The WSJ Wealth Report blog talked about a Pew Research Center study that attempted to find the origins of the conflict between rich and poor, which has been playing out in the headlines lately. While the main story talked about the impression of significant conflict between the rich and poor, the part that interested me was the same one that caught Robert Frank’s eye – did the rich get rich from hard work or their social network? That poll showed that 46% of respondents thought they were born with money or knew the right people, while 43% thought hard work, ambition or education was the root reason.

There obviously isn’t a definite answer, there will probably never be, but the question is an intriguing one. My belief is that both are necessary and the more you have of either, the higher your probability for finding success. Whether that success comes in the form of money or in the form of achievements, it’s hard to argue that you can be successful without hard work, ambition, education, or knowing the right people. Whether you’re rich depends on where you point yourself. You can be a successful philanthropist and not have a high net worth, you’d still be seen as very successful, you just chose a different path.

What do you think?

Need to do some quick multiplication and only have pen and paper? You could multiply the old school way using numbers (gasp!) or you can just draw some lines.

You’re still multiplying, just with lines instead of numbers. One gotcha is to remember the “invisible” lines for zeroes and it gets a little messy when the numbers get larger.

From kottke.org

If you recently received a 1099-MISC from a credit card company or a bank and wondering if it’s a legitimate form, try to remember if you opened up any new accounts for the cash or reward point bonuses in the last year. In the tiny print at the bottom, the financial institution likely stated that a 1099-MISC would be issued in the event you satisfied all the promotion conditions. The 1099-MISC is a legitimate 1099 form and is used for Miscellaneous Income, banks consider these promotional payments to be miscellaneous income.

On the flip side, they don’t consider reward points earned through purchases as income. It’s like getting a rebate, you’re ultimately getting a discount on your purchase, not a commission payment for doing something (like signing up for an account). So, it’s generally accepted that you do not pay taxes on credit card rewards, but the IRS has yet to formally weigh in on the subject.

Here’s the kicker – some financial institutions are issuing 1099-MISCs for promotions involving reward points. So those promotions where you got 50,000 miles for signing up for a credit card? They’re valuing those miles in terms of dollars (well, in terms of cents) and issuing a 1099-MISC for it. What stinks about that scenario is that you didn’t get actual cash to start with and you’ve effectively “purchased” those miles at whatever rate they determine. It’s very sneaky (or very clever, depending on how you look at it).

People are fond of pointing out that money doesn’t buy happiness. After all, there are a number of miserable people out there who are rich in terms of finances. However, no matter how fond we are of shrugging off wealth and saying that money doesn’t matter, the truth is that life can be pretty crappy without some money.

After all, most of us need money to some degree. While barter is an option in some areas, and you can grow some of your own food, at some point, there are things that you can’t get on your own with out money. And, on top of that, having a certain amount of money provides a few benefits.
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If you ever thought that the stock market was a rigged game, you’ll really enjoy this book. Lee Muson uses a mixture of anecdotes and data to illustrate why “Wall Street” is putting on a rigged game and that it needs “Main Street” to play along. The basic gist of the book is that your standard investment advice is wrong. Buy and hold is not a guaranteed strategy (it’s not even a strategy, because it only covers half the process – when are you supposed to sell?), diversification is often done wrong, and statistics lie. Your 401(k) might be nice, but you’re pretty much trapped. He devotes a very significant percentage of his book arguing the point that Wall Street has done all it can to make sure you play its game and that it beats you.

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Who’s paying taxes? We all like to know — and we all like to make sure that everyone else is paying his or her “fair share” in taxes. One way to figure out whether or not people are paying what they’re supposed to is to take a look at who’s being audited.

During fiscal year 2011, the IRS audited 1 in 8 millionaires. That number represents an increase in enforcement, and an effort to catch millionaires underreporting their taxes that hasn’t been seen since 2004. In a world where many are disgruntled about the 1%, many of the 99% can rest a little easier knowing that the IRS is stepping up its efforts to make sure that millionaires are paying what they owe.

