Andy Day: No Columns Feb 29 or 30 February 28, 2002January 25, 2017 But I need one for today, so here goes: CORRECTION Judy’s comment on UGMA‘s yesterday was not entirely correct. If you read it before I fixed it, you might want to go back and see where it was misleading. BUYING A HOUSE M. Farbiarz: ‘I want to buy a house in three years, and have my money divided into two little sections. One section is money I’m *saving* for the house downpayment—that’s in a money market account. And the other section is the excess—money I don’t think I’ll need for the downpayment that I’m *investing.* Should some of that invested money be in an REIT? The idea is that if the value of houses zooms up in the next few years, I may find that my savings is too small for a downpayment. But then I’ll be able to dip into my REIT—which should go up in value along with housing prices. Andrew, does this make sense? And while we’re at it, why do you never mention REITs?’ ☞ Interesting idea. I like it. I do mention REITs from time to time, but apparently not enough. Of course, there are many different kinds of REITs, of differing risks and rewards, so do your homework and pick one you think fits your plan. (No, I don’t know which.) HOW DO YOU SELL SHORT? Matvey Shindel: ‘I’ve never held any short positions (and am not about to), but how does it practically work? Do you have to have cash in your brokerage account when buying or holding a ‘short’? How did the short sellers of Enron, for example, liquidated their shorts after Enron declared bankruptcy? What happens if the shorted stock is no longer traded?’ ☞ First off, you don’t WANT to liquidate your short sale, because when you do, short-term capital gains tax is due. In an ideal world, you’d stay short forever, never paying the tax. Once the security completely disappears and becomes worthless, you have to declare the loss and pay the tax. So the best short is the high-flier that falls back to earth but never entirely flattens. All this said, I’m glad you’re not about to short anything: shorting is very, very dangerous. And the odds are against you: You PAY the dividend, if any, rather than getting it. You pay a commission to do the short sale, of course, and another if you cover your short. You pay a high tax on any winnings, no matter how many years you held the short. (There is no such thing as a long-term capital gain on a short sale, since you never owned the asset for even a second, let alone a year and a day. Someone else owned the asset in a margin account and, unbeknownst to him or her, loaned ti to you. If he or she sold it along the way, your broker would ordinarily, though not always, manage to find someone else to lend the shares, and you wouldn’t even know it had happened.). And if the stock goes up to irrational heights before it crashes (if it ever does crash), you may well not have the nerve – or the collateral – to maintain your position. Instead, YOU will be the person who, in finally covering his short sale with a huge loss, buys at the very, very top. (Most often, that’s who’s paying those crazy, tippy-top prices: not people who want the stock, but short-sellers desperate to cover their losses and get out so they can . . . finally . . . get a night’s sleep.)
UGMA, Ugh and TiVo February 27, 2002January 25, 2017 Thanks for the several kind responses to yesterday’s column, including those of you who noted that this page is, after all, free. Irony of ironies, I am sorry to report – talk about awkward timing! – that just prior to receiving all those nice messages I had initiated a price hike, too late to recall, that will take effect at the end of the month. Starting March 1, the price of this column doubles. MORE UGMA Judy: ‘Re: Transferring UGMAs to 529 Plans – Everything you wrote is correct. BUT, one thing people should be aware of (and probably will be made aware of if it is coded as an “UGMA 529 Plan” is that money contributed to an UGMA or UTMA account is an IRREVOCABLE GIFT. Since 529 plans let you transfer money from one beneficiary to another (a nice benefit) you have to make sure you don’t do this if the money started as an UGMA. Let’s say you have 2 kids, John and Mary. You set up UGMAs for both of them with $10,000. Then you transfer them to a 529/UGMA Plan for each. John gets accepted at West Point. Fantastic – no tuition! So you think “No problem, I’ll just transfer the balance of John’s plan to Mary since he won’t need it. And a good thing, too, since Mary got into Harvard and I’m going to need every penny to pay for that!” Well, you can’t do this. The UGMA funds for John were an irrevocable gift to him. And 529 plan money has to be used for education. So let’s hope John goes to grad school.’ ☞ Well, not exactly. Less tells me that an UGMA/UTMA or child ownership of the 529 plan simply means the parent/custodian cannot transfer the funds away from the child. But once John reaches the age of majority, HE can change the beneficiary from himself to his beloved sister. Also, 529 rules allow the distribution of funds without penalty to the extent someone qualifies for a scholarship. John can take a distribution, pay regular income taxes on the 529 earnings (which he would have had to do had the money been left in an UGMA), and have no penalty on any of the distribution. No grad school required. JUST PLAIN UGH Jay Fratz: ‘You’re so obviously pandering for some future candidacy. What are you running for?’ ☞ I would never DREAM of running for office, and am grateful for those who have the energy and courage and public spirit to do so (at least those, on both sides of the aisle, with good motives, which I believe is most of them). But me? Never, ever, ever, EVER. TIVO/REPLAY Bill Spencer: ‘So you’re a Tivo fan. Last year I decided that the idea of a hard disk VCR made sense for me and I started to shop. I determined that the MSRP for ReplayTV was about $200 higher than Tivo, but the programming services for ReplayTV are free instead of Tivo’s monthly or lifetime fee. Then I walked into Circuit City and saw that they were selling a 30-hour Tivo for $300, and a 30-hour ReplayTV for $400. BUT, the ReplayTV came with a mail-in rebate for $100, making the units equal in price. I snapped up the ReplayTV and have had no problems with it since.’ Rick Mayhew: ‘Your ‘TiVo’ is actually either a Sony or a Philips unit. TiVo is the software. Did you buy both models, or just one? Which model is causing you the problem — Sony or Philips, or both?’ ☞ Philips. Lots of problems, which is doubly annoying because I have become so dependent on TiVo. Imagine having no telephone or refrigerator. OK, well, not THAT dependent. But just one order of magnitude less. I’ve been trading calls with TiVo hoping I might actually be able to get them to give us all a better deal when it comes to equipment problems. On the admittedly slim chance anything comes of it, I’ll let you know.
Demystifying . . . Something? February 26, 2002February 21, 2017 Friday’s column about Arianna Huffington’s AmeriCorps conversion and David Brock’s new book elicited a fair amount of comment. Geoff Arthur: ‘Years ago, I used to really enjoy reading you. However, your column has become less and less finance related. You seem to be entirely focused on politics (which I find incredibly boring). So I regret to say that I am removing your site from my ‘favorites’ list. You really ought to change the title of your column. Best of luck.’ ☞ Sorry to lose you. You are certainly right that I should change the title of the column, but that’s a part of the web site I have no idea how to manipulate. Readers: Got any suggestions as to what I should call it? If you come up with a good one, maybe I’ll try harder to get it done. But you know, politics and your money can be tightly related. And because democracy requires politics, if everyone were bored by politics and policy it would be profoundly . . . bearish. John Mahoney: ‘I’m sure you were mistaken when you stated that the reason for the drop in the surplus was the tax cut. Surely you realize that it was the result of the slowing of the economy and the resultant drop in tax revenue.’ ☞ The column referred to the LONG-TERM surplus. (‘Don’t for a minute think the long-term surplus disappeared because of the War on Terrorism, which costs little more than $1 billion a month. It disappeared primarily because we enacted a massive tax cut for the top 1% of taxpayers.’) You will recall that candidate and then President Bush promised us plenty of long-term surplus even allowing for the recession he expected. No need to wait to cut taxes for the top 1% until we knew we could afford it – it was fine, we were told, to enact tax cuts for the next decade right away. We’d still have plenty of money for a prescription drug benefit for seniors, we were told . . . we would certainly not have to dip into the Social Security surplus . . . we would definitely have the resources needed to bolster the military. In short, we were told, we could do it all. Remember? All that was after the dot-com bubble burst, not before. It didn’t seem to add up during the campaign, it didn’t seem to add up while it was being debated in Congress, and in fact – surprise, surprise – it hasn’t added up. Robert Johnston: ‘While you are big on intellectual honesty for everyone you seem to give yourself a bye when convenient – you have to know that the effect of the ‘tax cut for the 1%’ has not begun – do try to take a longer view, even when it doesn’t suit your purposes.’ ☞ Same point as above. Mark Gorman: ‘Your analysis of the changes in the political landscape rings true. The Republican party has shifted so far to the right that I (who voted for Reagan, Bush the elder, and Bob Dole) voted for Al Gore in the last election. What is striking is that so many people in the lower and middle classes vote Republican when it is clearly against their own economic self-interest.’ Tomorrow: What Should You Put in Your Roth, Versus Your Traditional, IRA?
