The only time I ever crack open a newspaper is when I have absolutely nothing else to do and there’s a newspaper in front of me (I have this thing where I don’t like waiting around, I have to be doing something productive, maybe it’s ADD-ish or something), like when we’re checking out at the supermarket, because all the information in the newspaper is presented better, faster, and cheaper (can you feel that frugal bone in your body twitch?) online.

Consider this, how can a newspaper, which freezes its content the night before so it can be sent to the printer, really offer you “breaking news”? Your nightly television news can’t really offer you breaking news because they can’t show up until 10PM (or whatever time it shows up) either but at least on TV they can break into that 345873th rerun of Friends/Seinfeld/Everybody Loves Raymond (Brad Garrett is freaking hilarious) to show you something. However, on the internet you can get breaking news faster than any news service if you’re looking at the right place.

Now, skipping the breaking news aspect, all the other sections of a newspaper can be found online and in greater depth. You want the Money section? Check out CNN Money or Yahoo! Finance’s dozens of sections (retirement, personal finance, real estate, etc) with in depth articles. You want classifieds? Find your local Craigslist. Autos? Edmunds.com or KBB. Style? It’s online too. Every section is available. If you really love newspapers, try the newspaper’s website which is often absolutely free. As for the ones that make you pay, find an alternative!

So, save yourself a few bucks and a few trees and snub that newspaper subscription.

When people talk about their tax bracket, they are usually talking about their marginal tax rate - that is, the amount of tax on the next dollar they make. Often times people get this confused with their actual tax rate, which is much much lower after you take into account your deductions, such as a 401k contribution, medical benefits, mortgage interest, etc.

For example, here are my marginal versus my actual tax rates for the last three years:

Just some explanation before we continue, in 2003 I started my job part way into the year and so my salary was much less than in 2004 and 2005 and I was aggressive in my contributions to my 401k, which explains the percentage disparity between 2003 and 2004/5 in terms of taxes paid. The percentage fell from 2004 to 2005 because I purchased a home and now had more in terms of deductions, mortgage interest and the like, than before.

As you can see, in all three years my marginal tax rate was far higher than my actual tax rate because of the various deductions you’re allowed to take. Even if you weren’t allowed to take any deductions (not even the standard deduction), someone who makes $50k/yr is in the 25% tax bracket but only pays 18.12% in taxes ($9,057.50). If all they do is take the standard deduction of $5,150, then their tax burden falls to a lucky $7,770, or a mere 15.54%.

Why is this so? It’s because your marginal tax rate isn’t really your tax rate, people just misunderstand what it means. Since your first dollar is truly taxed at 10% (well, it’s really your first dollar after your first 5150 or more depending on what other breaks you’re eligible for) and not at your published tax rate, the marginal tax rate isn’t only important when you’re thinking at the fringes.

Where would knowing your marginal tax rate be important? Let’s say you’re thinking about contributing more to your 401K, if you were Mr. $50k, each dollar you contributed would only decrease your take home pay by about 75 cents. If you feel you can reduce your need for that money this month, you can actually contribute more on a pre-tax basis, about 25% more. So in those types of calculations, marginal tax rate is important, otherwise don’t stress it but do understand how it works.

One of the biggest scams in education, besides shelling out thirty grand a year for a private university (just kidding Mom and Dad!), is the college bookstore. They sell textbooks at full price and then, at the end of the year, offer to buy back that textbook at a fraction of the price. Buy a copy of Machine Learning, new, for $153.44 and then they’ll offer to buy it back for around $20 at the end of the semester! It’s a racket!

What you should do instead is buy a used copy of Machine Learning for a 79.99 and tell the university bookstore to go screw themselves and their monstrous profit margins.

Some people have reservations about buying textbooks online because they don’t like the idea of buying something sight unseen. I share those reservations if the item is something that’s thousands of dollars (I did buy two cars on eBay, so maybe I don’t share it quite so much) but we’re talking a savings of 50% on something as dull as a textbook. However, given those reservations, here are a few tips I have for buying textbooks online.

1. Read seller’s feedback - There are a number of sellers who are businesses selling used textbooks, one example is “ecampus_com” on Amazon who has over 69,568 ratings (86% positive). Go with these larger sellers (some are often stores or other websites using the Amazon Marketplace to unload inventory. I find that feedback through Amazon’s system is much more accurate than on Ebay because the buyers aren’t afraid of retaliation if the transaction goes sour (eBay recently changed this but the historical records still remain under the old system).
2. Use a reputable site with a strong mediation program - If the book doesn’t come, you want to make sure the website handles the problem. I’ve had people on Amazon not ship a book. I reported that the book never arrived, received a refund, and bought another one from someone else. It’s harder to do that on Ebay, Amazon requires only a simple explanation and a few mouse clicks. (which I suppose is bad for sellers, but whatever)
3. Buy a book at the bookstore, return it when the cheaper one arrives - If your bookstore has a liberal return policy, allowing you to keep the book for a few weeks, take advantage of it. Most stores offer liberal return periods because many students don’t drop a class until they’ve tanked the first test, bookstores are very understanding in this way.
4. Use a credit card - Instead of a debit card for your online transaction, use a credit card. If you’re balance is close to $0, having a textbook’s charge sitting in limbo limits your financial flexibility. Don’t put yourself in that situation.
5. At least buy from an online bookstore - While Machine Learning is an awful example because Amazon offers no discount on the retail price, at least look online to see if their prices are cheaper. Use resources like AddAll, a textbook search engine, to find the best price.
6. Don’t buy it online, buy it from another student - Rather than buy the textbook from a website, hit up your school’s bulletin boards or For Sale message boards to see if someone is selling that book on the cheap. You can often save on shipping charges and even get yourself a better deal. Remember, the seller is trying to get more than $20 for the book and you’re trying to pay less than $200, a happy medium can be found somewhere in there.

