is paid up. And maybe think twice before spending a lot of money on an asset in a high-risk zone, especially to the extent it can’t be fully insured. And take the hurricane warnings and evacuation notices seriously, even though most of the time they’ll be false alarms. That one unpredictable time it isn’t, you could, well, die. (‘Can’t you just tread water for a few hours?’ I asked, naively. Charles and I have a place on the edge of the dune. ‘It’s possible,’ Bryan said, ‘but when the storm surge comes in, the force of those millions of tons of water rushing at you at 25 miles an hour is murderous.’ And hard, blunt, things are flying around and slamming into you. Bryan displays a photo of a large palm tree, perhaps two feet thick at its cement-like core. Sticking all the way through that cement-like core – like an arrow throw a cowboy – is a six-foot piece of wood that must have been flying through the air at more than 100 miles an hour.) Everybody should have one of those no-batteries-needed radio-cum-flashlights you can operate by cranking the little dynamo generator. If you live anywhere you could lose power – California comes to mind – you might want one in each room. This one lacks the hand-crank generator but would work until you ran out of batteries. This one isn’t cheap, but it runs on batteries, stores solar power, or, if need be, runs forever with nothing but your hand cranking its generator. Here’s another kind for half the price. A large inflatable raft couldn’t hurt, either. (Look at the poor folks along the banks of the Mississippi this month.) So what could happen in Manhattan? ‘A hurricane that comes up the coast and pushes water into New York Harbor would take out the financial center of the world,’ Bryan explains. It would flood lower Manhattan, flood the tunnels in and out of New York, flood the subways – they would become submarine ways – and wreck the underground power and communications systems. Have I mentioned buying tuna fish in bulk, lately? To see how you might fare in your neck of the woods, from Texas to New England, click here.
Are You Ready for a Heart Attack? April 19, 2001February 19, 2017 Sorry this was posted late. The dog ate my computer. This is the web site that gets you free Handspring Visors, suggests stocks that sometimes go up (generally, the ones I am short), inspires conservatives to be even more compassionate, and offers time-saving recipes for Cooking Like A Guy™. How to top all that? Well, by saving your life. This has been going around the Internet, attributed to a newsletter from one of the chapters of an organization called Mended Hearts. Let’s say it’s 6:15 p.m. and you’re driving home alone after an unusually hard day on the job. You’re really tired, upset and frustrated. Suddenly you start experiencing severe pain in your chest that starts to radiate out into your arm and up into your jaw. You are only about five miles from the hospital nearest your home, unfortunately you don’t know if you’ll be able to make it that far. What can you do? You’ve been trained in CPR but the guy that taught the course neglected to tell you how to perform it on yourself. HOW TO SURVIVE A HEART ATTACK WHEN ALONE Since many people are alone when they suffer a heart attack, this article seemed in order. Without help, the person whose heart stops beating properly and who begins to feel faint, has only about 10 seconds left before losing consciousness. However, these victims can help themselves by coughing repeatedly and very vigorously. A deep breath should be taken before each cough, and the cough must be deep and prolonged, as when producing sputum from deep inside the chest. A breath and a cough must be repeated about every two seconds without let up until help arrives, or until the heart is beating normally again. Deep breaths get oxygen into the lungs and coughing movements squeeze the heart and keep the blood circulating. The squeezing pressure on the heart also helps it regain normal rhythm. In this way, heart attack victims can get to a hospital. Tell as many other people as possible about this, it could save their lives! — From Health Cares, Rochester General Hospital via Chapter 240’s newsletter So I went to Mended Hearts, just to be sure to give them proper credit, and found this: “How to Survive a Heart Attack When Alone” was initially published in a local chapter newsletter, without first verifying a medical source. The American Heart Association does not endorse the coughing procedure, and does not teach this as part of the core curriculum in any course. This procedure has been used in a medical setting (not related to heart attacks) with physicians available to diagnose the specific problem, and to instruct the patient how to cough. Therefore, it is not a recommended procedure for the general public. We encourage the public to call 911 in the event of an emergency. I’ve considered this seemingly contradictory advice and come to the following conclusion: quit smoking, eat smart, exercise, and don’t let the stress get to you. Tomorrow: Are You Ready for a Flood?
