Tomorrow is Earth Day, so why not start off the week with an environmental friendly post? When most people think of being green, their brains immediately jump to organic foods and recycling. Organic foods can be expensive, recycling can be a pain, and many come to the same conclusion as famed philosopher Kermit The Frog, who once sang, “It’s not easy bein’ green.” In all fairness, what Kermit was singing about was entirely different but it perfectly sums up what many people think of environmentally conscious living – it’s not easy. That’s because many focus on the difficult and expensive aspects of going green, because we commonly associate difficulty and expense with impact, rather than the relatively easy things we can do that can still make a difference. In fact, many of the easy things can save the Earth and a few dollars (and even a few pounds!).

Reuse Plastic Containers

Most people think recycle, recycle, recycle – but remember the mantra is actually reduce, reuse, recycle. Reusing plastic containers, when it’s safe to do so, is a great way to reduce the amount of plastic we consume as a whole. When we order take-out food from the local Indian restaurant, our meals come in plastic containers we can then turn into lunch boxes. While it’s great to also recycle, some municipalities don’t take certain types of plastic so reusing is the only option, besides throwing them away. Reusing plastic containers helps your wallet because you don’t have to buy these containers yourself! Plus, I always get the feeling that those Glad or Tupperware containers are overpriced anyway.

No More Bottled Water

I understand it’s convenient, I understand it’s healthy, and I understand you think your tap water tastes like crap. But every single year 29283094293 plastic bottles are thrown out and the poor penguins are choking on them. If you think my random number is an exaggeration, it’s actually not too far off because the Clean Air Council estimates that Americans throw away 2.5 million plastic bottles every hour (that’s 21,900,000,000 a year). Can you imagine that? No, I can’t either.

Want a good reason for your wallet? The cost of tap water, even if you add in a filter, is microscopic compared to the cost of bottled water. Buy a reusable water bottle, a filter, and fill your own each day and you can save yourself some serious money. If you buy a $1 bottle of water each day, that’s $365 a year you can spend on anything else. And you don’t contribute to this ridiculous level of wastefulness.

No Prepackaged or Premade Food

We love convenience right? We love throwing a Healthy Choice or Stouffer’s freezer/TV dinner into the microwave and eating it for our lunch or dinner. The only problem is that you introduce a paper box and a likely non-recycleable plastic container into the trash. Plus, to be honest, it’s really really not good for you. The amount of sodium in a typical meal like that, even if you can get it for a buck when it’s on sale, is ridiculous. If you consume that much sodium on a regular basis, it’ll have significant negative effects on your body (high blood pressure, heart disease) which will definitely impact your wallet in medical costs down the road. Instead of going with the prepackaged or premade foods, check out allrecipes.com and try making your own meals. You’ll find them more fulfilling (who eats only one of those meals anyway?), healthier, and perhaps even cheaper.

Carpool

You can’t have a list about being green and saving green if you didn’t throw in carpooling. The secret to cutting your gasoline bill by 20% is to carpool once a week. Brilliant right? That’s because saving on gasoline is not difficult, people just don’t want to be inconvenienced and the best way to do that is to strategically pick the day you’re going to carpool. By consuming less fuel, you contribute less in greenhouse gases, reduce the demand for petrol, and you save yourself some money each time you hop in a rideshare. Considering how many people complain about fuel prices, it’s amazing there aren’t more carpoolers.

Eat Less Red Meat

How could I, editor of Grill Maestro and lover of red meat, possible endorse the idea that we eat less red meat? I do this because I read in a recent Ode magazine article that stated a single cow produces as much as 132 gallons of methane a day! The United Nations Food and Agriculture Organization calculated that the livestock industry accounts for 18 percent of all greenhouse gas emissions, compared to 13.5% produced by all of the world’s transportation. That’s downright amazing. And meat is hardly cheap too, chicken on sale is $1.99 around us and beef is far more expensive (obviously depending on the cut). I don’t think I’d ever go vegetarian, ever, but consuming less red meat is something we’ve done accidentally given the rise in prices and changing food preferences.

Bag Your Lunch

Bagging your lunch is better for the environment because you don’t need to drive somewhere to eat and you don’t have all the waste associated with the restaurant. For your wallet, saving yourself that $6-$10 lunch each day is going to translate very nicely to your bottom line and you’ll probably be eating healthier if you cook the food yourself. There’s a reason why so many restaurants are fighting new regulations regarding nutritional information – their food is terrible for you. Super Size Me may have been a gross exaggeration but the point is still clear, fast food restaurants are horrible for you and the fact that they don’t want to list nutritional information on the menu is proof positive they know it too. So, save yourself a few dollars, save yourself the gas, and save your arteries!

