My fiancée bought me Heroes: Season One on DVD a few weeks ago and it’s amazing. We’ve been watching an episode or four every few nights and basically need to pull ourselves away from watching all of them at once. We weren’t able to watch it when they were first on television because of my Monday night classes and we started falling so far behind that the prospect of watching multiple episodes via the internet wasn’t particularly appealing. Now that we are caught up and missed only episode 1 of the second season, it’s about time to keep current again!

Now, some of the characters on the show have some typical comic book character abilities: telepathy, clairvoyance, persuasion, regeneration, invisibility, flight, time travel, walking through walls, cutting people’s heads off and stealing their powers. Now, some of the secondary characters have some crazier powers like being able to locate other “heroes” and ultra-sensitive hearing, so that got me thinking… what power would I really want? (answer below) What power would you want?

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When President Bush took office the national debt was $5.6 trillion. That’s right, five trillion, six hundred billion dollars. That’s $5,600,000,000,000.00 in debt. Yesterday, the Senate voted 53-42 to raise the credit limit for the fifth time in the Bush Presidency to $9.815 trillion dollars. 9,815,000,000,000.00 is how much debt the United States is allowed. Isn’t that absolutely staggering?

What makes this absolutely hilarious is the fact that all these lawmakers went absolutely nuts about the “subprime meltdown.” Oh, so when the banks were offering credit to people who had absolutely no right getting that credit, it was a travesty. When we discovered that these borrowers couldn’t pay the debt back, we needed consider bailing them out because they were the victims of predatory lenders. But, when the government can’t control its spending and is about to hit its limit, they can just raise it by, oh, eight hundred and fifty billion dollars. I wonder if any other country is going to bail out the United States when we discover we can’t possibly pay it back. It’s predatory lending!

Thoughts?

As checkered a history as the board game Monopoly has had (Monopoly: The World’s Most Famous Game–and How It Got That Way is a great book about its history), it’s amazing how much can be gleaned from it and how applicable those lessons are in so many facets of our lives. I think there are at least a half dozen million “business lessons learned from Monopoly” books but I haven’t seen any personal finance lessons, until now.

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Imagine that you just bought a $16M home… it’s gorgeous, idyllic, and 99.99999% of all human beings on the planet would do anything to be able to live in a home like that. Now imagine that you just submitted a request to the Preservation Division in your town for permission to demolish that home. That’s right… demolish it. Stop imagining it because John Henry, owner of the Boston Red Sox, has done just that.

But wait, there’s more. Now imagine that you’re a little puppy that’s been living the high life. It’s a life that most human beings would trade their left arm for… now imagine that your benefactor has passed away and has left you twelve million dollars. That’s right. Oh yeah, your name is Trouble and that’s exactly what happened. Leona Helmsley left her dog Trouble exactly twelve million dollars. Two of her grandkids got nothing.

Okay okay, just when you thought rich people weren’t all that crazy… check this out. Mel Gibson bought an island in Fiji and he had an eight lane bowling alley shipped there. Yeah… four lanes just wouldn’t be enough.

But wait there’s more… check out this story about the homes of billionaires. “Perhaps most mind-numbing of all is Baron Capital Management founder Ron Baron’s record-breaking buy this year. In May, Baron paid Adelaide de Menil Carpenter, an heiress to the Schlumberger oil fortune, $103 million for a 40-acre property in East Hampton, N.Y., shattering the previous residential record held by Ron Perelman, who sold a Palm Beach estate for $70 million in 2004.” Amazing.

But wait… there’s more! The last one is more of a sad story about Michael Larson. Michael Larson was the guy who figured out the pattern in Press Your Luck and won himself a cool $110,237. You have to read his story, it’s amazing, until you get to the part where he loses it all in a real estate Ponzi scheme and some get rich quick fraud contest involving matching serial numbers on dollar bills. Poor guy. I guess that’s not really a crazy rich story but I wanted to write about it anyway.

A hearty welcome to those of you awake and listening 7:06 Minnesota local time to The Morning Show with John Hines on KTLK-FM radio and glad you were able to find the site. As John mentioned, I’m just a regular guy writing about regular personal finance stuff from an amateur’s point of view. Sometimes I’m right, sometimes I’m wrong, but most of the time I’m close enough so that readers like you can correct, reinforce, or add to the discussion so that all of us learn about these topics together. Ahhh the power of citizen media!

