Will the oil bubble pop?

In April 2007, I was predicting $4 gas in the summer. I had the right idea, but was off by a year. Recently I've been seeing a few stations in my area posting 3.999 per gallon of gas signs for regular.

Over the last year, the dollar has declined in value 10% internationally, yet oil prices are over 80% higher. I don't think that's dictated by supply and demand. I'm beginning to think this is a speculative bubble. We had the dot.com bubble, then the housing bubble, even a little gold bubble recently. Now I think it's people investing in the only thing they see going up. Oil. I don't think market fundamentals are behind the sharp increases at all.

I predict we'll start hearing hucksters on radio commercials and internet ads telling us how we can make a killing by investing as they do in oil. Pretty soon, average folks will be talking about how they are thinking of investing in oil. That's when I think the oil bubble will pop. I predict that within 6 months, we're going to see oil start tumbling down to the $70 a barrel price range.

You heard it hear first folks!

Ode to good old traditional telephone

In my previous post, I wrote about a fascinating new development in telephone technology. Now I'm going to tell you why I won't be buying it. Reliability.

The traditional telephone is over 100 years old. With age and regulation, the telephone companies have made traditional telephone service utterly reliable. Every time I pick up the phone, the friendly dial tone is there waiting for me. Every time I dial (assuming I dial the right number), the connection is made. My traditional phone services has worked during cable outages, storms, electrical outages, and even after the Loma Prieta earthquake. There are no mysterious outages. There is no doubt that when I dial 911, it'll connect to the right emergency response center, and they'll know who and where I am.

I can't tell you how many times my cable internet stopped working for no apparent reason, or recently my DSL modem died, again for no apparent reason.
How often does your computer mysteriously lock up? If phone is routed through the computer, you're screwed when that happens too.

Traditional phone service is also competitively priced with newer VOIP phone services too, if you shop for it. My traditional local phone bill is about $17 per month with taxes and junk fees. My separate long distance bill is usually under $2. When I get those calls from Comcast or some long distance company asking me to switch, I tell them my total phone bill is less than $20, beat that. So far, they've always said they can't. I think Comcast is advertising $39.99 for phone and all the long distance you can eat. What a rip off? For that price, I can have my regular phone and about 9 1/2 hours of long distance a month (at 4 cents a minute with no monthly fees or minimum usages), like I'd ever use that much!

I'd bet 80% of the people who buy VOIP from Vonage or their cable company, can get a much more reliable service and better price from their local phone company and a competing long distance company, then they ever could from a VOIP competitor. Oh yeah, and they don't have to worry about their old telephone company going belly up and screwing them, like SunRocket just did.

Maybe when VOIP can claim a track record of going years without an outage, will I be tempted to switch.

$39.99 per year for telephone?

How would you like to spend $39.99 per year for telephone service. That's it. How can that be you ask? There's a new company out there called Magic Jack.

Here's how it works. You buy this little doohickey that plugs into the USB port of your computer, and then you plug your regular old telephone into the doohickey. Presto, you've got a telephone. The company gives you a telephone number, and you can call and receive just like normal using your telephone. There are no long distance charges for anywhere you call the USA and Canada. No monthly land line charges. You can even take your phone with you when you travel. Connect your laptop to the hotel wi-fi, or any hotspot, plug in the magic jack and a small telephone, and you've got your home phone with you wherever you go. You even get free voice mail.

Here's the part I don't like. You have to have an always on broadband connection, and you must leave your computer on all the time, and hope it doesn't crash. Still, it's an interesting new development.

Stickin' to the (phone) man!

I have DSL Hi-Speed Internet (the Slowskys not withstanding) with my local monopoly phone company. I purchased their modem / wireless router about a 1 1/2 years ago and have enjoyed reliable and cheaper service since then.

When I recently returned from a 1-week vacation, I noticed the modem was flashing all kinds of crazy lights. Usually it's just 2 or 3 solid green lights. So I knew it had lost the DSL connection. I unplugged it for 30 seconds and then plugged it in again. Same crazy flashing lights. So I unplugged it and went to bed. The next morning I plugged it in and the thing was completely dead. No lights at all.