Buy Stuff Online

I once gave 8 reasons I do my shopping online and reason #5 was that online shopping meant less driving. Less driving, of course, means less fuel. Now, the trade-off here is that companies will have to ship you the packages, which will mean more driving on their part. I believe that since they are shipping packages anyway and are on optimized schedules and driving routes, their consumption, after you factor in how they won’t need to ship that product to their stores, will be less than yours. I think there will never be a provable answer to this but I’m confident that shopping online is better for the environment.

There you go, seven easy ways you can be green and save green – just try one this week and see how easy is and good it feels!

The talk of middle class has come up a lot lately, in part because there’s no clear definition of middle class, but Lazy Man shared his thoughts this week on the topic and I thought this quote was a gem: “… unless you love what you do exchanging time for money is a losing proposition.” I think that many of us grew up in situations where money wasn’t abundant and saw education and a job as a way to more money. Whether it was brilliant parenting or actual fact, I grew up thinking we didn’t have much money (books were my toys) but we still considered ourselves “middle class” be we didn’t go hungry, we didn’t struggle to pay bills, and we were otherwise living comfortable and happy lives by any standards. As a result, I saw a job, which was attained through strong academic performance, as the way ensure I could provide for my family. The point of getting a job was to earn money, survive, and then thrive. In my jobs, I was exchanging time for money for something that I enjoyed but can’t say I loved. Now I am exchanging time for money for something I do love and I think I’m much happier because of it. (The italicized sentences in the paragraph were ones that were originally accidentally deleted in the editing process when I first published this post)

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If you’ve ever lamented the fact that you signed a 30 year fixed mortgage instead of a 15 year fixed mortgage (it was one of 8 regrets of 2007 for Trent of The Simple Dollar) because of how much money you could’ve saved, don’t. I’m going to do some simple Dinkytown.net (using this fixed mortgage loan calculator, but you can also use Bankrate’s mortgage calculator) math to show that the difference between prepaying a 30 year fixed mortgage and a 15 year fixed mortgage is not big. The current rates on Bankrate (as of early morning on April 16th, 2008) for a 30 year fixed mortgage is 5.62% and for a 15 year fixed mortgage is 5.20%, so we’ll be using those. Rates have since changed but the analysis still holds.

If you had a $300,000 mortgage and made additional payments (~$677) onto the 5.62% 30-year mortgage such that the payments matched the 5.20% 15-year mortgage (~$2403), the difference in total cost (principal and interest) is ~$19,153 pre-tax across fifteen years. After you discount it by your marginal tax rate (say 25%), divide it across the 180 months, it’s only $79.80 a month. $80 difference on a $2403 mortgage payment is 3.3%.

You might say: “Jim, you’re just conveniently ignoring the $19,153 and focusing on the smaller monthly number of $80 – that’s just mathematical hocus-pocus. I’m upset about the $19,153! Also, $80 might not be a lot to you Mr. Money-bags, but I’d rather have that money than give it to a mortgage company.”

To which I would respond: “Ah, good point, but let us calculate the present value of that $80 a month and see how much it’s really ‘worth’ to us today. As for the $80, I too would rather have it in my pocket, but I’m not going to cry over spilled milk.”

If you assume that inflation will be at 4% a year, 180 payments of $79.80 is worth approximately $10,788 today (if I did it right in my TI BA-II Plus calculator). It’s a $10,788 difference on a $300,000 mortgage. Ten thousands dollars isn’t a trivial amount of money, but that’s the cost of having the flexibility to make the 30 year payment into a 15 year payment if you want to. If you have a 15 year mortgage, you are required to make that payment.

Lastly, if you still are bothered about the difference, you can always refinance.

I always read about how Bank of America sucks this, and Bank of America sucks that, but never had experience the suck that is Bank of America first hand. I opened an account with them a year ago with my then-fiancée because they had a branch within walking distance of my house and because they have ATMs essentially everywhere. I looked past the Bank of America horror stories because, honestly, every company has its bad moments. Well, today I met a bad enough moment to make me can Bank of America and go with M&T Bank. (I opened up a personal and business account with them because a good friend of mine works in their new business development side)

No, they didn’t screw me out of $23049823049 in fees or otherwise hosed me by being unreasonable – they did something far worse because it wasn’t some technical glitch or some procedural hangup. They’re going to lose me as a customer because they were rude. When there are as many choices as there are in the world, you can’t even mess up like that. Sorry!

