Personal Finance 

Changing Your Maiden Name After Marriage

One of the tricky things about being “recently married” is that the missus was in name limbo. “Technically,” she’s my wife with my last name (that’s right!). “Legally,” she still retains her maiden name until she goes to the Social Security Administration to change her SS card name and the DMV or MVA to change her license name. So what happens when we get a check written out to her new name? Trickiness! Headaches! But not to fret, I’ll try to capture everything we’ve done so that it can be as painless as possible for all you newlyweds out there.

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When Does Married Filing Separately Make Sense?

Married Filing SeparatelyAfter the wedding, I started taking a closer look at the tax numbers and incorrectly concluded that the only time someone would ever file as “married filing separately” would be if one partner earned a whole lot and one partner earned not as much. The logic was that the lower earner wouldn’t be subject to the same tax rates as the higher earner and thus the difference would overcome the different tax brackets. The only correct assumption I made was that the lower earner wouldn’t lose access to any tax advantaged accounts, like Roth IRAs, because they’d still be over the limits for those types of accounts. I already gave out my hypothesis and my result (I was wrong and am now clueless as to why anyone would file separately if both options were available) but here’s what I did.

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 Personal Finance 

SmartyPig’s Exhorbitant Fees Help You Save

Since this writing, SmartyPig has removed many of the fees associated with their accounts and so is not as bad as this post makes them out to be.

If you read any other personal finance blogs, you probably have seen a lot of posts about this new type of savings called SmartyPig, run by West Bank. They bill themselves as a different kind of bank account and they’re sporting a pretty healthy 4.30% APY savings account, until you realize that they’re charging you some ridiculous fees!

Here are the fees from their Terms & Conditions:

  • Contributing funds to a public account via ACH, Electronic Check and Credit/Debit Card, a $4.95 processing fee per contribution will be charged to the purchaser.
  • Purchasing a physical or electronic gift card via ACH, Electronic Check and Credit/Debit Card, a $4.95 processing fee per card will be charged to the purchaser.
  • Unsuccessful attempt of transfer of funds, $25.00 per occurrence will be charged and debited to the customers ACH bank account.
  • Replacement of a lost, stolen or discarded SmartyPig MasterCard® Debit Card is $20.
  • Requesting funds on a check in lieu of placing funds from a Savings Goal on the SmartyPig MasterCard® Debit Card or Retail Gift Card will incur a $25 processing fee. To complete this transaction, the Primary Account Holder must contact SmartyPig Customer Support. Not available to minors. Waived when required by law.
  • Overdrawn accounts will be charged a $27 fee per overdrawn item
  • I’m not going to rehash the point and purpose behind SmartyPig, for that you can hit up one of the posts above, but to the untrained it eye it sounds a whole lot like you’re paying a lot for the opportunity ($5 each time someone contributes, how does that motivate saving?) to help someone save. Not only that, but the end product isn’t even an ACH deposit into the saver’s account, it’s a debit or gift card (minus $4.95)! (if you want an ACH transfer of funds, that’s $25 please)

    This seems like a raw deal, is anyone else seeing this differently? (though do enter those contests for a free $100)

     Personal Finance 

    Giving Makes You Happier Than Spending (Both Cost Money)

    An article in LifeScience says that the key to happiness is to spend your money on others. It could be charitable donations to a worthy cause of choice or it could be buying gifts for friends and family members, but the warm and fuzzies lasted much longer if you spent the money on others than if you spent it on yourself. “New research reveals that when individuals dole out money for gifts for friends or charitable donations, they get a boost in happiness while those who spend on themselves get no such cheery lift.”

    One of the teams involved in the experiments theorized why this was the case and had a few decent theories. One theory, one that I thought made the most sense, was that people spend a lot of money to make their lives seem more “meaningful, significant, and important,” and that giving away money is a much more effective way of doing that. If you impact someone else’s life in a positive way, that certainly gives you more meaning, significance, and importance than you did if you spent it on yourself.

    What’s funny is that I said something similar my wife while we were on our honeymoon. I mentioned that it’s much easier for me to spend money on other people, such as gifts on her (which she smiled at and then hit me), than it is to spend on myself. If I want to buy a new bicycle, for example, I’ll spend way too long researching different bicycles, comparison shopping, and price searching before I’ll pull the trigger (I’m still “researching,” it’s been nearly a year).

    Part of the reason is because I want a good deal but I also have to get over the fact that I’m buying something selfish that I could save for the future, either for my retirement, my future children, etc. However, last year we donated money to charity last year in relative blink of an eye (there was some research on Charity Navigator) and I attribute that to the lack of the “selfish” hurdle (the tax deduction helps too). Of course, the happiness (and heart-wrench, if that’s a word) from receiving letters from organizations like Operation Smile (it’s a charity my mom told me about and supports) and the kids that have benefited from its work do help as well.

    As an extension of this, I bet that the same happiness effect would apply if you spent time volunteering rather than working on a particular day (or weekend). It’s not as quick as spending money, but perhaps the happiness effect would be more pronounced. Either way, the lessons seems to be that if you want to make your life a little brighter for a little longer, do something philanthropic today. You can always get that bicycle tomorrow (or the next day, or the next day). 🙂

     Personal Finance 

    How to Cut Your Gasoline Bill by 20%!

