Should you pay off your credit card debt with equity from your home? My simple answer is no but honestly it isn’t a simple matter at all.

Let’s take the case of Mr. Joe Smith who is carrying $15,000 in credit card debt, charging him 15% interest each year. Let’s assume that Joe Smith has learned the error of his ways, despite watching his home theater each night, and is now on the righteous path of financial prosperity and has stopped hemorrhaging money - now he wants to make right. Despite his credit card irresponsibility, Joe actually has quite a bit of equity stored up in his home and has considered taking out a line of credit to pay off the credit card debt. By lowering his rate from 15% to something as low as 6%, which is tax deductible, you’re talking about a savings of a good $1,500 a year. That’s serious money and that’s the main benefit of doing it.

So what’s the risk? The big risk in doing this is that if you can’t pay off a credit card, it’s not that bad. Since it’s unsecured credit, they can’t come and legally seize anything (unless you go bankrupt, and even then your home could be safe if you live in a state like Florida). If you pay off your credit card with a home equity loan and then you can’t pay off that home equity loan… they will come and take your house.

Ultimately, moving shifting your debt from credit to home equity is a risky endeavor that has a significant payoff if you can remain responsible (a characteristic that, arguably, you may not have exhibited when you racked up the debt). If you can’t, you can take a bad situation and make it much much worse. If you can swing it, it might be better to see if you can utilize a 0% balance transfer to pay off that debt. Swapping one unsecured debt for another is better than swapping it for a secured debt - plus, 0% is a lower rate even though it would be for a shorter period of time.

If you don’t have to fill out a federal tax return but you still want to claim the telephone excise tax refund for all those unfair and unreasonable long distance excise taxes you’ve been paying the last three years, the 1040EZ-T is the form you will need. For everyone else, you just need to fill out the applicable line(s) on your return to get your refund. And that, is your kinda useful tax tip of the day.

Telephone Excise Tax Refund FAQ

Like to make wishes come true? Live near or in Norfolk, Virginia? Like to drink? If you said yes to any of those, I have a great event in mind that I’d like to tell you about. My friend Scott has been putting together a charitable semi-annual pub/bar crawl (history of the bar crawl) in a synergistic merging of two things dear to my heart - charitable giving and drinking. In the previous three times they’ve put this together, they’ve been able to raise thirteen thousand dollars for the Make-A-Wish-Foundation of Eastern Virginia… that’s a staggering amount when you consider registration is a mere $15 if you register before tomorrow (it’s only $20 if you register afterwards). This year Scott told me he’d like the event to raise $8,000, a very admirable and certainly achievable goal, and I’d like to do whatever I can to help him along.

If you’re in the area and like a good time, please do sign up! If you’re not but you’d like to help, there is a Ghent Bar Tour donations page if you want to send a few dollars to the MAW foundation and help them reach their goal of $8,000.

Here’s more about the event:

Drinking for Charity? What a concept. GhentBarTour.com is holding its fourth semi-annual charitable pub crawl on February 24th in Norfolk, VA. In the short span of just five hours, the 2007 Ghent Winter Bar Tour will visit ten different food & beverage locations in the city’s historic midtown neighborhood of Ghent. The winter and summer tours of 2006 brought out 300 plus participants each and raised a total of $13,000 for the Make-A-Wish Foundation of Eastern Virginia (the local Hampton Roads chapter of the well-known national wish-granting organization). This latest pub crawl will also once again benefit the Make-A-Wish Foundation.

Registration is required for the event and can be done online, by-mail, or at-the-door the day of the event. The registration booth will be located inside Zio’s at 1517 Colley Avenue. Every registered participant gets an official long sleeve event T-shirt, souvenir cup, magnet, guide map, a few other promotional items, and most importantly a wristband good for food and/or drink discounts at each stop on the tour. Registration is $20 the day of the event, but you can get a discount on this fee (and reserve your shirt size) by registering ahead of time in groups of two or more (see website for details). Still looking for more fun? Friendly competitions will be held along the way at each and every location. Play our versions of Bar Tour Bingo, Texas Hold ‘Em Poker, and various Bar Sports to win various prizes. And don’t forget to enter the 50/50 raffle to win your bar tab back! Rumor has it a few Budweiser representatives will also be making their way through the tour and adding excitement to the festivities. So why wait? If you live near Norfolk or have friends, family, or acquaintances that do you and they should register to be a part of the biggest party in Virginia this winter!