Today, I went to a Bank of America branch to make some check deposits. When I walked up to the counter with my checks, the first thing the teller asks me is if I had counted the amount. I responded “No” because I wanted them to double check my math, as they always do. The responded with a bit of a roll of her eye and then asked me if I filled out a deposit slip. Again I said no, deposit slips are useless anyway. When she counts them up, she’ll print out a slip that goes with the checks and the deposit slip is just a wasted branch on a tree we’d otherwise like to keep around. This is what has happened the other half dozen times I’ve gone in to deposit a bunch of checks (and didn’t want to you the mechanized paper-cut maker of an ATM they have), the teller simply adds them up for you and you’re on your way.

So she pulled out a deposit slip and told me to fill out my name and address on the slip (useless!). Then she put a calculator in my face and told me to add up the checks. All of this was pretty terse and borderline rude but I was content to let it go. As I added up the checks and showed her the calculator, she proceeds to read out the numbers really loudly over and over again. Is there no sense of privacy? I can understand her reading them back softly, but she was speaking more than normal indoor voice.

Okay fine, whatever, at this point the interaction hadn’t gone great but it was hardly worth closing an account over. Then she looks at my balance and tried to sell me on a certificate of deposit. I politely declined. She persisted by saying I was losing money by putting my money in a regular checking account. She’s right, but I still politely declined. Then she proceeded to start talking to the customer waiting behind me! No good bye, no thank you have a nice day, nothing.

That, Bank of America, was the proverbial straw. Keep that lousy $6 you got for giving me an interest rate of 1.0%, which is essentially paying an annual fee anyway, and keep your other worthless products. We’re outta here.

It’s amazing they didn’t make it out of the first round of the Consumerist 2007 Worst Company in America contest (Verizon was a formidable opponent), but you guys should lock up the first round in 2008 against a cupcake like Toys R Us.

Update: Some people have said that I’m being a baby, that I over-reacted, (one guy said he’d punch me) and I respect all of your opinions (maybe I am a baby, but there are plenty of banking options that are more polite) and thank you for sharing them. I actually wanted to touch on the topic of over-reaction. What’s “worse” of a reaction, closing my account or calling out that teller to their manager? If anything, asking to speak to the bank manager and telling them the teller was rude seems to be like a greater over-reaction than closing an account. Thoughts on that?

There are plenty of articles out there discussing the importance of emergency funds and how to set one up, so this is not going to be one of those. Here, I’ll discuss a strategy to maximize your emergency fund’s interest earnings so that you can lessen the pain of not having the funds in an investment account. The strategy is quite simple and works off the assumption that you are using the emergency fund to cover month to month expenses and not an enormous cost that is in the multiples of a month, though it can handle that too. (it might be easier if you watched this video of laddering CDs)

The Strategy

Ladder certificates of deposit so that you can maximize your interest earnings, minimize risk, and still have access to your funds when you need them. To ladder CDs, you purchase CDs for the amount of each month of savings but with different maturity periods so that one CD comes due each month. Let me us a real life example with ING Direct CDs (though I’d shop around for rates, I picked ING because they make opening a CD a cinch) to illustrate this. Also, for the sake of simplicity, let’s say you’ve saved up 13 months of savings of $13,000, which means 12 months will constantly be cycled into laddered CDs with one month sitting in a high yield online savings account.

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Sometimes you do your taxes on April 14th or 15th and you discover you owe the IRS (you actually owe the United States Treasury, the IRS is just there to bust your kneecaps if you don’t) more than what you can get your hands on in one day. Maybe you put too many exemptions or you underpaid your estimated taxes, whatever the case, you’re in a pickle and you need some help. The IRS sympathizes. They aren’t heartless automatons there just to suck the marrow from your bones, they’re willing to lend you a hand and let you pay off what you owe in installments. Here how you set that up. (and investigate why you had this shortfall so you don’t have to do it again next year!)

You have two options in setting up an installment agreement, through an online payment agreement webapp or through the telephone. Before you set up the installment agreement, you have to do some homework and make sure you can pay the one-time setup fees.

How Much?

To set up the payment plan, you have to first figure out how much you owe. If you don’t know, you can call the IRS to request copies of your tax returns so you can figure that out. The total amount should be the original tax you owe, plus penalties and interest. It may help to get an accountant or someone experienced with this type of math to help you out.

Request the Plan

After you have the amount, you can set up the installment plan in one of two ways:

• Call the IRS at 1-800-829-1040.
• Use the Online Payment Agreement Application. You can only use this if you owe less than $25,000. If you owe more, you have to call.