UGMA – and Enron February 25, 2002February 21, 2017 Tomorrow: Your responses to Friday’s column. But today . . . ENRON: WHOSE FAULT WAS IT ANYWAY? Here’s an interesting piece from the Charlotte World. Yes, it concedes, greed contributed to the Enron mess. But the corrupting influence of gays and lesbians was a major contributing factor as well. ‘Not incidentally,’ reports the World, ‘all of the ‘Big Five’ accounting firms, including Arthur Andersen, now offer same-sex benefits.’ UGMA, UGMA! It is, I feel sure, the original caveman rallying cry. (I base this information on nothing but primal instinct.) You want more food? UGMA! UGMA! Your team is winning the Flintstone Olympics? UGMA! UGMA! A pretty cavewoman passes by? UGMA! UGMA! (Cavewomen would have had an entirely different cry, heavier on the treble, which I can hear in my head but not spell.) Al Stitz: ‘I started saving for my two kids’ college expenses back in the the late 80’s and early 90’s using UGMA [Uniform Gift to Minors] accounts. I typically have to pay income taxes in the kid’s names every year. Can I convert the UGMA accounts into Section 529 tuition accounts to save on taxes?‘ ☞ Who the heck knows? Less Antman, that’s who! I transmit one of these questions from a beacon on top of my computer . . . he receives it on his zirconium CPAger ring . . . sidles off unnoticed into a phone booth . . . changes into a cape and boots . . . and – off he goes! Let me preface his answer by explaining Al’s motivation. Money inside a Section 529 Qualified Tuition Plan grows tax-free . . . and can be withdrawn tax-free to pay for tuition. That’s a pretty great deal. The exact terms of the Section 529 plan vary from state to state (I like the Utah plan, among others), so a lot of people use savingforcollege.com to find a plan they like. But then the question becomes, how to fund it? Can you take the money you’ve already salted away in an UGMA bank or brokerage account – with you as the custodian because at 3, Janie couldn’t be expected to do the paperwork and make the investment decisions – and somehow switch it into one of these wonderfully tax-advantaged Section 529 plans? ‘You cannot ‘convert’ UGMA accounts to 529 accounts,’ Less reports, with a flourish of his cape, ‘but you can sell investments in a UGMA account and transfer the proceeds into a 529 plan . . . which should either be designated as a UGMA 529 or have the child as owner, to be technically in compliance with the law. You will incur taxes on the sale of the UGMA assets, if there are any built-in gains. But if the child is at least 14 or the child’s total income, including the gain, is less than $1,500, the federal tax rate on investments held over one year is 10% and on investments held over five years is 8%, and that isn’t a bad one-time tax to incur to make the future income tax-free (especially since the gains will eventually have to be realized to spend it on college, anyway). ‘A reasonable approach might be to stop reinvesting mutual fund distributions and instead take the cash and add it to a 529 plan. Then, sell as much as you can without pushing your child into the 20% long-term gains tax bracket (no problem if the child is 14, but limited to $1,500 total income if the child is younger), and add that to the plan as well. When the child is 14, sell the rest and add it to the fund. This assumes, of course, that you are willing to spend all the money in the 529 plan on college costs for the child. If you want the money available for other purposes, you must keep it out of the plan.’ Actually, you could do much the same thing transferring up to $2,000 a year into a Coverdell Education Savings Account (the old ‘Education IRA’). They, too, grow your money tax-free and allow completely tax-free withdrawal for tuition, and may involve less in the way of fees. And, Less says, ‘I’m pretty sure the income limitations on Coverdell Education Savings Accounts won’t apply, since the contributor is the child, not the parent. UGMA money – also known as UTMA money – is the property of the child.’