So I called the monopoly phone company tech support and they inform me that yup, my modem is dead. It'll be $80 + tax and shipping for a new one. I'll have to call the estore to order. Not being too crazy about this idea, I check out my cable company. They're running a special for $19.99 a month for 6 months, and a $30 modem.

So I call the monopoly phone company again and tell them I wish to cancel. After getting the right person, they of course ask why. And I tell them. My modem crapped out and I'm not going to spend $90+ for a new one. I suspected they would cave and send me a new one for free, just to retain me as a customer, and that's exactly what they did. Today I'm looking at my shiny new, and free, DSL modem.

Moral of the story is, don't be afraid to cancel services. The only caveat is, you have to be a customer in good standing. Businesses know that it's much more expensive to get a new customer than retain one. It's worth it to them to give upgrades or improvements to keep you as a customer.

I routinely do this with credit cards and get all sorts of nice freebies. The credit cards will almost always offer me free money. 0% for X many months. Oh and by the way, tell them you want them to waive or cap the transfer fee. Last go around I got 2 cards to loan me a total of $45k for 10 months, for only a $75 fee. I made close to $200 a month in interest alone.

Gas to rise to $4 a gallon?

After seeing the relentless march of rising gas prices, I'm now convinced we will see $4 a gallon gas prices, at least in the south San Francisco Bay Area. Even the cheapest cash only places are now charging $3.35. $3.45 is more normal at the regular stations. Doesn't seem like more than 6 months ago, they were at $2.30 a gallon, or even less. And we are now moving into high driving season. Prices can only go up from here.

I'm kicking myself for my recent car buying decision. I bought a V6 Ford Fusion, and for a car it's size and weight, it's a total gas hog. My mileage, at least according to the onboard computer, is about 16.5 mpg for the last couple of fill ups. According to the sticker, it's supposed to get 20 in the city and 28 highway. Well, my driving is about 50% city and 50% expressway. I know the EPA estimate is not a realistic estimate, but given my driving conditions, I should be getting at least 20 mpg.

I could have easily bought the 4 cylinder version, and saved some dough in the process. But my prejudice against Ford 4 cylinder engines prevented me from even considering them, due to my previous ownership of two Fords with vastly underpowered 4 cylinder engines.

I had no idea they've increased the power output of their 4 cylinder engines so much in the last 20 years. I only found out when I went back and checked the specs for the Fusion I4 vs. my V6 Buick. Same horsepower! 16% less torque, but since the Fusion is about 1400 lbs (30%) less weight than the Buick, the I4 should have performed better than my Buick, and I never thought my Buick was underpowered.

I'm also kicking myself for not consindering the Camry. At the time I was looking, I thought the 2007 Camry was ugly. Now that I'm seeing them everywhere, I'm starting to find them attractive. The styling has grown on me. They still seem a little smaller on the inside than the Fusion and I like that interior room, but the V6 has more power and better mileage than my Fusion, just looking at the EPA numbers, and the 4 cylinder probably would have been fine too.

I've already made the decision that my next car will be something different. Plug-in Hybrid, electric, Biodiesel, whatever. Hopefully in 8 - 10 years, which is how long I generally keep a car, those alternatives will be available. If not, we're going to be in trouble as a nation. I told my wife she could have a new car in two years. I'm going to try and steer her towards a safe, but fuel efficient vehicle. Maybe a Prius. We'll see.

None of this is so much about the price of gas. My income has more than kept up. It's about using less of the gas. The price just makes it more noticeable. Don't get me wrong. I love the Fusion and think it's a great competitor to the Camry or Accord. It's just I wish it was more fuel efficient.

Downloading Music

I'm not much of a music buff, so I'm kind of late to the game when it comes to downloading music. Oh, I've ripped some of my CDs so I could play them on the computer, and I toyed with Limewire a while back downloading some old songs that I used to have on cassettes I had bought.

But recently, I got a free Ipod Nano from a credit card promotion (sorry, that promotion doesn't exist any longer) and also I have a new car that has an MP3 capable CD player in it. So I thought I'd check out some of the legal music services. What a hassle!

First, I already subscribe to Yahoo Music Unlimited so I can listen to music at work. They stream it in and have a wide selection. I can play new hits, old hits, or maybe some relaxation music. Good stuff. The quality ain't the greatest, but I'm OK with it.