While the discussion with John Hines focused more on the article I wrote about the 7 Unwritten & Often Forgotten Credit Card Secrets, this blog covers much more than that. John mentioned a few other topics I hit such as searching for a home but the site covers everything I’ve dealt with from a money perspective. For example, I’m getting married soon and one of the most popular posts on this site is whether Married Couples Should Combine Finances… so you can see the chronology of this site very much mirrors my life.

So, you’re not 27, about to be married, and just settled into your new home, can you get anything out of this? Of course! I write about topics that aren’t necessary pertinent to me now but may come in handy some day, such as this post briefly talking about 529 plans (I have no kids). I also answer reader questions such as the one I mentioned on-air with John, about the reader who asked whether he needed a credit card (he already has a condo, is doing great, no he doesn’t need one).

Also, if you want to receive what I write in a daily email, you can sign up to this mailing list (I don’t use it for anything else other than to send you a daily digest) below (Privacy Policy):

Ultimately, I’m just a regular person just like you facing the regular problems that you do, so feel free to send me an email (I love email!) if you have a question, comment, or to just say hello.

I totally forgot to mention this but I’ll be on The Morning Show with John Hines on KTLK-FM radio (100.3), a Minnesota radio station, tomorrow (September 26th) at 8:06 am Eastern time to talk about how I started up blogging and more in detail about the 7 Unwritten & Often Forgotten Credit Card Secrets article I wrote last week. If you’re in the area, I hope you’ll tune in. I don’t know if it’ll be available electronically but they do have a listen live option. Since I am posting this at 11:25pm the night before, chances are by the time you read this the piece will have already happened since I’m a terrible forward looking planner.

There’s been a lot of talk about debit cards versus credit cards from a fraud perspective and I think there are a few misconceptions out there that bear further investigation. I don’t use a debit card much so until today I never researched the real differences between debit cards and credit cards from a fraud perspective. Federal Reserve Board Regulation E is the federal regulation that governs Electronic Fund Transfers and includes provisions that makes debit-card transactions instantaneous. Instantaneous means that the money is technically spent from the account the moment the card is used, which is important because your debit card draws from a bank account as opposed to a line of credit.

Why does this distinction matter? It matters because when a transaction is under investigation with a credit card, the charge is generally reversed until it is investigated further. With debit cards, the charge stays on while the transaction is investigated. So, if you have a fraudulent charge, you’re out the money until it’s fully investigated. This often causes a cascading effect where the missing money causes your account to go negative and start incurring fees. It’s not the bank’s fault at this point because it doesn’t know the offending charge was fraudulent and you really have little in the way of a defense to get the fees reversed since your account was negative.

Another difference is that you need to report the fraud within two days of “discovering” the loss (timely fashion), but “discovery” isn’t well defined, and you’ll be liable for up to $50. Any longer and you could be liable for up to $500. Now, some banks offer zero liability but those rules still apply because they’re outlined in Regulation E (§205.6 Liability of consumer for unauthorized transfers).

Regulation E has a lot of good stuff in it if you have a few minutes to kill. For example, § 205.8 Change in terms notice; error resolution notice, outlines how the bank must send you written notification of a change at least 21 days before its effective date. The only exception is a change is required to maintain or restore the security of the account or system, in which case they have 30 days to notify you.

It’s not particularly long and it’s written in easy to understand language so give it a look if you have some time. You can find all the other Federal Reserve Board Regulations here.

I was reviewing my Citi credit cards this morning when I saw this banner offer: Get a $25 cash back certificate just for signing up for a thirty day trial of their IdentityMonitor product. What does the offer include?

• 3-in-1 Credit Report—Access to your 3-in-1-credit report, 3 credit scores, monitoring and analysis at no additional cost
• Credit Monitoring—Keeps track of your credit file activity every business day
• Notify Express SM—Alerts that can warn you of potential fraud
• Toll-free access to Fraud and Credit Education Specialists—They’re available to assist you with your concerns
• Credit Analyzer and Online Tools—Credit tips and tools to help you understand your credit rating

If you just want a copy of your credit report, I’d recommend avoiding this song and dance and going to AnnualCreditReport.com, where you can request a copy of your report for free once a year as mandated by federal law. You don’t have to cancel any memberships to any programs by going that route (but the bureaus will try to upsell you on their products as you request your report).