For the latest event information visit www.GhentBarTour.com.

The Make-A-Wish of Eastern Virginia chapter serves all of Hampton Roads, the Peninsula, Williamsburg, Emporia, Franklin, York, James City, Sussex, Isle of Wight, Surry, Greensville & Southampton counties and the Eastern Shore. The mission of the Make-A-Wish Foundation is to grant wishes to children between the ages of 2½ and 18 who have life threatening medical conditions. The organization provides a bright moment of hope, strength, and joy for a child in what can sometimes be a dark routine of treatments, doctors and hospital visits.

If you’re a blogger and wouldn’t mind writing a little bit about this event, I’d be very appreciative. Thanks!

Thank you FMF for your generosity and thank you Mapgirl and Henry for blogging about it!

I had some hacker issues last night, just as I was sitting in traffic trying to get to the Greenbelt Metro stop so I could take a lovely hour and a half jaunt down to meet the finest personal finance and non-personal finance bloggers (and non-bloggers) in the land, so my sincere apologies for those of you who had the thirst for knowledge that couldn’t be quenched and had to go to bed left wanting. What happened was someone was trying some script injection attack of some kind, the host didn’t elaborate and I didn’t bother to check the logs to figure it out, but it had to do with my site’s .htaccess (which I hadn’t updated with the rest of 2.1, the permalink rewrite stuff has been trimmed down considerably), so all the permalink stuff was down even though the main site was up. Anyway, hopefully those have been resolved.

Either way, last night a bunch of us got together, had some half price/2-for-1 burgers and then meandered over to a bar about the size of my living room. Those in attendance were:

• George of Fat Pitch Financials
• Clever Dude
• Nick and his wife from Punny Money - dude has some pimpin’ business cards
• H. from Binary Dollar
• Mapgirl - thanks for playing the hostess, none of us knew where we were
• Rob and his wife from Epistolary (not a pfblogger himself, he’s an avid and much appreciated commenter here)
• Mighty Bargain Hunter
• Nickel - I’m not linking to you

(Hopefully I remembered everyone, if not, let me know because I didn’t leave you out on purpose. I had a two hour trek home…)

It was a pleasure meeting you all face to face, my apologies to Nick’s wife who really had little interest in blogging but tried to smile whenever someone said something about it… next time I’ll try to bring my fiancee and you two can talk about normal stuff.

This is a Devil’s Advocate post.

Buying a car, whether it’s new or used/certified pre-owned/whatever Orwellian double-speak you prefer, is better than leasing a car. When you lease a car, you’re throwing your money away! You’re overpaying in terms of fees, you don’t get any ownership in the car, and basically you’re renting.

All that is true. However, I argue, in this Devil’s Advocate post, that while you do pay a premium for leasing and while you don’t get to keep the car, that premium gets you a lot of benefits you either don’t get at all or that you’ll lose after a period of time when you buy the car. Also, one thing a lot of people don’t consider is the impact of depreciation. With leasing, you’re essentially paying for that depreciation (plus fees, etc.) because it represents the value that you’ve used up. With buying, you are paying for that depreciation but you get the car afterwards.

Automobile Equity Is A Myth
First off, I think the fact that you get your car after you pay off your loan is hugely overrated. People say that you should buy a car instead of leasing it because when you pay off the loan the car is yours. When you lease, you’re basically paying rent (you pay for the depreciation of the car) and you never actually own a piece of it. See how the analogies are so closely tied to home ownership? The problem is that cars depreciate, and depreciate extremely quickly, whereas homes appreciate. You want to own a home… it doesn’t really matter if you own your car because in ten years you’ll probably sell it for a couple hundred bucks or donate it. When you buy a car instead of leasing it, you’re still paying rent - it just takes the form of depreciation (value that you never recover) and just looks invisible to you (out of sight, out of mind). It’s something businesses fully understand (why do you think businesses lease equipment?) but something individuals don’t fully consider.