So there's some hits on the radio I like these days, and I buy 5 of them off of Yahoo. Can I put them on my Ipod? NO! Furthermore, they aren't MP3s, so I can't even burn an MP3 CD to play in my car stereo. Yes, I can burn an audio CD, but more on that later. Sure I can download from ITunes to put on my Ipod, but you can't burn an MP3 there either.

Also, Yahoo has an enhanced subscription music service called Yahoo Unlimited Music To Go. This let's me put as many songs on my MP3 player as I want to carry around with me. Uh, except again it doesn't work with the IPod. Also it costs extra. I checked out Rhapsody, Napster and they have the same story. ITunes doesn't even have a subscription service, like it, so no Ipod relief there either.

For all of these services, I have to buy the song using a lossy compression method, WMA or AAC, burn it as an audio CD, then rip that CD again with an even older lossy compression method, MP3, all to get my music in an eastily useable format.

The audio quality just ripping straight from CD, let alone converting these others, is nowhere near CD quality. Maybe cassette quality. What happened to how important CD clarity was? Now nobody gives a crap about the quality, just as long as you can move it around in an electronic format.

This brings me to my point. ITunes notwithstanding, the legal downloading music biz sucks! Because of Digital Rights Management, you can't really move it everywhere you want it, at least not without further audio quality loss, and the audio quality is inferior to begin with!

I used to think that people downloaded music illegally because they were just cheap. Now I'm beginning to understand there maybe other reasons. Portability for one. Still not sure how I'm going to resolve this. I really do want to buy music legally. The artist and distributors are providing value to me, and I want them to profit from it. But why does it have to be so difficult?

Car Buying Experience #4

Decided to check another Chevy dealership for Impalas. Only 4, all silver or gray. Ugh. Didn't even bother asking the sales guy to open any up and just left. While walking out, I noticed that they had at least 20 of every other model Chevy makes, in a wide variety of colors and features.

What's up with Chevrolet? Cobalts, Malibus, Equinoxs, HHRs, etc are everywhere in abundance, but Impalas are scarce, and only in drab colors.

So we packed up and went across the street to the Ford dealership to look at Fusions. Pretty nice. Got in and checked it out. Lots of legroom, even in the backseat when I've got the front seat all the way back. Good size trunk. Nice interior design, and surprise! A nice selection of colors. They had a gorgeous Merlot Red one we took for a test drive. Very nice. Far better than the Five Hundred. I liked it so we went in and talked numbers. They offered me $250 over invoice. I asked for a minute and he went away and I talked with the wife and went over the options included - uh oh! There was a car navigation system on there for $1,650. Ouch! I generally know where I'm going, and even if I don't, I have a good sense of direction. I told the guy that was a deal killer. $500 maybe, but not $1,650.

He said let me show you another car. Drives up a silver one (goddamn silver again) with an ugly interior. Told him no good, we're leaving. He says, just let me check to see if I can find what you want elsewhere. He finds another Merlot Red one, basically the same, but no navigation and sob, no moonroof. OK, the moonroof I can live without. So I buy it sight unseen, because it's supposed to be identical.

Went in the next day to pick up. It has the spoiler, which I didn't really want. What do I do now? I've already signed papers. On the spot, I take a good long look at the spoiler and decide I'll live with it, so I took posession of my shiny new Merlot Red Ford Fusion V6 SEL.

So here's my tip for future car buyers. Do not buy sight unseen based on sales guy's assurance it's identical in every other respect. You MAKE them bring it in so you can look at it or you walk!

Car Buying Experience #3

Started looking for my 2nd car model I was interested in. It was the Ford Five Hundred. Dropped by the Ford Dealership not really expecting to think highly of it, but they had a fantastic sale of $6,000 below MSRP. They were getting rid of those models as they are being discontinued.

They had 1 car on the lot that looked great! Black with shale leather, oodles of features, really big and really classy looking interior and exterior. I got really excited and told the wife we're taking a test drive. What a dissapointment. The thing was seriously underpowered, seemed like it was having trouble finding the right gear, and basically drove like an underpowered oil tanker. Not very smooth or satisfying at all.

