Okay, the title sounds gross but I assure you the explanation isn’t. Back when I was a child, my sister and I would usually start Trick or Treating relatively early (like right after dinner time, but when it was still light out) with a few of our friends. We would make it around our little block in a pretty short period of time, collecting about a bagful of candy, and then return home. On this first little excavation trip, we would collect enough unwanted candy (that is, candy that was good but we weren’t necessary a fan of) to supplement the small amount that my parents had purchased to give away from our house. Throughout the night we’d check in at home (mostly for safety’s sake, back then only Gordon Gecko had a cell phone), dumping our unwanted stash into the giveaway bin, until we were exhausted from the fun of Trick or Treating. This little strategy of ours worked out nicely for a variety of reasons:

1. we could save a little money by not buying a ton of candy,
2. candy we didn’t like wouldn’t go to waste since we picked out the undesirables, and,
3. give away as much as we wanted since there was no reason to try to keep any of it for ourselves.

Personally, I’m not a huge sweets type of person. When I do eat candy, I generally enjoy chocolate with some nut component involved (almonds, peanuts, etc). That means that all the sugar heavy candies were of little interest to me as a kid (candy necklaces = gross) and so I would usually take those and toss them into the giveaway pile. What if you’re the type of person who loves absolutely everything? Well maybe this idea isn’t for you.

I think we arrived at this process after a few years of “oh great, it’s November 1st and we have a ton of candy no one will eat.” After a couple years of having a ton leftover, you start to think about ways to reduce the waste and our little recycling process seemed to work out. Too bad I can’t go out Trick or Treating anymore, I’m probably a little too old now.

Anyone else have any good Halloween frugality tips? And do be safe out there tonight!

I don’t understand why people have Netflix subscriptions.

I never rent movies and when I do, I usually turn to the $1 a night RedBox vending machine at my local Giant. For $1.05 (MD sales tax is 5%), I get a recent release that I happened to miss in the theaters (I enjoy going to the movie theater, paying $9, and watching a movie with my girl) and most of the time I can find a coupon online that gives me the rental for free. That being said, I don’t really understand why people sign up for a recurring rental service when something like a RedBox exists (unless it doesn’t in your area). And no, Redbox isn’t paying me. In fact, if you sign up for Netflix through that link above, Netflix is paying me a commission so enjoy my brutal honesty.

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Whenever a company offers its services, it’s generally quick to note that it’s bonded, licensed, and insured (when it applies and if they are) but I was never certain what that actually meant. Until now, all I knew is that you should only hire someone if they’re bonded, licensed (if applicable) and insured. Often times someone who isn’t will be cheaper, but you will have to accept all of the responsibility if something bad happens and, as Murphy’s Law clearly states – if something bad can happen, it will. (Incidentally, that picture of the bail bonds company is only somewhat related to what it means to be bonded)

Bonded

Being bonded means that a bonding company has secured money that is available to the consumer in the event they file a claim against the company. The secured money is in the control of the state, a bond, and not under the control of the company. Let’s say that you hire a cleaning company and they end up stealing your Nintendo Wii. Well, you would file a claim against the company and, after an investigation, would be paid out by this bond.

This is slightly different but similar to what it means for an employee to be bonded. Being bonded in that case means that a bonding company has investigated your background and finds that you’re trustworthy and “good” enough to insure. In general, this is generally done when an employee has to handle large amounts of money or handle valuable property like jewelry or art. There is a very extensive and deep background check involved and what the employer gets is insurance that you won’t steal. If you do, then the bonding company pays out the amount of the theft. By being bonded, it shows that the employee is trustworthy enough for a bonding company to insure you up to a certain amount. Now, a company that is bonded means that a bonding company has funds

Licensed

For certain professions, a license is necessary to show that you’re competent and permitted to conduct business in the city, municipality, or state in which the license was issued. For example, home improvement contractors will have to be licensed to perform certain types of work and that license number will be printed on every advertisement they print. You can take that license number and look up their performance history in most states through the Better Business Bureau.