There is the third option of filling out Form 9465: Installment Agreement Request and mailing it in but that takes longer, every day that passes is more interest and penalties tacked on. It’s better to use the online or call options.

Fees

According to Form 9465, there is a one-time fee based on how you plan on paying:

• Direct debit installment agreement – $52
• Payroll deduction installment agreement – $105
• Online payment agreement – $105

Rejection!

There is a possibility the IRS could request your request for an installment agreement but they do say that if you owe less than $10,000 and you 1) have timely filed all income tax returns and paid any income tax due, and have not entered into an installment plan in the last five years, and 2) the IRS determines you can’t pay the tax owed in full and you prove it, and 3) you agree to pay the full amount you owe within 3 years and comply with tax laws; then you will be okay.

Basically, it sounds like as long as you aren’t screwing with the IRS, have your ducks in a row, and aren’t trying to pull one over on them, they’ll approve it.

“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not your enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.” – From translation of Sun Tzu’s Art of War

In this article, I’m going to try to identify a salesperson’s tools, why they work, and hopefully what you can do to defend against them whenever you’re going to make a purchase. These aren’t tricks or scams, these are just solid sales techniques that have been proven to work. I won’t go over things that are outright scams, like baiting and switching or “the one you want is out of stock, how about this one” or “whoops I added this up wrong and it’s way too high, lemme see how you react,” just the ones that are generally honest and just good tactics.

Throughout reading all this, remember one truism: Salespeople need to eat. They will try their hardest to sell you something and they will persist if you give them any reason to believe a sale can be made. Being polite is one thing, but being honest and forthright is better because it allows a salesperson to work on a customer willing to buy. If you’ve made a decision not to buy, make it very very clear and the salesperson should understand. If they don’t, they won’t be in sales for long! If they do, they’ll be thankful to be able to get a good excuse and move onto someone who will turn into a commission check.

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It’s April 15th and today I will not write a single thing about last minute tax moves (you’re too late) or about the tax stimulus (just fill out a tax return and put in your direct deposit information) or anything boring like that. You don’t want to be like that guy to the right, right? Nope! Today will be a day of fun and we can start it off with fifty fun facts!

Some of these facts, I can guarantee, will not be fun. There will be a mix of tax history, some current tax laws, some mind boggling statistics that will likely piss you off; but at least we’ll start you off with some of the weirdest tax laws and funny trivia! You’ll read some of them and say, “Hmm… okay, kind of interesting, but not actually fun.” However, some of them will be fun or your money back! Let’s get started.

Weird Tax Laws

• Drug Tax Stamps – In at least 23 states there is a tax on illegal drugs. When you buy an illegal drug, like marijuana or even moonshine, in Tennessee, you have 48 hours to report it to the Department of Revenue to pay your tax and get a stamp for the substance. No identification is needed, though there are a dozen cop cars sitting outside the office. (Just kidding about the cop cars, I have no idea)
• North Carolina has had a illegal drug tax stamp law in place for 15 years, only 79 people have purchased stamps since 1990 (most of those were stamp collectors, or complete and utter morons).
• If the law sounds absurd, it’s only because of the way it was worded. The real end result is that people are taxed on drugs found in their possession when they’re busted. This creates a new revenue stream for the state or county and I can’t say I can argue with that.
• “Jock tax” – Levied on athletes who earn an income competing in a particular city or state. California first levied this tax on athletes from Chicago in 1991 after the Chicago Bulls beat the LA Lakers in the 1991 NBA Finals. What a bunch of sore losers.
• Alabama has a 10 cent tax on a deck of playing cards.
• Blueberries from Maine are subject to specific tax too, anyone who grows, purchases, sells, handles, or processes blueberries in Maine has to pay a penny and a half tax per pound.
• “Fountain soda drinks” in Chicago are taxed at 9%, if it comes in a bottle or can then it’s only taxed at 3%.
• Peter the Great in Russia once taxed beards (he doesn’t do much taxing anymore). There was also a tax on souls, hats, boots, beehives, basements, chimneys, food, clothing, birth, marriage, and burial.
• In the UK, everyone under the age of 75 pays a TV license fee £126.50 for color TVs and £42.00 for black and white TVs (it in part pays for state run networks like the BBC). If you are legally blind, you only owe half that fee.
• According to the UK’s Tax Avoidance Schemes Regulations 2006, “it is illegal not to tell the taxman anything you don’t want him to know, though you don’t have to tell him anything you don’t mind him knowing.” What!?
• Royal Navy ships that enter the Port of London must pay a barrel of rum in tax to the Constable of the Tower of London. All visitors to my house must pay a case of beer in tax to me.