The dealer than put on the high pressure, putting the screws to me to try and sign, but they made one fatal mistake. While running my credit to see if I'd qualify, they left me alone for 10 minutes. I sat down and started making a pros and cons list for the Impala vs. the Five Hundred. The Impala only had 2 pros and 1 con. The Five Hundred had abotu 7 Pros, but also 7 cons. In the end, I just didn't like how it drove, but in every other respect it was superior to the Impala.

When I gave them my final no, the sales manager said he understood and basically said "What was Ford thinking putting that small engine in that big car?"

He then insisted I drive a used Lincoln LS. I did. It drove much nicer, but it was dark and we were tired and I just wasn't prepared to make an offer on a car I knew nothing about. He dropped $5,000 off the sticker to encourage me to sign. Again, very high pressure. The deal was that day only, being the last day of the month. In my mind, there was too much pressure. There was no reason I had to do it right then and there, so I left.

After I got home I checked edmunds. The car's value was indeed what the dealer said, about $28k. However, it was listed on the dealer's internet site for $23k. Basically, he was giving me his advertised price. Plus I had no way to verify the quality of the car at the time. No mechanic's inspection. No title history. Plus the wife wasn'tt hat happy with it. Too little room in the back seat.

While in there showroom, I noticed the Ford Fusion was bigger than I tought it was, so I expressed interest. As we were leaving that asked if I wanted to drive it, but we were tired, it was late, and I was done with high pressure tactics.

Cary Buying experience #2

Saturday morning I went to another Chevy dealership looking for the Impala. Got to take a good test drive of one. I liked it quite a lot. Good pick up, smooth ride, nice overall feel, and the interior was roomy and comfortable. The trunk was nice and big. The style was very nice. The only problem was that Chevrolet seems to make about 10 times as many silver, white and black cars then they do the blues and reds. I wanted the Bordeaux Red or my back up was Imperial Blue.

The sales guy was excellent, again very low pressure. He seemed to really want to find me the car I wanted, but only had one that I even half liked the color and interior.

After searching on the computer for other available cars within their sales region, he came up empty. He did offer me $250 over dealer invoice. If I had liked the colors I would have bought it.

But in the end I walked away, mentally making that my backup car if I couldn't find something I liked better.

Car Buying experience part 1

It's been about 28 years since I last bought a new car. Since then I've always bought used. Anyway, you go into these things expecting all the stereotypes you like you saw on Fargo, or see in the news and magazines. High Pressure, smarmy sales guys ready to pounce on you and sell you a bunch of extras you don't want, etc.

So today I went down to the local Chevy dealer during lunch time to take a look at some Impalas and get some info. A very pleasant experience. This particular dealership told me up front they are a no haggle dealership, and the experience was very low pressure. The sales guy was helpful, asking what I was looking for in the car, trying to show me what they had in stock that might be helpful. I had to look at 4 different Impalas to see various features I was interested in, as they had not 1 even close to what I wanted.

Still, I spent some time talking with Medy, the sales rep, and he said they could always get one from somewhere else or even order one from the factory if I chose to. He gave me a quote on my ideal Impala based on the options I wanted. I matched what they quoted vs. Edmunds.com. Edmunds was spot on! The MSRP was exactly what Edmunds quoted, the dealer invoice was what Edmunds said it was, and the average selling price that Edmunds had was very close to what the dealer offered me, with the dealer beating it by a hair. The deal had a tag in the front window with how much they were discounting off of MSRP. That amount left them about $650 $560 in dealer profit on a car they sell for $22,500. I think that's a fair deal, if not an outstanding one.

Still researching. Need to check out the Ford Five Hundred and also Chevy's at another dealership not too far away.

Free ID Theft Monitoring from Paypal and Equifax

Paypal and Equifax have teamed up to provide a free ID theft monitoring system. Here's what it says it does

Early warnings. Automatic notification through email, in the event there’s a new account opened that impacts your credit file or a significant balance change to one of your existing accounts.

To sign up, go to Paypal and then find the link on the page that reads "Free Alerts to Help Protect You From ID Theft." You'll be taken to another page where you'll see the icon to Get Equifax Credit Alerts. Click on that and then fill out the forms and create an account at Equifax. Again, this is free, although they do offer a full featured credit monitoring system option that you are free to turn down.