David and Arianna February 22, 2002February 21, 2017 There is nothing quite so impressive as an open mind. Having, like most people, a mind that’s not nearly as open as I like to think it is – and what may be an even deeper than normal aversion to admitting I am wrong – I naturally think I’m right about everything and that it’s others who need to open their minds. (You know who you are.) But I do try. And certainly on things like the well-intentioned but disastrous welfare system, we Democrats have learned a lesson or two over the years. I was so relieved when the leadership of the Democratic Party shifted so noticeably to the right a dozen years ago. We are still bleeding hearts – or at least I hope we are – but we are no longer jerking knees. Indeed, irony of ironies, it is the Democrats who have become the fiscal conservatives, balancing the budget and calling for the surplus to be used to build reserves for Social Security. (Don’t for a minute think the long-term surplus disappeared because of the War on Terrorism, which costs little more than $1 billion a month. It disappeared primarily because we enacted a massive tax cut for the top 1% of taxpayers. Which was extraordinarily generous of the voters, and we in the top 1% truly appreciate it.) But it’s not just the Democratic leadership that shifted to the right – placing it pretty much in the moderate, progressive center – but also the Republican leadership. It, too, has shifted to the right – placing it pretty much on the right edge. I was offered up a fundraising prospect by a friend the other day who warned me that, while Larry was a man of means, he was a Republican – ‘so good luck!’ (Newcomers to this column: I am a fundraiser for the Democratic National Committee.) When I reached Larry, he told me that he no longer thought of himself as a Republican, he thought of himself as an Independent. I reported this back to my friend, who was ‘pleased that Larry has shifted a bit to the left.’ ‘No,’ I explained, ‘Larry hasn’t shifted to the left. He has stood still. The political landscape has shifted to the right.’ Now, you may find a left-wing columnist or commentator who has recently seen the light and proclaimed himself a convert to the vision of Tom Delay and Trent Lott. I can’t think of one. If you do, send me their names, which I pledge to report. But I can think of at least two right-wingers who have swung the other way. One is Arianna Huffington, former Newt Gingrich acolyte, whose column last week tells an interesting story. (See below.) And one is David Brock, whose forthcoming book, Blinded By the Right, I read this weekend. (David was the conservative journalist known for, among other things, pillorying Anita Hill so that Justice Clarence Thomas could be confirmed.) First, Arianna: AmeriCorps And Dick Armey’s Friendly Fire By Arianna Huffington Talk about friendly fire. That was House Majority Leader Dick Armey pronouncing the president “so wrong” on his plan to greatly expand federal funding for AmeriCorps — the national service program Armey called “obnoxious.” Poring over Armey’s tirade, I could only shake my head knowingly and think: Been there. Done that. And Armey is as dead wrong as I was. I, too, had once scoffed at the notion of offering financial support to volunteers — after all, isn’t “paid volunteer” an oxymoron? In fact, on Oct. 17, 1995, I testified against AmeriCorps in Congress, convinced that young people should learn to volunteer out of the noble impulses of their hearts, not because they are getting a few dollars in return. “Helping those in need is a moral imperative,” I testified back then. “It is our responsibility — our obligation — and in a completely different realm from getting loans to go to school or money to live on. The people I most admire in this world are volunteering their time everyday without the benefit of any fancy, bureaucratically run programs.” I believed that then and I believe it now. What’s different is that I’ve come to realize what a vital role programs like AmeriCorps can play in supporting the charitable efforts of those working in the trenches. My conversion began seconds after I finished my testimony. Harris Wofford, the former senator from Pennsylvania who was then running AmeriCorps, came rushing up to me. I was expecting him to read me the riot act, but, instead, he asked me to lunch. I was taken aback, but intrigued — and off we went for some grilled chicken, a green salad, and a side order of crow. I must admit I’m a sucker for passion, and Wofford — who had been instrumental in setting up the Peace Corps and had worked closely with Robert Kennedy — had more passion than an entire season of “Sex in the City.” And now he was bringing it all to bear on AmeriCorps’ mission of fostering national service by training 50,000 Americans a year to, among other things, tutor at-risk kids, build homes, help seniors, clean up trails and rivers, and