Insured

This is probably the most commonly understood of the three (second to being licensed) and this refers to what happens if someone gets hurt on the job. Let’s say a company is fixing your roof and a roofer falls off and hurts him or herself. If the company isn’t insured, then the claim gets filed against your homeowner’s insurance (bad). If the company is insured, then the claim gets filed against the roofing company’s insurance.

In summary, it’s important that anyone you work with is licensed, bonded, and insured. There’s no reason why you should have to work with someone who isn’t all three, unless being licensed doesn’t apply. Once you know that they are, research and confirm that they are being truthful. I can say that I’m bonded, but unless I provide the documentation and you can verify it, I’m not actually bonded.

When I was younger, I used to play Sid Meier’s Civilization all the time. One of the best parts of the game was trying to build one of the Seven Wonders of the Ancient World because it gave your civilization a distinct advantage in the world. My personal favorites were the Lighthouse (it gave your ships a farther range and they wouldn’t get lost) and the Hanging Gardens of Babylon (I believe each one of your cities now had a Granary), but fun part was being exposed to these wonder in the first place.

Since then, there have been more “Wonders of the World” like the Natural Wonders of the World, 7 Wonders of the Modern World, so why not create a Seven Wonders of the Personal Finance World? Hokey, I know, but it’s my opinion that, if you can, you should “visit” every single one of these wonders.

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Last week, reader AJ sent me an email asking for ideas on where he should be putting his savings once he’s maxed out the contributions to both his 401(k) and Roth IRA. He’s 23, employed in real estate, and has fully funded his emergency fund and was wonder where he should go next.

Question: I’ve been sold on the wisdom of buying index funds and I would like to take a portion of that savings account and buy at least 3 different index funds (total stock fund, total bond fund, and a total international fund.) Reason being, I do not want to be wholly in stocks, be it domestic or internation, or bonds. However, the minimum investment is $3000 per fund at Vanguard. So at the very minimum I would have to spend $9000 to begin which is not the problem. However, if I stopped there, my allocation would be all out of whack. I’d be 33% in domestic, 33% in foreign, and 33% in bonds.

At my age, those allocations do not make sense. (Bonds and foreign, I think are too high of a percentage.)

Any suggestions – short of buying enough of each to make the proper allocations?

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The other day I was talking with someone about rolling over their 401(k) into a Rollover IRA and they asked how they should mail the check. They were debating whether it was “worth it” to mail the check by regular mail or if they really absolutely had to mail it via certified mail. I told them that when I did it, I mailed it by certified mail because I really didn’t want to deal with the headache of getting another check if the first one was lost. It makes sense to use regular mail for some things and certified for others, conserve when it makes sense and don’t when it doesn’t make sense.

Tip of the day for all you frequent mailers, there’s no point putting something into a Priority Mail package unless you really just want to use that package because it isn’t treated any differently. Since there is no guarantee, unlike Second Day or Next Day, the package travels just as quickly as your typical First Class package; except you’re paying more for no reason. The only way you can win by using Priority Mail is if you use the Flat Rate boxes, then you can potentially save yourself some cash.

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Representative Charles Rangel (D-NY), Chairman of the House’s Ways and Means Committee, unveiled a huge $1 trillion tax cut bill. It’s a bill designed to get everyone talking about it, rather than skirting the issues, though anyone thinking the House will pass it is likely misguided. I read CNN’s overview of it and wanted to share some of my thoughts with you all (and hope you do the same with all of us).

Decrease: Action! Action! AMT Repealed!

The bill would repeal the alternative minimum tax, rather than patch it for another year, and this is the marquee headline of the bill. I personally think a full repeal is foolish, why not adjust it and then index the dollar amounts with inflation? The idea was to stop the wealthy from taking unfair tax breaks, which is something I think should still happen, so why repeal it entirely when you can help the middle class while still keeping with the spirit of AMT?

Ultimately the goal of the bill seems to be to get discussion going on the AMT, so what better way than to just axe it? Most experts believe that another one-year patch will be put on the AMT to help the estimate 800 billion people likely to be affected by it (yes, 800 billion is a totally made up figure, but that number doesn’t actually matter unless you’re one of them!). It’s like putting a band-aid on an infected cut; it’s nice that you’re doing something, but let’s fix it instead of putting it off.