Seems like a good service that will cost you nothing.

Cars. Then and Now

I've had new car itch, and I've been looking up new cars like crazy on the web. I've noticed two things:

1. Cars are like cell phones. They keep adding on more features to keep the price up.
2. You basically get more car now then before for the same money, after inflation.

In November 1979, my dad and my 16 year old self went out car shopping for my first car. We both knew I needed something cheap and reliable. We settled on, and don't laugh, a brand new 1979 Ford Pinto. The sticker price was $5,800, but my dad being the former car salesman knew that this particular vehicle had been on the lot a long time as they were well into the 1980 year sales, so he bargained them down to $5,000. Thus I was the lucky recipient of a Ford Pinto with luxuries of automatic transmission, Power Steering, Power Brakes and AC. Well, recipient wasn't the word. I paid for almost all of it over the next 3 years. I drove that car to death selling it 10 years later with 138k on the odometer.

Anyway today using internet searches I looked for the most likely equivalent of a Ford Pinto and settled on a Ford Focus hatchback. I went on Edmunds and equipped it with at least what the Pinto had, including Automatic Transmission. Of course it comes with much more standard than the Pinto ever did. The Average selling price was $14,228.

Next, I went to the governments CPI calculator and asked what $5,000 is 1979 is equivalent to today. It came out to $14,015.

I think we can all agree that the Focus is a far superior vehicle. I've rented one and was satisfied with it. It also has more luxurious standard features. So the lesson here folks is we are getting much better equipped cars, better performing (trust me, the Focus performs far better than my gutless Pinto ever did), and safer (remember the infamous exploding Pinto gas tanks) cars than at least in the late 1970s, for roughly the same price.

Microfinance and Kiva.org

There is a very interesting article in today's Mercury News about microfinance or microlending and a web site that can help arrange it called Kiva.org. Make sure to check out the graphic of how it all works.

What is microfinance? It's the lending of small amounts of money to people in impoverished nations or poor areas, so they can buy tools or assets, that they can use to earn a better life for themselves. It helps a poor woman in Africa buy chickens so she can sell eggs, or a cobbler in Bangladesh new tools so he can repair or make new shoes much faster, etc.

Usually this is done through very small banks or finance institutions set up for this very purpose. The entrepeneurs then pay the loans back from their increased earnings. That money is then lent to another poor entrepeneur, etc.

I dislike many charities, because they aren't geared toward helping people become self-sufficient, but here's a great alternative. In the past, this was done as a charitable donation. The money was given to these microbanks and it was then lent.

The beauty of Kiva, is that instead of given money to charity to make these micro-loans, you can do so directly. And if the entrepeneur is successful, you get your money back so you can lend it out again. It's a lot like prosper.com, but only geared towards micro-lending for poor entrepeneurs. You can start with amounts as low as $25.

Zoho Applications for Small Groups or Businesses

There's a little known company out there providing a whole host of useful online applications called Zoho. Like Google that offers online word processing and spreadsheet programs, Zoho offers them, and much much more. Their additions include a Presentation program, Wiki, Notebook, Project Management, Database, Planner, polls, tests, and Chat.

But best of all, they offer a CRM application called Zoho CRM. It's an online Customer Relations Manager that is very similar to Salesforce.com. It's not as polished, but it has virtually all the same functionality.

What I love about Zoho is that all of these programs, including the CRM, are free to use to individuals, small groups or small businesses. It's not until you start signing on 4 or more people to these applications that they start to charge anything. Even the CRM is only $12 per month after you've gone past the first 3 free users. Cheap compared to Salesforce.com If you have need of online applications for individuals, small groups or need small business tools, for free or very cheap, check out Zoho. I can't believe they haven't been bought out yet by the likes of Yahoo or Google.

IRS gets it bass ackwards

Every year this irritates me, as if having to spend hours preparing my taxes isn't enough. I'm talking about the IRS's E-File program. What is the purpose of the E-File program? Why was it even created? Was it to help taxpayers get their refunds faster? No! That's the incentive to encourage people to e-file.