assist the victims of natural disasters. “My dream,” Wofford explained, “is to make service of a substantial kind a common expectation of young people.” It was a masterful seduction. I don’t think I’ll ever forget the moment when we first locked eyes and he said to me: “Together we can crack the atom of civic power.” Prompted by him, I was soon witnessing firsthand how, far from undermining the spirit of giving, as I had feared, AmeriCorps members actually acted as magnets drawing in other volunteers. Indeed, Wofford estimates that “every AmeriCorps member generates and makes possible the work of about 12 occasional volunteers.” As it turned out, the list of erstwhile AmeriCorps foes converted by Wofford is long and impressive, and includes many lawmakers not noted for flapping in the wind of legislative fashion, like Sens. John McCain, Dan Coats, and Rick Santorum, and Rep. John Kasich. In fact, McCain and Santorum — who once mocked AmeriCorps as a place “for hippie kids to stand around a campfire holding hands and singing ‘Kum Ba Ya’ at taxpayer expense” — each ended up introducing legislation to expand the program. I called Wofford to ask him how he had let Armey slip through his net. “When Gingrich became speaker,” he told me, “abolishing AmeriCorps was at the top of his agenda. Every year since then, a bill has been introduced to abolish AmeriCorps. And Armey has always supported it.” “On the other hand,” he continued, “look at Kasich. He was adamantly opposed to AmeriCorps until he started researching a book on leadership and compassion, and discovered that the program he admired most, the Harlem Peacemakers, would not have been possible without the participation of fifty AmeriCorps members.” Still deeply committed to mobilizing the country’s young people, Wofford has just taken over as chairman of America’s Promise — a post first held by Colin Powell. In a fitting twist, he replaces new Republican National Committee chair Marc Racicot, who, as Governor of Montana, was instrumental in getting all but one of the nation’s top governors to sign a letter to Congress urging it to renew AmeriCorp’s funding. Of course, charm and enthusiasm can only get you so far. In the end, it was confrontation with reality that transformed the thinking of so many influential Republicans. While, in theory, the private sector can rise to the occasion and provide the time and money needed to solve social problems, in the real world — of which conservatives pride themselves on being the only true denizens — it simply doesn’t. I discovered the hard way how much easier it is to raise money or recruit volunteers for the opera or a fashionable museum than for a homeless shelter or an inner city after-school program. It is sad but true that the task of overcoming our social problems is too monumental to be accomplished without the raw power of government appropriations and all the incentives we can muster to urge Americans — especially young ones — to make service part of their lives. There are, of course, those who insist on elevating ideology above proven results. You would think that, post-Sept. 11, Dick Armey would be champing at the bit to tap into the new spirit of altruism and patriotism. Perhaps a lunch with Harris Wofford, John McCain, Rick Santorum and John Kasich would tip the balance. I’ll bring the humble pie. We’ve all admitted we were wrong. Why won’t you, Mr. Armey? [Click here to subscribe to Arianna Huffington’s column.] And then you have David Brock and his book, due out next month. David was a much more rabid conservative operative than Arianna. This is a terrible book [Brock begins]. It is about lies told and reputations ruined. It is about what the conservative movement did, and what I did, as we plotted in the shadows, disregarded the law, and abused power to win even greater power. I came to Washington in 1986 as a conservative rebel from Berkeley, and from that moment through the latter part of the 1990’s, as the leading right-wing scandal reporter, I was a witness to, and a participant in, all of the scandals that gripped the capital city – Iran-Contra, the failed nomination of Robert Bork to the Supreme Court, the Thomas-Hill hearings, Troopergate, Paula Jones, Whitewater, and the secret scheming that led to the impeachment of President Clinton. The conservative culture I thrived in was characterized by corrosive partisanship, visceral hatreds, and unfathomable hypocrisy. Turns out there’s something of a vast right-wing conspiracy after all. This isn’t to deny or excuse hanky panky with an intern in the Oval Office, let alone finger-wagging obfuscation. Nor is it to suggest that all conservative ideas are without merit or that Democrats have every answer. But those who will dismiss Brock’s book rather than read it – as most conservatives will – are kidding themselves. No one would write such a self-flagellating book if it weren’t essentially true.