Decrease: Higher Standard Deduction

An increase in the standard deduction of $850 for joint filers and $425 for single filers, which, in theory, actually helps the affluent more than it helps the middle and lower classes. In theory, if you are in a higher tax bracket, you’re taxed at a higher rate. Thus, by increasing the standard deduction, you actually decrease the tax on a higher income earning person. Now, in practice this idea will help the lower income folks because they are more likely to take the standard deduction. As the standard deduction increases, the idea that buying a home is better, for the tax benefits, will become less and less clear.

Decrease: Easier Child Tax Credits

Without getting into the muck of this particular proposal, I think anything that allows more tax credits for families with children is a good thing. With the rising cost of college, two income families, and other children related items, I think we need to be fostering an environment in which children of all economic classes are able to flourish. Now, this puts the onus on the parents to actually spend that money on the children, which may or may not happen.

Increase: 4% Surcharge, $200k+ incomes

And the warm fuzzies end as we get into the part where the reform talks about paying for the first three tax decreases… The idea with this particular piece is that married with $200k+ in AGI and singles with $150k+ in AGI would have a 4% surcharge on the sum above that limit added onto their taxes. For those over half a million, it’s a 4.6% surcharge. This, in combination with a repeal of the AMT, would theoretically result in lower taxes for those making less than half a million.

Everything Else

That ends the provisions that most directly affects most of us, the rest include additional taxes on fund managers and businesses that will impact us indirectly. Anytime you tax businesses, it has the potential to stifle growth (duh! less money on investment) but I think that’s in part fueled by how people, businesses included, don’t like to be taxed more. However, if you look at the tax cuts, they’re really just closing loopholes like accounting magic (valuation of inventories would be affected), corporate tax break loopholes, and empower the IRS to penalize companies dabbling in chicanery. In fact, the bill actually proposes to reduce the top corporate tax rate from 35% to 30.5%.

Summary

Other than the AMT, this bill doesn’t really do much for me from the perspective of real change. So you tweak a few things here, tweak a few things there, why not just clean up the whole million page IRS code and make things easier on everyone? I think every time I see one of these “mother of all tax reform” announcements, I think about how simple life would be if we had a flat ax or consumption based tax.

What are you thoughts? Fire away!

Take a look at your bank’s checking account and tell me what your account maintenance fee is. If the answer isn’t $0, you’re getting ripped off big time. I just looked at the Bank of America Advantage Account (checking) and saw that the account maintenance fee was $20 a month (I bank at BoA but I don’t use that account). Twenty dollars a month! That’s $240 a year and that’s approximately $240 more than what you should be paying for banking. It’s ridiculous!

This is how I think banking, in general, works. The borrower should be the paying the lender and in 99.9% of banking transactions, this is the case. When you borrow money from the credit cards, you pay them. When you give money to the bank, they’re basically borrowing it from you, so they should be paying you interest too. In most cases, they do, but when did the ability to transact on your balance mean a minimum charge of $240 a year? There are enough banks of there that you can find one that won’t charge you to do business with them.

I’ve Never Paid This Fee

In my brief history with banks, I’ve never paid a single maintenance fee. While it sounds like a great streak, it’s not by chance and it’s not at all difficult to do. JD recently just wrote about how he made the switch from a bank to a credit union, in part to avoid US Bank’s $8 a month maintenance fee. He’s been paying that fee for eighteen years! For those keeping score at home, that’s $1,728 in fees plus he said the customer service was terrible. Now, he’s at a credit union where they don’t charge him a minimum balance or account maintenance fee, which is how business should be done.

The only fee I’ve ever paid was the hidden account maintenance fee that no one ever thinks about. My checking account gets some insultingly low 0.01% interest rate but the bank can lend it out on a mortgage for at least 6%. They can lend it out for more to other banks, to home equity loans, to car loans, to anything and make more than 0.01%; that’s the hidden account maintenance fee and the only one I’ll pay for the convenience of ATM access.

How To Find No Fee Accounts

So, if you’re paying more than $0 a month for banking services, my advice is to find a new bank or credit union who is willing to charge you zero. If you’re at a loss as to where to go, keep a mental note of the banks and credit unions you see on your drive into work or school. When you get to a computer, check to see if they offer accounts without fees. If they do, sign up and say good-bye to worthless fees forever.