The E-File program was created to accomplish two goals. To reduce data entry error and to eliminate the extra labor and hassle of handling paper returns. For every paper return filed, the IRS has to deal with handling the mail, opening it, scanning the forms, seperating out the checks, W-2s, etc. On many it has to do manual data entry. It's much more efficient and accurate to have them filed electronically.

So why does the IRS insist on making those who have the largest returns pay a fee to efile? If you've got a simple return, like a 1040A or 1040EZ, it's usually 1 or 2 pages, and it's pretty much free to file. If you have a return like mine this year, it's 8 pages, with a lot of numbers. Wouldn't it be in the best interest of the IRS to make longer more complicated returns Free to file?

If I wasn't getting back very much, or god forbid had to pay, I wouldn't pay $16 to e-file. And my home state of California is just as bad. In their case, I'm not getting much back, so I am not paying the additional $16 to e-file with them. So what if it takes an extra couple of weeks to get my return. They can just do the extra work in dealing with my paper return.

None of this makes sense. They've got a program in place, and it works! Now they just need to implement so all want to participate and save the government money. But we're supposed to pay for the privilege of saving the gov't money when doing the most hated of gov't requirements. Screw that! But I guess that shouldn't surprise me, because it's the government.

Annual Flower and Greeting Card Extortion Day - A man's perspective

Otherwise known as Valentine's Day.

I hate Valentine's Day.As a man, you are absolutely obligated to buy your wife or girlfriend flowers and a card, and usually a present. Of course, on this day, flowers are easily twice as expensive as normal. I haven't priced it, but I bet the Valentine's Day cards are more expensive than other cards too.

Then of course, there's dinner out somewhere nice.And what's the benefit? After you've paid this extortion, you've fulfilled your duty. Any other day of the year and you get extra credit for doing the above. Today, it's just to stay out of the doghouse.Not only that, but it's a woman's holiday. Men don't want gifts on Valentine's Day. Where's the equivalent holiday for the men? None! We don't get any. How about a holiday where the woman is expected to buy her man a new tool or gadget or take him golfing. And if she doesn't, she's in the dog house!

What a jip.

Online Storage

The Wall Street Journal had a good article on Online Storage and how about numerous companies are trying to get us to store our important data online as a back-up. Frankly, this is an idea whose time has come. If your computer dies, or you accidentally delete an important file and don't have an onsite back up, or god forbid if your place burns to the ground taking your computer and back ups with it, what will you do? With online storage, you simply fire up the computer, login and retrieve your important data.

If you already pay for virus and malware protection on your computer, paying to back up important data shouldn't be a foreign concept. Isn't that what is really important on your computer anyway?

There are numerous ones offering a taste for free, offering anywhere from 1 to 5GB for free, and then of course charging $50 to $100 a year for much more storage. Here's some I already knew about:

Xdrive - 5 GB online storage for free from AOL. All it takes is an AOL account, which is now free as well. You can designate files to share as well. $100 per year for 50 GB
Mozy - 2 GB for free. Has the virtue of encrypting your data with Blowfish, a well respected ciper, so only you can read your data. $50 buys you all the storage you can eat.
Carbonite - No free plan. Unlimited for $50. Has utility that automatically backs up your documents for you all the time.

There are several others, each with it's own specialty. Also I'd like to mention Yahoo Photos, which allows unlimited photo storage, and the ability to get those photos back at full resolution, although only 1 at a time. Still, it's free too, and you can view, share and order prints as well.

Right now, I'm currently in the process of backing up all my music and documents to Xdrive, and my photos to Yahoo Photos. What great services, and for free if your need is small, or cheap if you have lots to back up.

National Debt Misunderstood

One of my favorite blogs to read is Blogging Away Debt. This week she posts a guest article titled Consumer Debt vs. Government Debt. How Can We Judge Congress When Our Plastic is Maxed Out?

Gov’t debt is a vastly misunderstood subject, and Ben seems to be just one of the misled.
Simply put, there is no reason this debt EVER has to be paid back. For virtually all of our country’s entire existence, the debt has never been paid back. It’s been rolled over.

Think of it this way. A person starts out their adult life earning generally low wages, and then throughout life as they gain skills and expertise, they continually earn more and more. This represents our country’s GDP.