Gunning for a Tax Cut April 18, 2001February 19, 2017 ‘Where one party rules, tyranny follows.’ – Alan Gottlieb, Chairman, Citizens Committee for the Right to Keep and Bear Arms ☞ The context of this statement was a fundraising letter to New Yorkers. ‘It’s up to you to save the gun rights of every New Yorker,’ it began. ‘After 28 years as Chairman of the Citizens Committee for the Right to Keep and Bear Arms,’ he was ‘scared to death’ when ‘the anti-gun Democrats seized nearly every statewide office’ in New York (well, not the governorship). The latest threat? ‘A Democrat Assembly bill forcing you to buy and install trigger locks on your handguns and rifles so that they can’t be used when needed for protection.’ (That’s exactly the goal of the trigger locks, I’m sure – not to reduce accidents, but to render you powerless the next time in the course of city living you would normally fire your rifle at someone.) ‘As you can see,’ Gottlieb writes, ‘NEW YORK IS IN A GUN CONTROL CRISIS!‘ Of course, all I could think of when I read this letter – “Where one party rules, tyranny follows” – is that one party controls the House, the Senate, the White House and, saddest of all, the Supreme Court. I don’t think tyranny will follow; I think you’ll all send me checks for the Democratic National Committee and we’ll restore some checks and balances in 2002. “The Bushes’ tax cuts have bankrupted Texas and Florida. Is the country next?” — The New Republic cover line, April 2, 2001 ☞ This is really interesting. Floridians, of whom I am one, pay no income tax. We do have an annoying “intangible property tax,” which is two-tenths of one percent of your stocks and bonds, basically — $2,000 for every million you’ve got (but not, if I remember right, cash or retirement plan assets or Treasuries or Florida municipals). Of course, this only applies to rich folks – someone with essentially no wealth pays no tax. (There is even an exemption for the first $20,000 or so.) And for rich folks, it means that instead of growing their wealth at, say 6.8% a year, they might grow it at 6.6%. Still beats the pants off having to pay an income tax (or having to be poor). I was happy to see that Jeb Bush, my governor, cut my tax in half this year, from two-tenths of one percent to one-tenth. But as I was enjoying this Bushian windfall for the rich, I was wondering: Do I actually need this tax break? No. Is Florida running a surplus? No. Might it be more fair to cut the sales tax a bit, which everybody pays, rather than halve taxes on the rich? Yes. Is the Republican Party not extraordinary in its success at getting elected by a majority (or a near-majority) when it is so focused on improving the lot of a few? Yes. “The problem with making a large tax cut our nation’s top priority, rather than saving Social Security first, is that it may be far more difficult to save Social Security later.” – Clinton national economic advisor Gene Sperling writing in the New York Times, March 21, 2001 Few things are as important to the president, or his brother, as tax cuts for the wealthy. “President Bush’s budget . . . raises the prospect not merely of mainly benefiting those already at the top of the income heap but also of doing so directly at the poor’s expense.” —Washington Post editorial 4/17/01 (“A Squeeze on the Poor”) ☞ Well, the money’s got to come from somewhere.