There you go, my tips for buying textbooks (or any book) online.

(Photo by larissa72350)

Today (Sunday, Feb 18th, 2007) is the first day of the new year by the lunar calendar and thus the first day of the new Chinese year, the year of the piggy. If you’re curious about some of the other things involved in the Chinese New Year, Wikipedia has a pretty comprehensive writeup about the various customs and the history behind the importance of the Chinese New Year, I recommend you give it a read if you want to learn more.

Xīnnián kuàilè! (Happy New Year!)

If you have a Visa or MasterCard, you’re eligible to receive discounts from a variety of vendors just for using that card? For example, with a Visa card you can get $10 off your purchase of $34.99+ at 1-800-Flowers by using the card and giving them code 66V? If you have a MasterCard, you can get $10 off a purchase of $39.99 at 1-800-Flowers by using the card and giving them code MAST33? Your card could be issued by Citi but as long as it has the Visa or MasterCard logo, it’s a Visa or MasterCard card and you’re eligible for these discounts. (American Express gets in on the 1-800-Flowers fun by giving you $10 off $34.99, just call it in and let them know, code AMX4)

Sometimes you can get better deals by going to deal hunting sites or sites that give you a kickback on your purchases (Fatwallet, Ebates), but these are good starting points.

• MasterCard Discounts
• Visa Discounts
• American Express Discounts

With the arrival of the new $1 Presidential coins comes the arrival of new collectors itching to get a full set of them, are you joining the speculators? MBH gives some tips for those of you looking to capitalize on the $1 presidential coin craze. Flexo scored two rolls of the coins early, maybe he’ll hit the lottery!

Changing gears from quick money to sloooooow money, FMF writes about the value of an advanced degree. And from the department of terrible ideas, Dave Ramsey recommends skipping the 401k match and that you should pay off debt, something JLP doesn’t particularly agree with. As an aside, I was going to write a Devil’s Advocate post about how the match isn’t worth it… but I couldn’t come up with any reasons not to do it!

Last but probably not least, Nickel writes about applying for a business card.

The key to being prepared is to learn about stuff before you need them and learning about 529, for me, certainly falls into that category! A 529 plan is an educational savings plan named after the section of the federal tax code that outlines the rules for them. Basically there are two types of 529 plans, prepaid tuition plans and college savings plans, but they are generally designed to help you save towards college for your children.

Prepaid Tuition Plans
Essentially what you do is prepay tuition at an in-state institution at current rates, regardless of when the beneficiary could potentially go to that institution. Lastly, if your child decides they don’t want to go to that school, you can still use the money for out of state schools but it may be adjusted.

College Savings Plans
The other type of plan, the College Savings Plan, is a little more involved and has more rules but it basically sets up an investment account that grows tax free, as long as you use the money for education, in state, out of state, undergraduate, graduate, it doesn’t matter as long as the university or college is accredited. The account is handled by an investment company, which in Maryland is T. Rowe Price, just like any other investment account. What you’re allowed to invest in will depend on the rules for your state but in general you can invest in a variety of managed investments (so not individual stocks, which kind of sucks for you but is probably a boon for brokerages).

So, as I mentioned before, the growth is tax free as long as it’s spent on eligible education expenses but there are more benefits. While there is no limit, contributions are considered gifts so you’re subject to the reporting and tax limit of $12,000 per year (if you give under $12k, you don’t need to report it) and $200,000 over your lifetime. You also retain control of the account, despite the beneficiery being your child, which is different from other accounts like Coverdell Education Savings Accounts. Lastly, contributions may be state tax deductible.

Whew… it’s scary to think about, especially for me, but it’s good information to know.

After taking out three 0% financing balance transfers last year and dealing with the hassles of them, I told myself that all the work wasn’t really worth it and that I wouldn’t apply for any more cards for the purposes of balance transfers. I am happy to report that I have not applied to any more credit cards and that this time the balance transfer offer sort of fell into my lap. I wrote on Monday about how you shouldn’t cancel your old credit cards because you never know when you’ll see something nice, like a balance transfer offer for no reason, and yesterday I initiated a new balance transfer off the Citi Platinum Dividend Select card.

The major downside to applying for a new card and requesting a balance transfer is that it will have a significant negative impact on your credit score. Since your credit utilization will increase and you’ll have yet another credit inquiry, it’s guaranteed your score will fall. This isn’t a concern if you aren’t planning on going after a mortgage or other large loan but I really didn’t want yet another item on my credit history so this particular scenario is perfect. I can get a balance transfer without another credit inquiry, so in essence it’s “free.”

Now, if you happen to find one of these free balance transfers, you should request a credit line increase before the transfer. On a typical arbitrage play, the card is brand new so the credit card company won’t increase your credit line limit but if it’s an “old” card, you won’t have this problem. Request the increase so you can put more onto the transfer! Sometimes you’ll get an automatic offer of an increase of a thousand dollars or so, just take that and make the transfer. Those offers usually require no credit inquiry and so they are perfect, if they don’t offer you that and instead require you to fill out a large form, just skip it. Since you’re taking advantage of the “free” nature of the offer, you don’t want a credit inquiry muddying it up.

Good luck!