That same person probably also starts with renting a small no frills apartment, and then throughout their life continually continually rent nicer and nicer homes, at higher and higher rental rates. This is interest on the ever growing national debt. (No home ownership allowed in this analogy, because that builds equity).

Since the nation will never retire, the GDP, and thus the tax revenues, will only continue to grow, and thus the gov’t can continue to afford the interest payments on more and more debt.

Here’s some interesting facts about the national debt:

Interest on the debt now consumes less percentage of government tax receipts than it did during Clinton’s time, despite Bush’s heavy borrowing. How can this be? Because tax receipts have also been growing heavily. In 1998, debt service consumed 14% of tax receipts. In 2006, it consumed under 10%. America’s ability to pay interest on the debt is becoming less of a burden, not more so.

Approximately 40% of the national debt is owed to the government itself. US Citizens own approximately 35% of the debt. The other 25% is owned by Foreigners.

While I would prefer that the federal gov't do a better job of living within it's means, and use debt only in times of recession, disaster, war or investing in building of new national infrastructure, it is not the boogeyman we all perceive it to be. Simply put, it is OK for the debt to grow, and continue to be rolled over, as long as the economy grows along with it, so we can continue to pay the interest.

I highly recommend you point readers to a blogger called The Skeptical Optimist for facts and views on the national debt that you just won’t hear anywhere else. He too is one of my favorite blogs.

Hunting for New Life Insurance

I went quote shopping for new term insurance on a couple of those internet sites. Wow! I have been getting barraged by calls from agents, all of whom claim to be independent. All but one have been pushing one company over another, each a different company. I can't help but think it's because that's who they'll be getting the biggest commission check from. No bother. I'm after the lowest rate and I don't care how much commission they get, as long as the company is rated A+ or better by AM Best and gives me a great price.

One good thing about these calls is that one agent really took the time to show me that I'm woefully underinsured. As a result, I've doubled the coverage that I'm seeking. Whichever policy I do choose, it will be a bigger bite than I was hoping before because of that. Still, since I'm the only breadwinner, I have to make sure my family is secure if I'm gone.

So far, only 3 agents are credible. 1 pushing West Coast Life, 1 pushing US Financial and 1 pushing Prudential. I currently have West Coast Life, and my health has only gotten better since I took the policy two years ago. If they quote me based on the health info they have, I know it's a real price. I think some of the other agents were giving me too optimistic of quotes saying I'd fit into a catagory that I don't think I can fit it. My health is fine, but I'm way overweight for my height.

I'm surprised that not one agent has tried to push me into whole life or variable life or any of that other garbage. The one agent who talked me into seeking higher coverage even told me that term was the best way to go, and that any extra money should be invested in my retirement program, rather than a cash value life insurance policy. He's got a lot of credibility right now with me.

If any readers have any useful tips to pass along, please leave a comment for me.

Roth vs. Traditional IRA

I keep seeing everyone advocating putting money in Roth vs. a Traditional IRA. Maybe they're seeing something I'm missing. To me, a Roth is really the best choice only in a narrow set of circumstances.

For many, they did not save as early as they should of. And even if investing everything they can for retirement, their retirement will still earn them less taxable income than they earn now. So why would you want to pay the higher tax rate now and then invest in a Roth, vs. take the bigger tax break now and invest in a Traditional IRA or your 401k?

For example. Right now I'm in the 25% tax bracket. However, by every retirement calculator I've ever ran, my annual retirement income will place me in the 20% or less bracket. So why not pay lower taxes later?

The common argument against my point is that you don't know what Congress will do to tax rates in the future. Fair enough. But you also don't know what they'll do to Roth rules either. If the gov't is hard up enough that they need to raise income taxes on less affluent retired seniors, they can just easily turn around and say that Roth earnings can be taxed too.

The Roth does offer one nice feature. You can withdraw your contributions (not earnings) early, without penalty. This makes it a good way to save for retirement, but still have that cash available without penalty if another more important need arises. I have seriously considered this as an investment vehicle for my son's college education / my retirement, while putting everything I can into my company's tax-deferred 401k. If you ever look at the 529 plans, they have penalties galore if the money is not used to spend on a post-high school education. The Roth would have none, as long as I only took out my contributions, and left the earnings in for my retirement.