More Free Money February 21, 2002January 25, 2017 WHICH BOOK Ethan: ‘Monday‘s column includes the self-aggrandizing letter about the book that saved a life, but it didn’t mention which book. I think you may have a new customer.’ ☞ I call it, The Only Investment Guide You’ll Ever Need – which is more than a little embarrassing when you consider how many times I’ve had to revise it. RICH BUT SHAGGY William H. M.: ‘Thank you for your book. I read it and am mailing on to my daughter. My net worth is about 1.3 million. Not that much these days. However, I have not been to the barber in 27 years. Lots of hair. People can plug their own numbers into how much money (and time) this has saved and made.’ ☞ You were expecting hot stock tips? The book is mostly about haircuts – and not getting scalped. BEWARE THE EGRESS Jack Maret: ‘Your P.T. Barnum story reminds me of a quote of Mark Twain’s: ‘In a Havana, Cuba museum is an exhibit that includes two skulls, described as ‘Christopher Columbus’s Skull As a Man,’ and ‘Christopher Columbus’s Skull As a Boy.”’ MORE FREE MONEY Lynn Smith: ‘I was considering using my home equity line to pay off the last of our over-budget home renovation project, when I noticed one of those 0% APR junk mail letters. I thought, why not? I scoured the fine print for the catch, but couldn’t find one. This offer is for six months 0% APR, and they waive the cash advance service charge for $$ requested when you open the account. Easiest $12,000 I ever borrowed, as they direct deposited the funds right into my checking account! When the six months is up, I plan to roll over the balance to some other promotional card at 0%. Already I’m stockpiling the offers I’m getting in the mail (they seem to arrive almost daily). In the worst case, I’m back to my home equity line for the remaining balance. Of course, I’ll have to be cautious to make all the payments on time. I’m planning $500/mo for 2 yrs. Normally I’d never carry a credit card balance, but this offer was too good to pass up.’ DOES THIS MEAN I SHOULD SELL TIVO? J. T. Keter: ‘I’ve read that small things can reveal big things in stocks. I was thinking of buying Oakley stock. I bought a pair of their shoes I loved. But within the first week, the top layer of the inner soul of one shoe folded down. Same with the other shoe not long after. I thought, ‘If they don’t have quality control down with these shoes, maybe their whole company isn’t run well.’ On the power of that alone I didn’t buy the stock. Today an L.A TIMES headline reads ‘Oakley profits down 66% this quarter.’ I’m glad I listened to myself!’ ☞ Well, this kind of anecdotal analysis has a way of cutting through a lot of footnotes. And every time one of my TiVos gets sent in for repair, I worry about my larger investment in TiVo stock. My hope – and it’s only I hope – is that the new ‘TiVo 2’ line has corrected some of the reliability problems. Two of the original TiVos I’ve bought (for us and others) have worked more or less flawlessly for more than a year; two others have had to be sent in for repairs. And that can’t be good for business. Yet I can no longer live without TiVo, and neither will you be able to once you try it – so I hang on.