If you really want identity monitoring services like this, I’d skip this $12.95 service and go with one that offers you a little more hands on service if you ever do have your identity stolen and some insurance as well. I’m not advocating identity theft insurance, read my thoughts and the opinions of others on identity theft insurance, but there are better options out there than this offer. IdentityMonitor seems to only alert you of when a theft may occur, doesn’t seem to do much afterwards (I don’t have the service so I don’t know, but none of the bullet points mention it).

The only thing that would concern me about this promotional offer is that there’s no mention of the $25 outside of the graphic on the left of the landing page (nothing in the IdentityMonitor terms and conditions, no mention on the sign up page), so if you do this or have done this offer, please let us know if there are any hiccups we should be aware of.

(Also, if the above link doesn’t work, please let me know… I reached it through a link in my account so it might not be public)

Much thanks to Steve for this article, where Gov. O’Malley actually details the new tax brackets under his proposal. The current state income tax is 4.75% per person, to give you a point of reference, and so the new tax brackets would make it more of a progressive (more you earn, the more you pay) similar to the federal income tax. The brackets are:

Marriage penalty, a feature seen with the federal income tax, now gets to be introduced with the state if this get passed. The marriage penalty is the fact that you have to pay more tax as a married couple than if you were two single filers, something that I think makes absolutely no sense (it only makes sense to the people writing the checks drawing from the account our extra taxes go into).

Breakeven point at $165,000 for singles, $218,000 for married. Under the new plan, you would pay approximately $7,832.50 in taxes under the new plan and $7,837.50 under the existing tax structure as a Single. For all you married folks out there, at $218,000 combined income you’d be paying $10,351.25 under the new scheme and $10,355 under the existing tax structure. Those over the breakeven point will pay more and those underneath it would be paying less in terms of taxes. (please check my math!)

One of the other proposals that seems to bother people a lot is the introduction of slot machines. I don’t see the harm in that, especially all the revenue it would generate, but I haven’t looked into it in great detail. Ultimately, it’s just opening up a new revenue stream that the state can then spend irresponsibly.

What do you all think of this? Bear in mind that in Maryland we also have county taxes and those are around 3%, so before anyone claims we have low taxes, take those into account too.

Ever notice that tons of personal finance sites talk about Roth IRAs all the time but rarely talk about Traditional IRAs? I think part of the reason is that the Roth IRA is newer so there’s far less literature on it and because it’s sexier – forty years of tax free appreciation and then no tax on disbursement? That’s pretty hot. The downside is that some people can’t contribute to the Roth so they’re stuck with the Traditional route, something that isn’t discussed as much.

About Traditional IRAs

The Traditional IRA is much like the Roth IRA except contributions are tax deductible unless your employer offers a retirement plan. This means you get tax savings immediately since your income will be reduced by the amount of your contribution. It’s very much like a 401k from a tax perspective, which explains why the deductibility rules are structured the way they are. If your employer offers a 401k, Keogh, SEP-IRA, etc; then the deduction is limited. The rules are a little complicated so I direct you to a past article I wrote about IRS income phaseouts (specifically IRA contributions) with respect to contribution limits and deductibility.

From there, the Traditional IRA grows tax free much like a Roth IRA. However, whenever you start taking disbursements, those earnings are then taxed at your marginal tax rate. You are also required to take minimum disbursements once you hit the age of 70½, which is something you are not required to do with a Roth IRA. If you don’t take the required minimum distributions then you will be penalized (you will always want to take these distributions).

Finally one last distinction worth noting with respect to Traditional and Roth IRAs; if you make an early withdrawal on your Traditional IRA, you will have to pay taxes plus a 10% penalty. With a Roth, you can withdraw them contributions at anytime (since you’ve already paid taxes on it).

So, why a Traditional IRA and not a Roth? There are two reasons:

• Income restrictions. If you have too much income, you will be prohibited from contributing to a Roth IRA, this is the main reason why folks choose Traditional over Roth (or rather they settle, because they never had the choice).
• Tax law concerns. The government can always decide to tax Roth IRA disbursements, which means you’d be doubly taxed. This is less of a concern but still one that bears mentioning since it could always happen.

Traditional IRA Conversion

Another considering for those thinking about Traditional IRAs is that if you have a modified adjusted gross income in excess of $100,000, you currently cannot convert your Traditional IRA to a Roth IRA. However, in 2010 and 2011, that prohibition will be lifted so anyone can do the conversion. When you convert all or part of your Traditional IRA, you pay taxes immediately on the funds converted if you haven’t done so already.