This is a guest post by Anna Ivey, more on her at the end of this article.

The working world is a completely different beast from the college world, and the transition can be a bumpy one. There’s been a lot of talk about how Gen Yers demand meaningful responsibility on the job, and I’m all in favor of internships and starter jobs that offer opportunities for challenge and increased responsibility. However, you have to earn those things, and prove you can handle them.

I’ve also noticed a fundamental lack of respect by many twenty-somethings for the people they work for. That lack of respect can manifest itself in something as small as addressing an email or consistently refusing to follow — or even acknowledge — instructions. (And even if your boss is a drooling idiot, it’s in your interest not to reveal your contempt.)

The following eight tips might seem completely obvious to some people, but I’ve seen this behavior often enough that I’ll list the most common issues here, as simply and bluntly as I can.

1. Respect the English language.

If you can’t be bothered to spell properly when you’re writing to your boss or a customer, what does that say about you? We all fall victim to typos, and there are certainly different standards for text messages or wiki postings (or blog postings!) and more formal kinds of communications. But… ignoring the “shift” key altogether, when you’re writing to someone you’re supposed to impress? Not good. Same goes for proper grammar and precise vocabulary. Language is power. Don’t believe me? Read Orwell’s Politics and the English Language (”the slovenliness of our language makes it easier for us to have foolish thoughts”).

2. Banish “hey.”

Banish “hey” from your written communications (and spoken communications, for that matter).

Your colleagues are not your BFF’s (”hey dwight”), or even your MySpace/Facebook friends. They might turn into friends, but don’t impose that casual familiarity unless and until the relationship warrants it. Posting a message on someone’s Facebook wall and writing an email to your boss are two completely different things. (I remember calling someone a few years back to offer him a job, and thinking how badly I wanted to retract the offer when he told me how “stoked” he was. Argh.)

3. Follow directions, and don’t make your boss ask twice.

If your boss asks you to put the customer name in a header for all of your project documents, don’t send him a document without the customer name in the header. Simple, right? And if your boss has to remind you, don’t make him remind you again.

4. Don’t ask for clarification of perfectly unambiguous instructions.

If you’re asked to get the TPS reports on your boss’s desk by the afternoon, don’t ask him, “When do I need to get you those reports?” Or if you’re asked to restrict your report to 5 pages, don’t send him an email asking, “Is that a hard limit?” Your boss’s time has value, and stupid questions tend to waste his time. (Contrary to the brainwashing you’ve received in school, there is such a thing as a stupid question.)

5. Just OK is not enough.

Every day that you show up at work is another day you need to justify your employment. If you’re not doing your best, why should they keep you? Your job is not pass/fail, and the job interview never really ends. Don’t wait until your first performance review to shape up.

6. Tell your parents to butt out.

Don’t ever — EVER — let your parents contact your employers. If you want to be respected as a mature, independent professional, act like one and leave mommy and daddy out of it. Expecting your employers to deal with your parents is beyond lame. They hired you — not your parents — and it’s not a package deal.

7. Get used to grunt work.

I don’t care how smart or “entrepreneurial” you are, or how impressed you are with yourself, or how great your parents think you are. When you’re starting out in the working world, you’re going to do a lot of grunt work. It’s the only way to learn the ropes, and nobody is above it. Nobody. If you think you deserve to be entrusted with matters of importance in a starter job, you have delusions of grandeur. Plus, true entrepreneurial types do plenty of grunt work, and they don’t complain about it, because they know it needs to get done if the overall project or venture is going to succeed.

8. Understand your role.

As long as you’re reporting to someone, understand that your job is to make her life easier, not the other way around.

Anna Ivey, a recovering lawyer, decided the fates of thousands of applicants as former dean of admissions at a top-ten law school and now works with high school students and twenty-somethings to help them make smart choices in school, at work, and in life. Anna has appeared on CNN and Fox News Channel, and has been featured in the New York Times, the Wall Street Journal, the Boston Business Journal, Fortune.com, Smart Money, and Marie Claire. Anna speaks at colleges around the country and publishes The Ivey Files, a blog for twenty-somethings, the parents who love them, and the bosses who manage them. Learn more about Anna at www.annaivey.com.