Unless you are predicting a rosy scenario retirement, I say take the sure thing bigger tax break now, and use that extra tax savings for further investments of one sort or another.

Tip on Tax Return Advances

Many people when they take their taxes to a tax preparation center, or even if they do it with some computer software, will be offered a Tax Return advance from the tax preparation company. These companies will give you your tax return instantly for a small fee, and then your tax return from the IRS will be given to them later. Sounds great, right?

AVOID THESE OFFERS LIKE THE PLAGUE! If you calculate the fee as you would interest on a loan of 1 to 3 weeks, you often wind up paying 600% or more on that loan. You've already paid too much to the IRS and let them hold your money for a year or more. What's another week or three?

In fact, some companies actually make very little money on the tax preparation, and make their real profits from these short term loans. The actual tax preparation is almost a loss leader.

If you are that anxious to get your money as soon as possible, adjust your witholding exemptions to a higher number, so you keep more of your money every payday. Then you won't have a large return at tax time.

What's Old is New Again

USA Today reports that AT&T will be ending the Cingular brand and replacing it with AT&T. Uh....Cingular used to be AT&T Wireless.

"Today's AT&T was known as SBC Communications until late 2005, when that
regional Bell company acquired its former parent, the AT&T Corp.
long-distance business. Several years before that deal, the AT&T
long-distance company spun off its cellphone business, AT&T Wireless, as an
independent concern. Then, in late 2004, AT&T Wireless was acquired by
Cingular, which had no real desire or legal right to adopt a brand still owned
by the AT&T long-distance business."

I just find it amusing that here Cingular has invested all that time and money in brand building over the last 6 years, and it's just scrapped like that, especially when they already had the AT&T name before, and chose not to use it.

Do You Have a Silent 2nd or 3rd Mortgage?

When I bought my home, my mortgage broker found some state assistance for the first time homebuyers. It was a silent 2nd mortgage at 5%. What this means is that $25,000 of my mortgage loan requires no payments until at the end of the 30 year period. At that point, I would owe something like $62,000 and could re-finance it if I had to, as my 1st mortgage would be paid off by then.

Anyway, the interest has been adding up since then. I've made a few occassional small payments, and the interest paid has been tax deductible. Right now, it's about $1,300 in interest. I'm taking money out of savings and sending in a payment on it for that $1,300 in interest. It's going to save me a bundle.

First, I'll be saving 5% in future interest on that $1,300. That's what I was earning in the savings account. Plus, I can deduct that interest payment on this year's taxes. I'm expecting to be in the 20% bracket, so it'll save $260 on income taxes this year.

Get Your Mortgage Payment in Early to Maximize Your Tax Deduction

This year I'm sending my mortgage payment in 2 weeks early. Why? So I get 13 months of interest paid this year, so I can deduct it on my taxes.

If you've had a good income year, and expect to owe a larger amount in taxes, here's a free way to save taxes on that interest. If you haven't had such a good year and don't expect to owe much in taxes, make the payment in early January. Maybe you'll have a better year next year and can take that extra help on next year's taxes.

Get Free Bill Pay Service

If you want a full featured FREE Bill Pay Service, look at AOL. America OnLine (AOL) is restructuring from a membership model to a ad supported model. In doing so, they are making many of their services free to all. Their Bill Manager Plus is a full featured Bill Pay system, integrated with their Email. All you need is an AOL account, which is free too, just go and sign up for one AOL.com.

Here's some of what it will do:
Receive Secure E-Bills from over 4,400 support billers and bankers.
Receive and Pay Bills from your inbox
Automatically Add Bill Due Dates to your calendar
Track Monthly expenditures with easy to read charts.
Spending Alerts -- designed to protect you from fraud.
Credit card and banking alerts enable you to monitor suspicious activity and large transactions
Cell phone minute alerts allow you to avoid monthly-minute overage fees from your cellular provider.

AOL is also offering other free services, including 5GB of storage, free safety and security software, local voicemail, picture storage.

AOL is no longer the stodgy dial-up company with their own weird software. It is definitely bringing on the heat and is offering hard core competition to Yahoo, Google, and MSN. We consumers can only benefit.