Buy on Bankruptcy February 20, 2002February 21, 2017 QUICK! OH . . . YOU MISSED IT Bryan Norcross: ‘You may not have realized it, but a historic minute in time will occur this coming Wednesday. For the one minute that it is 8:02 pm on Wednesday, February 20, 2002, the time, date, and year will read 20:02, 20/02, 2002. Okay, you have to use a 24-hour clock and the DD/MM convention that the rest of the world uses (where today is 20 Feb, not Feb 20). But still, it’s very cool and it can never happen again, unless we change our system of time so there are at least 30 hours in a day.’ ☞ Not since October 1, 1001 at 10:01 am (and then again 12 hours later) did I feel so giddy. Looking forward to 9:12pm on December 21, 2112. BUY ON BANKRUPTY? Don Rudolph: ‘Have you noticed the panic selling of shares in companies that declare Chapter 11? Isn’t there almost always a nice, healthy bounce back off the bottom?’ ☞ Often, but not ‘almost always,’ I think – and on some of them, the spreads become pretty wide (e.g., bid 15 cents if you’re selling, 20 cents if you’re buying), making this strategy an interesting thing to contemplate, but a tough one to do well with over the long run, I’d guess. I’m sure there’s a retroactive study of this out there someplace – anybody have it? I’d be fascinated to know whether various anomalies actually make this a meaningful opportunity. These anomalies could include institutions forced to sell because of arbitrary rules against owning shares below a certain level . . . human nature, irrationally ‘throwing up one’s hands’ in response to the bankruptcy (and a strong preference for not seeing this junk on the brokerage statement every month) . . . and, of course, selling to establish a tax-loss. AND SPEAKING OF ANOMALIES Thanks to Brian Evans for this link to a recent Washington Post story (headlined: ‘The Compromise Effect’) that rounds up some of the best examples of money irrationality. It’s worth a read as entertainment . . . to challenge your own thinking, perhaps . . . and perhaps even to give you an idea or two of how to take advantage of the irrationality of others.
Free Money February 19, 2002February 21, 2017 But first . . . Still thinking about Valentine’s Day? Well, here‘s a gem of an undiscovered little love story – between two Eighteenth Century ladies who eloped to Wales and won the hearts of everyone from the Duke of Wellington (who defeated Napoleon) to Charles Darwin (who is imagined to have been a bright little boy). Not your typical fare, it is written in the form of a screenplay, based (very loosely) on a true story . . . and when the movie’s over, the author circles back around to let you know what is historical fact and what was made up – with pictures! (Oh, don’t get all excited; they’re not that kind of pictures.) Love Above the Reach of Time, as it is called, is $4 cheaper on Barnes & Noble, but for some reason I can’t forge a link direct to the book. And now . . . FREE MONEY Mark L: ‘I wanted to share something that seems just amazing to me: I recently received a letter from one of my credit card companies (an MBNA MasterCard — a card I don’t even use) offering me a 0% APR for 3 months on balance transfers AND cash advances. When I called for more details, I was amazed to learn that the 0% applied to cash advances and that I could take a cash advance in the full amount of my credit limit (which is pretty high) and still take advantage of the 0% offer. ‘I asked many, many questions and there is not a catch (except that they charge up to $40 — maximum — for the funds transfer, and the APR ratchets up to more than 10% after the 3 months are up). What gives? They are offering me free money for 3 months! I can invest the cash advance in a conservative bond fund and make, say, 4% with little principal risk. I would of course pay the full outstanding balance right before any APR kicked in (as I do with all my cards), so why wouldn’t I take the cash and invest it?’ ☞ When these offers include zero interest on cash advances — which is rare — you should grab ’em. At least in theory. Whether it’s actually worth the effort depends on how much you can earn after tax . . . and how you value your time. If your credit limit is $20,000 and you can make 4% for a quarter, that’s works out to 1% on $20,000 = $200 before tax or maybe $140 after tax, less the $40 = $100. That’s a lot to someone who could never get a $20,000 credit limit, maybe not so much to someone who can. Actually, the 0% would be better used paying down a high-interest credit card balance, but obviously you don’t run any. (And neither does anyone else who reads this column, God bless ’em. We run a credit check on each of you each time you click this link – kind of like a Norton virus check — and return a ‘CAN’T FIND WEBSITE‘ message to anyone who runs credit card balances.) And finally, re: The Great New Jersey Buffalo Hunt last week . . . BARNUM David D’Antonio: ‘P.T. supposedly had a museum filled with various ‘wonders’ one of which was the Egress. There were lots of signs saying ‘This way to the Egress’ and, finally, a door labeled ‘Egress.’ You passed through the door and voila! you were outside and had to pay to get back inside… I guess not too many people realized that Egress just meant Exit. I’m also not sure if this is true or an Urban Legend, but it sure fits his style!’ LIVING WITHOUT ME Paul Langley: ‘Just a quick note to tell you that the title of today’s column — “If You Can’t Live Without Me, Why Aren’t You Dead?” — was actually the title of a book by Cynthia Heimel over 10 years ago. If you are not familiar with Cynthia Heimel, her stinging essays are collected in books with great titles, such as: Get Your Tongue Out of My Mouth, I’m Kissing You Good-Bye . . . If You Leave Me, Can I Come Too? . . . But Enough About You . . . When Your Phone Doesn’t Ring, It’ll Be Me . . . Sex Tips for Girls . . . and her most recent: Advanced Sex Tips for Girls: This Time It’s Personal. I know that titles can’t be copywrited but I just thought I’d put in a plug for Cynthia, since she appears to have been the first to come up with this terrific line.’