Tax History & Facts

• The first income tax ever was in 1404 in England.
• The first property tax in the United States was in 1798 and it was on land, houses, and slaves.
• The first US income tax started during in the Civil War to help raise money back in 1862.
• The first federal tax office in the US was the Office of the Commissioner of Internal Revenue in 1862, what a coincidence!
• The 16th Amendment, ratified in 1913, established the first permanent US income tax.
• Four states rejected the amendment: Connecticut, Florida, Rhode Island, and Utah.
• Two never considered/discussed it: Pennsylvania, Virginia
• Everyone pays income tax. [this fact is decidedly not fun, I concede this]
• There are over 7 million words in the tax law and regulations. That beats the Gettysburg address, the Declaration of Independence, and the Holy Bible all rolled into one (269+1,337+773k).
• There were 402 tax forms in 1990, by 2002 that number had jumped to a staggering 526.
• My personal favorite is Form 6478 – Credit for Alcohol Used as Fuel. (I don’t think the IRS really counts beer as fuel, though it does keep me going sometimes)
• According to CCH, the number of pages in the tax code and regulations went from 26,300 in 1984 to an astonishing 54,846 in 2003. Those 1.2M tax preparers are smiling every year.
• The IRS sends out over 8 billion pages in forms and instructions every single year, that’s nearly 300,000 trees (now they use recycled paper).
• The easiest form, the 1040EZ, has thirty-three pages of instructions.
• Tax Freedom Day was April 23rd in 2008, a few days earlier than last year because of the tax stimulus rebate.

Tax Collection & Forms

• You know how everyone hates the taxman? Did you know that in 1789, the start of the French Revolution, tax collectors were sent to the guillotine? Poor folks were just doing their jobs… it’s not like they enjoyed it!
• Too bad those French tax collectors didn’t live in Greece a few thousand years earlier, back then the tax professionals were considered the most noble man in society (perhaps that’s why they were given the slice in France, the French Revolution wasn’t particularly friendly to “nobles”)
• 21% of paper returns have errors, 0.5% of e-file returns have errors; do your taxes electronically.
• In 2003, 78% of returns received refunds to the tune of $205B and an average of $2,073 per return.
• The first e-file (electronic transmission of a tax return) occurred on January 24, 1986…
• By 1989, taxpayers in 36 states could e-file their taxes…
• By 1990, everyone could.
• For each $100 that the IRS collects, it costs only thirty-nine cents. While you might hate them, tell me what other agency runs with such efficiency? The answer is probably none.
• The Cato Institute estimates that there are approximately 1.2M tax preparers in the country.
• AMT was designed to snag 155 wealthy taxpayers in 1969. (Yeah, they created a whole new tax to get 155 people!)
• Technically, income tax is voluntary (but not optional)!
• There are 114k employees at the IRS, that’s more than the CIA or the FBI.
• According to the Joint Committee on Taxation, in 2006, 53.7% of all federal income taxes were paid by those earning $200k+. Those between $100k and $200k paid out 28.3% of income taxes. That means 82% of taxes paid are by those making more than $100k. (link)
• Taken in aggregate, those earning less than $40k paid 0%.

Facts That Will Piss You Off

• A Government Accountability Office report released in 2004 showed that…
  • 61% of US corporations paid no income tax between 1996 and 2000.
  • 94% of US corporations paid less than 5% their total income in taxes.
  • US corporations paid, on average, $11.88 in taxes for every $1,000 in gross receipts.
  • 38% of big companies ($250M+ assets or $50M+ revenue) paid no taxes.
  • in 1943, 39.8% of taxes collected came from corporations; only 7.4% in 2003.
• From 1996 to 1998, these companies paid zero taxes: AT&T, Bristol-Myers, Squibb, Chase Manhattan, Enron, ExxonMobil, General Electric, Microsoft, Pfizer and Phillip Morris. (link)
• In 1998, these companies received a total of $1.3B in rebates (despite making $12B in pre-tax profits): Texaco, Chevron, CSX, PepsiCo, Pfizer, J.P. Morgan, Goodyear, Enron, General Motors, Phillips Petroleum and Northrop Grumman. (link)

Now that you’re all fired up… I will leave with one final quote, most often mis-quoted (except right now, duh!). Benjamin Franklin, on November 13, 1789, wrote the following to Jean-Baptiste Leroy: “Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.”