A House of Cards — and a Plain Old House April 17, 2001February 19, 2017 Chuck Smith: ‘A friend asked me today about ‘Tri-West Investment Club.’ The idea is you give them $1,000 (minimum) for a year and they start paying you 10% a MONTH! And you get a bonus for referring people. With the bonuses, my friend’s friend made a $2,000 return on a $1,000 investment in one year. They claim to invest it in bank debentures. Sounds like a pyramid scheme to me.’ ☞ And to me. A classic Ponzi scheme, in which the funds of new investors (not any actual investment activity) are used to pay old investors. A house of cards. It will end badly. Josh: ‘We are in the position to sell our house and net about $250,000. We want to buy another house at approximately $250,000. Should we do an all cash deal or put a sizable down payment (40, 50, 60%) and invest the rest? And if so where do we invest? We are in our late thirties with two kids entering school.’ ☞ Buying your new house for all cash is a wonderfully conservative thing to do, and will leave you that much more for saving that otherwise would have gone to the mortgage (and ‘points’ at closing). It’s also good for your peace of mind, and leaves you plenty of borrowing power for a home equity loan, should you ever need one. If you have the opportunity to get, say, a 7% fixed rate mortgage, then NOT getting one is the same as investing your money in a completely safe 7% bond. Right? Not having to pay 7% interest is like earning 7% interest. The questions are, first, what is your true cost of borrowing, after taking the mortgage interest deduction on your taxes? If you were, for example, in the 40% bracket, between federal and local income tax, then your true cost of borrowing (not counting fees) is 7% less 40% – 4.2%. What if you could turn around and invest $200K in a completely safe “general obligation” municipal bond issued within your state that paid you 5% tax-free? In theory, you’d be making a small profit on the difference between your 4.2% cost of borrowing and the 5% you were earning after tax. (The IRS doesn’t allow you to deduct interest on money borrowed to buy tax-free bonds. But especially if the two transactions weren’t closely linked, you could certainly deduct interest on money borrowed to buy a house – even if that did leave you free to invest some of your cash in tax-free bonds.) I wouldn’t advise this, because the difference is small, and, well, just not worth enough (in my mind) to forgo the pleasure of owning your home free and clear. Nor would I rush to put much of the money into the stock market, on the assumption you will easily outperform that 4.2% after-tax cost of borrowing. You should fully fund your 401(k)’s, etc., and a Roth IRA if you qualify for one. If that pinches too much and you need a mortgage, so be it. Plus, if you’re really confident as an investor and business person, and know the risks, then of course you can throw this advice out the window – 4.2% after tax is a low rate, and, over the long-run, many smart people could do nicely borrowing at that rate and using the proceeds to invest in something else. Or open a Wendy’s – all manner of things. But a lot of people who try their hands at these things LOSE THEIR MONEY. So I wouldn’t rush into anything at all. One day, there might be a compelling reason to borrow against the house. But until there is, enjoy your prudent good fortune. Reminder: Free advice is worth what you pay for it.
Credit Card Reflux; Reagonomics Redux April 16, 2001February 19, 2017 Dan Flikkema: Re: its taking an hour to eat a meal and 39 years to pay it off, if your credit card charges 19.8% interest and you pay just the minimum each month . . . ‘Actually I come up with 501 months to pay off the $3,000 credit balance — 41.75 years. If you were ever late or missed a payment, it would quickly increase to 45 years. But hey, 39 or 41 or 45 years, I suppose your point would really be the same wouldn’t it? My no-annual-fee Visa card works the opposite way (Wells Fargo 1-800-642-4720). Instead of paying interest (I pay the balance in full each month), I get 1% cash back. This month, I will get roughly $300. Wow, that means I spent over 30,000 on my credit card last year! What did I buy? Now I’m depressed again. I need to cut back.’ Bob Eatho: Re: our racking up $4 trillion in debt during the Reagan/Bush years, the last time we tried a massive tax cut for the rich . . . ‘Yeah . . . Darn that Reagan/Bush era. Let’s return to the Carter era where the economy was a mess, and inflation was a whopping 17%. Give me a break!!!!!!!!!!’ ☞ Why go back to the Carter era? What’s wrong with sticking with the Clinton era? We had the best economy in history. We found a balance that seemed to work just great. Under this balance, the top 1% – despite their hiked tax bracket – found their after-tax income increasing way faster than everyone else’s . . . which is fine with me, being in that top 1%. But need we tilt the balance further in the favor of the top 1%? Under Carter, the top federal tax bracket was 70%. Likewise, under Ford, Nixon, LBJ, and Kennedy. Way too high! Crazy! (Not to mention poor old Ike, who gave us a 90% bracket.) But the current 39.6%? I’m not saying it’s fun to pay taxes, or that it’s easy to rack up after-tax wealth with a tax burden like that. (Once you do rack up some wealth, you can put it to work at a substantially lower capital gains rate, or at a zero municipal bond rate.) But I am saying that the top 1%, and most of the rest of America, have done great with the current balance. Why mess with it? We seem now all but certainly headed toward a huge shift of wealth in favor of the top 1%. The Republicans are geniuses at getting the rest of America to go along with that at the expense of things like a prescription drug benefit for seniors, money to renovate dilapidated old schools, incentives to develop and deploy sources of alternative energy, or, simply, a faster pay down of the national debt. (I know some of you are worried we’ll pay it down too fast. Fat chance. But if that problem ever did present itself, that might be the time to enact a massive tax cut for the top 1%.) How do they do it? Tomorrow: A House of Cards – and a Plain Old House
Malcolm in the Middle, Florida in a Muddle April 13, 2001February 19, 2017 How is a great TV show like a great stock? Well, with a stock that’s done really well, you worry that by the time you recommend it to a friend it may be too late. So it goes with ‘Malcolm in the Middle,’ Sundays on Fox. Yes, ‘The West Wing’ is still the best thing on television, both for its entertainment value and because it – astonishingly – teaches so much and makes us better citizens. But ‘Malcolm’ is a close second. It, too, is brilliantly written – the last two episodes especially. (Did you see the one where they take two of the kids bowling? Genius!) I’m just terrified that the first time YOU decide to watch it, you’ll get an episode that somehow fails to engage your interest . . . you’ll not make the small investment required to get to know and like the characters. But I’ve got to chance it, because ‘Malcolm’ deserves all the praise it can get. This Sunday, Fox is showing two episodes, one at 8:30, one at 9:30. And this summer you can maybe catch up with reruns. If you ever get to see the bowling one – or last week’s episode where Dewey becomes germ-phobic – well, I just think you will be grinning from ear to ear. (Same with the Simpsons. First time I watched, 100 years ago, I couldn’t imagine what everyone saw in it. Indeed, I could barely make out what the characters were saying. Ah, but once I caught on!) And now on to the X-rated portion of our entertainment, starting with this, from Wednesday’s Miami Herald. A group that wants to overturn Broward County’s [ordinance that bans discrimination based on sexual orientation] has raised $14,299, while a group that supports the ordinance has collected $485, according to reports filed this week with the supervisor of elections. . . Among the donors: Janet Folger of the Center for Reclaiming America, a national political organization based at Coral Ridge Presbyterian Church; Jean Hansen, former chairwoman of the Broward Republican Party; and Ken Jennings, Republican candidate for the Florida Senate last year. The group has spent $6,632 so far. Its largest expenses — two checks for $2,500 — went to Executive Director Joel Hawksley. He resigned Monday following disclosures in The Herald that he was charged in 1999 with sexually abusing a 15-year-old girl in Maryland. The case never went to trial. If you wonder why some people work so hard to deny gays and lesbians the same protections, real and symbolic, that other once-despised groups already enjoy – let alone tangible things like domestic-partner health care benefits or the right of a spouse to inherit tax-free – you could read this from the previous day’s Tampa Tribune: Gay students lobbying for discrimination protection in Florida schools got a jolting civics lesson Monday from a lawmaker who welcomed them into his office only to declare: “God … is going to destroy you.” . . . After listening patiently for 10 minutes as the students made their pitch, Trovillion, a conservative lawmaker representing the Orlando suburbs, told them flatly: “You’re throwing your life away.” . . . The meeting left 17-year-old Chris Vasquez in tears. Vasquez, an honors student and editor in chief of Edgewater High School’s campus newspaper, thanked Trovillion for his time but was stunned as he left the lawmaker’s office. “The Florida Legislature says we’re going to hell,” he said.
Dinner Out: An Hour to Eat It, 39 Years to Pay It Off April 12, 2001February 19, 2017 ‘If you have a $3,000 credit card balance at 19.8% interest . . . and you pay the required minimum balance of 2% of the balance or $15, whichever is greater . . . it will take 39 years to pay off the loan. And you will pay more than $10,000 in interest charges.’ – ‘Cleveland Saves’ brochure ☞ C’mon people – if you’re among the 60% or so of credit card holders who pay interest, cut it out! How DARE they! WHAT SOME ARE SAYING ABOUT US ABROAD Click here.