I am proud to present the third and final installment of the discussion between Saladdin and Tim with regards to gifts, which was spawned from a post I wrote about ideas to solve the 20% down payment dilemma. Tim and Saladdin come from two different schools of thought. As we’ve read in prior parts, Tim argues that one should not judge the gifter and simply be honored to be receiving the gift. Whether the gifter is a parent, relative, or someone else; one should accept the gift graciously instead of rejecting it out of hand. Saladdin comes from the perspective that one should not accept charity and one should work for their share in life. Both perspectives are powerful and both are certainly understandable. In this final chapter, we tie up some loose ends.

Part 1 and Part 2 are available if this is the first time you’ve seen this discussion.

Saladdin: Just as I do not think you are running around with your hand out yelling give me, give me you shouldn’t think that I am running around murmuring under my breath “Those lucky rich bastards. I really pity them driving dad’s car.” I don’t lose sleep over others. Yes I think about this stuff but in a way that I try to learn what really makes me tick. I want to understand my thought processes while maybe fixing some loose wires.

I would like to answer the question about being a parent to my girlfriend. (All the sex jokes aside here since we are just a couple of friends talking over a few beers.) I just don’t see the reasoning. It is a give and take relationship. I never consider the help a gift because of that reason. It is no more a parent relationship then with your marriage. Do you not help her? Would you stop helping her? Can she not leave you also? I just don’t see the difference. I guess you are a parent to your wife also. Maybe I just did not explain myself well enough.

I lived in Japan for 2 years. I never knew that such an importance was placed on the color of envelopes until then. Of course I was just a kid who had never been out of my home state except to see some Cardinal games.

Maybe I am getting too philosophical but off the top of my head I can’t think of too many things that do not have strings attached. Isn’t an obligation a string? As a parent, brother or husband do you and I not have obligations that are automatic and come with the territory by birth alone? Are those not strings?

The definitions of pity and jealousy, I think, separate us. They are both legitimate, human emotions and I have them both. I’m not jealous of my friend or you for that matter. As an adult I can’t recall whispering “Boy I wish I had that instead of him…” I have another friend that last week won 100K in the lottery. His wife was laid off work just last month. When he told me the thought of jealousy never entered my mind. I was actually happy for him. Of course I had to bite my tongue when he told me his spending plan. But that is another story.

But again, what is wrong with having pride?

I think we are closer then you realize in our opinions. You mention your friend and the parents buying them a house and the difference in values. Also to me it is not the gift itself but the values behind it. I think I phrased it as the way the gift was received not the gift itself.

I would like to ask do you think it right to solicit for a gift. Is it ok for someone to go to their parents and ask for 20% down?

Tim: There is nothing wrong with soliciting the 20% down payment either. If your friends and family can afford to do so and chooses to do so, why not. They in fact do have the ability to say no. We have no qualms about soliciting money from a bank, yet we somehow have an issue with soliciting money from family.

Perhaps it is the way you are explaining your relationship with your girlfriend that makes it seem you are acting the parent. We already know you acted the parent for your brother. Your expectations for her out of your assistance. It isn’t a mutual sounding relationship. We also know that she doesn’t need the assistance as she comes from a family of means.

I guess you could wax poetics all day long about pride. Many philosophers and writers have. There is nothing wrong with pride,
whether it be a proud parent wanting to continue supporting his children, or earning everything on your own…only when it turns to
hubris does it interfere with rational reasoning. I use to have the mentality that I was going to do everything on my own. Then I realized, sometimes it is ok to have others help you.

Money isn’t the end all, and it doesn’t define us. To say that somehow getting 20% from family and friends is wrong or somehow defines you and your legacy as a person, is putting an importance on money that does not exist.

With that, this epic three part introspective, for Tim and Saladdin, was very eye opening. Tomorrow I’ll write up a post in which I share my thoughts on the matter, which may or may not be of interest to you all. Again, if you have thoughts or points you want to mention with regards to what these gentlemen have said, the comments are open.