The IRS also stepped up efforts to catch offshore tax evaders in 2011, and audited 1 in 25 of those making more than $200,000 a year, rather than the 1 in 32 that were audited in 2012. If you make less than $200,000 a year, though, there is only a 1 in 98 chance that you will be audited. That means that, when you think about it, there is a fairly small chance that you will actually be audited.

All told, the IRS reports that 1.6 million tax returns (for the year 2010) were audited in 2011. It is worth noting, though, that 75% of these tax audits were conducted through the mail. For most audits, all the IRS is looking for is documentation to prove that you are entitled to a tax deduction or tax credit. In most cases, this is handled fairly quickly and easily — as long as the person being audited has the documentation, of course.

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One of the furious debates going on right now in the world of finance and money is the one over whether or not getting a college degree is “worth” it. And, of course, the debate only intensifies once you start talking about graduate and professional degrees.

The reason that this is such a debatable subject is due to the fact that different degrees offer different advantages. Not everyone with a Master’s degree or a professional degree (such as a law degree or medical degree) is going to earn the same amount because the salaries you see when you are done vary widely. Georgetown’s Center on Education and the Workforce estimates that the median salary with an advanced degree is $73,738. However, that doesn’t mean everyone with an advanced degree. (Indeed, half of those with advanced degrees will earn less.) The Center also points out that payoff from getting an advanced degree can mean as little as a 1% boost to your salary, or as much as 190%.

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401(k)s are making everyone poorer. That’s the conclusion from a study by the Urban Institute in which they analyzed qualified defined contribution plans, the official category of 401(k) plans, and concluded that employers reduce worker salaries when those workers are eligible for 401(k) plans with matching contributions.

Toder and Smith looked at a Census database on pay and pension plans, and how much employers contribute. They looked at workers who had 401(k) plans in which their employers contributed to retirement savings automatically or by matching employee contributions and compared them with workers who had either a 401(k) with no employer contribution or no 401(k) at all. All else being equal, they found that workers at companies that contributed to their employees’ 401(k) accounts tended to have lower salaries than those at companies that gave no retirement contribution. In fact, for many employees, the salary dip was roughly equal to the size of their employer’s potential contribution.

In other words, if your employer said they’d match your contributions up to 3%, they were probably offering you a salary that was 3% lower than what they would be offering if there were no 401(k) available to you. The actual figures are less dour but that’s the gist.
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Yes.

Rhett Allain of Wired did an extensive study of three battery brands (Energizer, Duracell, and a dollar store variety) and concluded that the brand named batteries are worth the added cost. Brand named contain more energy, disperse that energy better, and cost, on a joule per dollar basis, less than the dollar store variety. The differences between the brand name (Energizer vs. Duracell) were not significant. He did this by having the batteries power a light and took some measurements to arrive at his conclusions.

It was nice to see my own opinion confirmed (I use mostly rechargeable batteries but when in doubt I avoid dollar store varieties) but the big takeaway for me was the energy dispersed over time. As you can see, current (Amp) and potential (V) are highest at first and then drop significantly between 3 and 5 hours. At around 6-7 hours, it has minimal energy left but has that for quite some time. What I typically do with alkaline batteries, after they’ve exhausted most of their charge, is use them in remotes. Then, as new alkaline batteries come into the system, I cycle out the ones in remotes (for fear of leakage). I find that remotes use very little energy.

The difference between brand name and el cheapo batteries is significant and this little study, with its wealth of data, proves it.

(and please use rechargeable batteries… alkaline batteries are horrible, especially if you don’t recycle them!)

(Photo: grandhi)

We have a lot of cool gadgets around our homes. Many of these gadgets offer the chance to easily purchase apps, games and more. As a result, you might find that your children can quickly make purchases without your knowledge — simply using the devices found around your home.

It’s important that you monitor your accounts, and pay attention to what is on your devices. You want to prevent your children from running up the bills with the gadgets designed to make your life easier.

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