A Good Year to Convert to a Roth IRA? April 11, 2001February 19, 2017 You want to know what I think of the budget and the tax cut? I think they are terrible. It’s just nuts to give a huge tax cut to the top 1% or 2% when, under the current structure, they were already dramatically outpacing everyone else after-tax. Let’s use most of that money to pay down the debt. Yes, the surplus is ‘our money!’ but so is the $5 trillion National Debt ‘our debt’ – about $4 trillion of it racked up under Reagan/Bush, the last time we tried a huge tax cut for the rich. Why don’t we take the prudent course and first do the stuff we know needs doing, like paying down the debt and keeping cops on the street and providing a prescription drug benefit, and then, if we’re still rolling in it, turn our attention to cutting taxes for those in the top 2%? For shame! Blood pressure falling . . . back . . . to normal. OK. Now: With a Roth IRA, you get no tax-deduction for the money you contribute . . . but neither do you pay any tax on the money you withdraw. (There’s also less paperwork and more flexibility.) As a result, many people have toyed with the notion of converting their traditional IRAs to Roth IRAs. It often makes sense. (The scenario in which it would not is if you are in a high tax bracket now, and expect to be in a very low one as you withdraw the money. I say: fat chance. But if you did expect to be in a very low tax bracket as you withdrew the money, the tax benefit of the Roth IRA would be correspondingly low, and would probably not justify giving up today’s tax deduction.) You don’t have to convert by any special deadline. But if you were thinking of converting, this could well be a better time to do it than, say, this time last year. For two reasons: First, your IRA may have shrunk in value with the stock market. If so, there will be less money to convert and, thus, less tax to pay on the conversion. Later, when it bounces back, all that bounce-back will be free of tax. Second, it looks as if tax brackets themselves are likely to come down this year – so the tax you’ll owe may be lower still. Of course, if the bear market has further to run, as it probably does, you might want to wait still longer to convert. And if some of the drop in tax brackets winds up being phased in over time, that, too, would be a reason to wait. But clearly, this year would be a better time for most to convert than last year – even if it proves not to be as good as, say, next year. (You could always waffle, converting some now and – if the value of your traditional IRA falls further – the rest later.) For Vanguard’s worksheet on Roth IRA eligibility and conversion, click here. And don’t forget that the deadline for contributing this year to either kind of IRA (as opposed to converting, for which there is no deadline) is Monday. (Monday – oy! — is also the deadline for filing YOUR TAXES! Or at least your Form 4868.)
Free Stuff April 10, 2001February 19, 2017 John Dicks: ‘Regarding the recent comment on the Handspring Visor through CSFB Direct (then DLJ Direct) — I, too, opened the account and got the Visor (and never used it and subsequently got rid of — it makes a good gift). Anyway, I noticed that the rate paid on the money market account averaged about 2.75%. I’ve closed the account, but certainly see how they could afford to give away the Visor!’ ☞ That 2.75% put you about 30% ahead of most folks in the same time period – coulda been worse! (And seriously, by giving up 2% for 6 months versus something safe-but-higher-yielding, you gave up about $50 on $5,000. Not too bad for a Handspring Visor.) Michael Young: ‘Based on their handling of my ‘free Handspring Visor’ account last year, I would never do business with DLJ Direct again. After opening my account, I expected to receive instructions on how to fund my account, but I never did, so I had to call to find out. {Of all the things associated with opening an account, you’d think this is the one they’d make an effort to get right!) While I was on the phone, I asked whether I’d still be eligible for the free Visor. There was no indication I’d signed up through a promotion – their web page was having troubles, they said – but they promised that they’d put in the promotion code. Several weeks passed, so I called to make sure the promotion code got entered after all. Of course, it had not. More promises. It took three more calls before it actually shipped (and then two more to FedEx, who found a wonderfully creative place to hide the box). Nice gadget, though. I might even buy some add-ons.’ Gary Krager points us to a free Palm m100 when you open a Citibank checking account with $2,500 or more. And how about a little free cash? Allan Tanner, from Wichita, directs us to an online offer from TD Waterhouse. ‘If one opens a brokerage account or even a bank account (they have a bank, too) with at least $1,000, they will add $100 to it. Sounds like a good deal to me. Even if you earned nothing else on the $1,000, as I figure it, you’d be getting a 20% return for those six months.’ ☞ In percentage terms, the return on investment is indeed awesome. If only they’d let you do it with bigger money – say a $2,500 gift for keeping $25,000 on deposit for six months. Ah, well.