    I have a fantastically cheap and proven technique for you to cut your gasoline consumption and bill by 20%. That’s right folks, step right up and hear about how you can cut that bill one one-fifth! It sounds unbelievable but it doesn’t involve buying any gadget that you attach to your car or an additive that you’ll need to put into the fuel, it’s a time tested technique that I can guarantee will cut your gasoline bill by nearly 20%. You won’t even have to buy anything from some late night infomercial… do you know what I’m talking about? I’m talking about carpooling.

    Before you run for the door or click to another site, consider this – if you carpool to work just one day a week, you can cut your gasoline consumption by one-fifth. On the day that you’re driving, you’ll probably use up a little more gasoline than your normal commute because you’ll need to pick someone up and the amount of weight your car is carrying has increased, but that’s in the noise… you’re saving tangible money here!

    The point is that you don’t need to carpool every. single. day. Just one single solitary day of minor inconvenience. For me, I have class on Monday and Thursday night which means either my prospective carpool compatriots will need to conform to my schedule or I drive myself those days. Tuesdays and Wednesdays are wide open. I could easily carpool on those days as my schedule is more flexible. What about people who need to pick up kids after school around 2 or 3 pm? They just need to find other people at their office that can leave around 2 or 3 pm, or they work out their schedules in other ways. Ultimately, it’s about how much hassle are you willing to take on in order to save money on gas (you can calculate your savings if you know how much each mile costs to drive).

    If you find several people at work who are willing to carpool, you leverage your one drive into multiple trips. You pick up two other people and now you’re talking about cutting your bill by 40%. Pick up three, now maybe you’re talking 60% of your gas bill erased in one fell swoop. But for now, try it just one day. One day a week or one day every other week, see how it integrates with your schedule and you might be pleasantly surprised.

    Carpool just one day. Just one.


    Calculate Your Car’s Cost Per Mile

    A few years ago, with my last car, I did a little calculation to help determine the “cost per mile.” I was doing quite a bit of driving back and forth from Baltimore to Pittsburgh, then Baltimore to New Jersey, to visit my girlfriend (now by wife, so I suppose it was worth it :)) and so this number was important for me to know. I also found that it helped make other decisions in my life easier because it gave me a very tangible cost associated with driving somewhere, such as to the gas station across town instead of the gas station on my route home.

    The Calculation

    The cost per mile can be broken up into three major categories and one catch-all:

    • Gas: Clearly the dominant value in the calculation, gasoline is something that has to be based on actual costs rather than estimated costs. You can’t take the cost of gasoline, the EPA value for your car’s mileage, and figure out based on that. Ignoring the inaccuracy of EPA values, though they’ve made a push to make them more accurate, your car is probably not the standard car. You have crap in your trunk, your tires are probably not inflated perfectly every single drive, and your maintenance isn’t going to be perfect (get that 30,000 mile checkup exactly at 30,000 miles?). So, keep a log for five fill-ups, reset your B trip odometer, and calculate your gas cost per mile that way.
    • Insurance: This value is easy, simply take your premium and divide by the number of miles you drive in a given year. The “rule of thumb” is around 15,000 miles a year, but if you have an especially long commute then you can increase that. You can always just throw in a guesstimate because what you use as your miles driven per year isn’t going to drastically affect this number. For example, if you pay $2,000 a year and you drive 15,000 miles, that’s 13.3 cents a mile. At 20,000 miles a year, it’s 10 cents a mile. Sure the difference is 33% but you’ll ultimately use this value for trips in the tens or hundreds of miles… meaning a difference of only 30 cents – $3.
    • Tires: Depending on how expensive your tires are, you might want to go through with this calculation or just consider it part of the noise. I know tires say they can last 30,000 miles, but I believe most of my tires run only maybe 20,000 miles. Either way, this math should be pretty simple. Divide the cost of the tires by the mileage and add it to the running total you’ve been using.
    • Everything Else: I always throw in an extra 3-5 cents to cover everything else, from windshield wiper blades to routine maintenance to oil changes. I figure that a $20 oil change put across 3,000 miles (I actually changed my own oil with synthetic but do it once every 10,000 miles) is small enough to be considered noise in the equation so I use the 3-5 cents catch-all value.

    So, what’s the final number? The IRS business mileage deduction is 50.5 cents a mile, how close was your value to this one? When I did this calculation a few years ago, I found my value was close to the mileage deduction back then (it was 40-something cents) but that was before the spike in fuel prices. For comparison’s sake, my value for gasoline back then was 7 cents a mile based on a car that was running around ~32 miles to the gallon (Acura Integra and I was doing a significant amount of highway driving).

    How do you use this number? Let’s say it’s 280 miles between my home in Maryland and my parent’s in New York. The tolls between Maryland and New York, I believe, are around $60 a round trip. Given the cost of fuel alone (7 cents a mile), the cost of the trip is over $100 compared to the cost of a Southwest flight that can be bought for $39 a round trip. So, driving alone would cost over a hundred dollars and nearly 5 hours – flying would cost ~$100 and 3 hours… it’s a no brainer and the math is facilitated by knowing the cost per mile.