Taxes taxes taxes!
In Maryland, the sales tax is 5% - that means when you buy a $15,000 car, you need to send another $750 to the state just to register your car and get license plates. That tax is up front, even before you get to drive the car. With leasing, you will only pay taxes up front on the amount of the down payment (often little to no down payment is necessary for leases). Then, with each month’s payment you will be charged tax but ultimately, with leasing, you are only charged taxes on the fraction of the car that you’re using during your leasing period. You don’t pay tax on all $15,000 of car.

Cars are Always New and In-Warranty
I put these two together because they’re related and they focus in on the same reason - when you lease a car, you’re getting a new car. You’re getting a car that has on accident history, it doesn’t have weird noises or other strange quirky behavior. Also, when you lease a new car, it will probably be covered by the original manufacturer’s warranty for the length of your lease. That means if something happens, the repairs are absolutely free. While this is true of new cars that you purchase, that warranty will eventually run out and then you’re stuck with the repairs. If you continue to lease, you’re always getting yourself a new car and you’re always in warranty.

Ultimately, the choice of whether to buy or lease depends on each individual’s personal factors but just like the Buy, Don’t Rent post, one cannot universally say that everyone should buy a car and not lease it. As you can see, with this inclusion as a Devil’s Advocate post, I am a proponent of buying a car because there are a lot of benefits to doing that - mainly, that little bit (dollar-wise) of ownership that you get after you pay off the car can last a very very long time, especially if you’re smart about maintenance.

I recently purchased the 50″ Philips Plasma TV from Buy.com and for the first time in my life I chose which credit card I’d use to make the purchase based on their customer protections - in this case, I used my American Express TrueEarnings Costco card because, like many other AMEX cards, it offers a Buyer’s Assurance Plan. (The TrueEarnings Costco card has an annual fee that’s waived with a Costco membership, if you want this protection but from an AMEX without an annual fee, consider the AMEX Blue card)

The Buyer’s Assurance Plan will double the manufacturer’s warranty on a product up to an additional year (so if it only has a six month warranty, you get another six; if it’s a two year warranty, you get only an additional year) if the original manufacturer’s warranty covers the product for fewer than five years. All you need to do is charge the purchase to your eligible American Express card. There are two limits to be aware of. The first is that the product must cost less than $10,000 and the second is that there is a $50,000 per card account limit per year. There are also some other rules like how you must be a card holder in good standing (paying on time, still have the card, etc.) at the time of the claim as well as a list of product types not covered by the plan.

The television itself comes with a supplier 1-Year Parts & Labor, 2-Years Plasma Panel warranty, less than the limit of 5 years, and it cost less than $10,000 (it was “only” $1,500, thanks to Miller for making my wallet lighter by pointing out this deal) so it’s eligible for the Buyer’s Assurance Plan. This marks the first time ever that I’ve purchased a television that wasn’t: 1) used, or 2) less than $100.

Full program details

MBH talks about the latest round of 0% financing offers - this time from furniture stores.

Nickel writes about how HSBC Direct is trying to gain new customers by offering a teaser 6.00% rate until April 30th. I remember other banks doing this same move a year or so ago.

Flexo runs into another problem with TIAA-CREF and his SEP-IRA involving incorrect contribution coding.

From the Department of Obviousness, FMF posts “advice” from Money Magazine: If you want your house to sell faster, drop the price. It’s a brain trust over there at Money.

JLP takes a look at the impact of a few bad years on your investment returns.

Him of Make Love Note Debt wonders if he should move his SIMPLE IRA because it sounds like the brokerage handling it isn’t being 100% honest with him and his fellow co-workers. Anyway, the full story is at Make Love Not Debt as well as a list of his options, weigh in if you can.

I also wanted to throw a shout out to LAMoneyGuy, who hit 100,000 page visits, congratulations! Everyone go visit his site and give him a few more.