My Favorite Valentine February 18, 2002February 21, 2017 Listen, I know I’m milking this Valentine’s thing for all it’s worth – today is President’s Day and technically your subscription doesn’t even call for a column on days the market is closed – but one of you sent me a Valentine last week that made me feel so good I wanted to share it. WARNING: It is incredibly self-promotional of me to post this message. It’s the sort of thing my mother would do (promoting me, never herself). I am ashamed of myself. But the thing is, I got these folks to make a budget. Do you know what a big deal that can be? Behold: Jer: ‘Eighteen months ago, my family and I were constantly broke, behind in our bills, about $8000 in debt to credit card companies and waiting for the electricity to be shut off. Even CCCS advised bankruptcy, since we couldn’t meet the minimum monthly payments. It looked hopeless — we were so broke that we didn’t even argue about money! I saw no end in sight. We earned fair money, but where did it go?! Now, a year and a half later, our credit debt is down to $2000, and will be paid off in 5 months, our bills are all caught up, we have $800 in an IRA, and are contributing $250/month into it, and we have more spending money than ever before. Your book changed our lives. We started the simplest of budgets — just a sheet with our utilities, credit cards, and medical bills, the amount due, and the date due — and filled in the blanks when we paid it. We found where the missing money was going: most of our bills were due at the start of the month, with only a few in the middle. Late payments and over-amount fees on our credit cards totaled at least $300 every single month. Bounced check charges came to about $75-$100 a month. By simply figuring what we HAD to spend and WHEN, we were able to divvy up the paycheks to last all month — now we’re over a month AHEAD on bills — and by paying our cards on time, and NEVER bouncing checks, we were able to take $400 a month and put it right on our cards. We even bought cases of tuna at Sam’s Club! Thank you so much for putting out a simple but life-changing book! I recommend it to everyone!’ ☞ Just to reiterate, nothing in the book is original with me – Ben Franklin was saying this common sense stuff 200-odd years ago and Aesop, 2500-odd years ago. My job is just to push it. So, well, I’m pushing it.
If You Can’t Live Without Me, Why Aren’t You Dead? February 15, 2002February 21, 2017 This question may have been more appropriate yesterday, as a Valentine’s Day topic, but I came across it a day late, reading a very clever manuscript that Robert Pollard, its author, handed me. I’m not sure when his book-to-be, Street-Smart Economics, will be completed and published, available to be One-Clicked, but I hope it won’t be long. I enjoyed the portion he handed me. His point in asking this question is to drive home the notion that “needs” are often merely ‘wants’ – but that we tend to call them needs because it helps us rationalize the expenditure. Another of the points he makes that I like: there’s no such thing as a free lunch but there’s big money selling them. To make this point, he tells the story of P.T. Barnum’s 1843 Great New Jersey Buffalo Hunt. You may already know it, but it was new to me. Ordinarily, of course, there were not a lot of buffalo in New Jersey in 1843 – still aren’t – but that was what gave P.T. Barnum his opportunity. He took out ads in New York for this event, to be held FREE at a race track in Hoboken. Tens of thousands of New Yorkers took the ferry across the Hudson to see the ‘savage beasts’ lassoed and hunted. ‘The grand hunt was a grand debacle,’ Pollard recounts. ‘The buffalo ambled into the arena, huddled together, and refused to move.’ But Barnum was happy – he cleared $3,500 on the enterprise . . . having first rented all the ferryboats and refreshment concessions at the race track for the day. Have a good weekend . . . HAPPY PRESIDENT‘S DAY Next Week: A Book Out Next Month that You CAN One-Click