    Finally, your car’s cost per mile is only part of the story. In my drives to Pittsburgh or to New Jersey, tolls played an important role and often threw the entire equation out of whack. Back then, the toll for the Pennsylvania Turnpike was around $8 a round trip and nearly $50 a round trip to New Jersey. Another factor was time. I could take a $15 Chinatown bus from Baltimore to Grand Central in NYC, then jump on an Amtrak train out to New Jersey… but it would take me like 15 hours to make the trip and time is money! (and back then, that was time I could spend with my beautiful soon-to-be wife, and yes she reads this blog)


    Harness the Power of Impulse Saving

    Have you ever gone to the mall and impulsively bought something you hadn’t intended? Have you ever gone to the grocery store and walked out with a couple things you didn’t plan on getting? Sure, we all have. I’ve gone to the supermarket for some chicken, eggs, and yogurt only to return with coffee filters and a package of pork ribs because both were on sale (coffee filters are never on sale, probably because a package of 100 only costs $2 anyway and you can conceivably use it for 100 days!). It’s called impulsive buying and here’s a close cousin of it that is very powerful but less often used: impulse saving. Here’s one great way you an impulsively save:

    Impulse Saving & Debt Paydown

    Get a yourself a six-sided die (or more sides if you prefer) and roll it. Take that number, multiple it by ten, and put it in a savings account or pay down a debt. Do it every single time you get a paycheck and learn to live without the money in your budget.

    If you don’t have a die, figure out another way to randomly generate a number. If you truly can’t afford to save up to $60 a month without feeling great pains, multiple the number by $5 so the top impulse saving amount is $30. If you truly can’t afford to save up to $30, you need to re-assess your financial situation, but for that’s a topic for another time.

    To facilitate impulse saving, electronically link up your bank accounts or set up electronic bill pay. This lets you quickly and easily save or pay down debt in a handful of clicks. Without electronic means, the transfer of savings or pay down of debt is made less efficient to make smaller transfers and payments.

    Why Do This?

    Saving money and paying down debt is hard and any little trick you can take advantage of will be to your advantage. I think impulse saving is a lot like snowflaking (an idea and term first coined by PaidTwice, someone please clarify if I have this wrong). With snowflaking you generate more income through various means and put it towards your debt. With impulse saving, you force yourself to spend less of the unplanned “noise” in your budget by “spending” it first on savings or debt. The ideas are close cousins but slightly different in where the funds come from.

    So, why should you do this? Because we impulsively buy stuff all the time. No matter how disciplined we are, there is always noise in our budget that we simply cannot account. Rather than fight it, take advantage by spending it before you get the opportunity to spend it. If you impulsively save it first, then you are less likely to impulsively spend it. This won’t prevent you from impulsively spending but if you do, the impulse savings are cutting down your debt. It’s like improving your worst case. (worst case is nothing, you spend but already paid down by that amount; best case is that you pay down debt)

    How Good Is This Idea?

    Let’s take an example to illustrate how powerful this can be. If you have $8,000 in credit card debt at 19.99%, it would take 11 years and 1 month of $400/mo payments to clear the debt. By paying down an additional $30 a month, (less than the average impulse save of $35, but you get the idea) it takes only 10 years and 2 months, a difference of eleven months. If eleven months doesn’t sound like a lot, remember it’s eleven months of $430 payments, or $4,730! If you combine this idea with some debt consolidation by way of 0% balance transfers or peer-to-peer lending marketplaces, you can do some serious damage to your debt.

    So, if you have some debt, consider some impulse saving, it’s the latest thing in debt busting since snowflaking!

     Your Take 

    Your Take: Pay for Academic Performance for Children

    When I was younger (starting around 2nd grade), my mom said that for every 100% I got on a weekly spelling test, I’d get a dollar as my reward. The spelling tests started all the way back in the first grade but really got going in second and third grades, but I’d routinely get a hundred in part because I was brilliant and in part because they told us the set of words ahead of time (my mom knew this). There would be maybe fifty words and then ten or twenty would appear on the test, it was a cinch to get a hundred and anyone who didn’t simply didn’t try or didn’t care. Anyway, as I grew older, the 100s were harder and the prize was made larger until I was in high school when it would be $10 per 100. By high school, though, I didn’t get 100s unless it was something trivial like a health test or something meaningless, so I never went to collect. Anyway, I ended up being a decent student, in part because of the incentive my mom provided, but this is a issue that’s a hot button topic for many parents. Should they “bribe” (or “reward,” as the proponents would say) their children for performance?

    My opinion is that you can and should bribe or reward them for performance because that’s how the world works. You get a good SAT score, you are rewarded with admittance into a good college or university. If you get good grades in college, you’re rewarded with a good job. If you perform well at your job, you’re rewarded with more money (maybe!). Giving children incentives for strong academic performance isn’t going to ruin them for the world because the world rewards strong performance with money as well.

    What prompted this Your Take post was an article from the New York Times where students were being paid to perform well academically.

    What’s your take on this?

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