Personal Finance 
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comments

Wow, Another Reason I LUV Southwest

Right now we’re sitting on a two hour layover in Oakland, CA on our way to Hawaii for our honeymoon. Our trip thus far has taken us through Kansas City on Southwest and we were reminded once again why Southwest is easily my favorite airline. We were the only two people on the flight from Baltimore to Kansas City that would continue on to Oakland and we arrived ten minutes early so we had some time to chat with the flight crew. They asked us where we were going and my wife said we were flying onto Honolulu for our honeymoon. They said their congratulations and we thanked them, everyone smiling all around, and we thought nothing of it. A new flight crew came on board to help the first flight crew clean up and then we were on our way. About five minutes before we were to land in Oakland, the a member of the flight crew came on the PA and said “We wanted to congratulate two of our passengers who recently got married, everyone please give them a round of applause!” There was clapping all around, some more congratulations, and then one of the crew walked over and gave us a bottle of Korbel champagne!

(Click to continue reading…)


 Banking 
41
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Endorsing Checks With Two Names After Marriage

As many of you know, I recently got married to the love of my life (awwww!) and had a wonderful wedding and reception this past weekend. Everyone had a blast, we had a blast, and all in all I think the entire weekend went very very well considering the magnitude (both in size and importance!). Anyway, with a wedding comes gifts and some gave a gift in the form of a check.

Why is this worth mentioning? As you can probably tell from the title, the tricky part was in the fact that the checks were made out to my name and my wife’s name. That, in and of itself, is not big deal except they put it in my wife’s new (and, dare I say, better) name, which is not the name on our joint account. So, in the eyes of both the state and the bank, one of the person’s listed on the “Pay To The Order Of” line doesn’t actually exist. So, what were we to do? There are in fact two solutions.

Change Account Name

One solution is to change her name from her maiden name to her new (better) name and all we need for that is the marriage certificate. With the account name changed, she would simply sign the back of the checks in her new name and be done with it.

Double Endorse The Check

The other, far easier, solution would be for her to sign the check twice: first with her new name (name on the check), then with her old name (name on the account). While this struck me as a bit shady, it seemed to be the typical result. If the two names were in fact two different people, this is how we would’ve signed the checks to deposit them into the account. When she signed her new name, she was endorsing the check for deposit anywhere (you can write, “For Deposit Only” on the check to force it into an account your name only). It seemed tricky but the Bank of America tellers (two at two different branches) seemed to think that was business as usual and an accepted practice. Either way, no one will be disputing the deposits so it’s no big deal either way.

After those shenanigans, I needed to sign the check in order to deposit it. If a check has two names (with an “and” between them, rather than an “or”), both have to endorse the check before it can be cashed, deposited, etc.


 Credit 
14
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Citi CashReturns: We Got A $500+ Rewards Check

Citi CashReturns(SM) MasterCard® Don’t think cashback reward credit cards are worth it? Well, a month ago I wrote about how the Citi CashReturns card was our wedding spending secret weapon because of its phenomenal 5% cash back rewards program. It was an idea my friend gave me and we’re now thankful he thought of it (and remembered to mention it to us!) because just the other day we received a check from Citi for $532.45. That’s right, in the last month we’ve spent a whopping $13,311.25 on wedding related items (mostly catering deposits, thankfully they took credit cards!) and we’re still a month out from the actual event!

While this is an extreme example, it’s the perfect case of how this CashReturns card has saved us a lot of money. That $500 is like getting our wedding cake for free… or part of our DJ for free… or a tuxedo for free. Another awesome feature of the card is that you don’t have to request the check, something I always felt was a ridiculous requirement. Of course I want my money, why would I ever “stockpile” cash? So, without any prompting, Citi sent us the check (we almost ripped it up because we thought they were convenience checks!).

The only downside to the promotional offer is that the 5% cashback is for only three months but that’s long enough for us to pay for the wedding and a honeymoon… all at an instant 5% discount!


 Credit 
9
comments

Citi CashReturns: Our Wedding Spending 5% Discount Secret Weapon

Citi CashReturns(SM) MasterCard® This offer has expired.

I actually feel kind of stupid for not thinking of this earlier but my friend mentioned the Citi CashReturns card the other day and how he used it to take a 5% discount off his entire wedding. He took the CashReturns promotion of 5% cashback (no annual limit), put all of his wedding spending on it, and got himself a nice fat check for 5%. It was so easy that I felt stupid for not having thought of it first. I dismissed the card entirely from my mind when I heard it was 5% for only 3 months, I’ve written in the past about how those types of time limited cashback promotional offers suck but this time it’s different.

Why is it different? It’s because it’s 5% on everything and because we’re going to have a tremendous spike in spending for the next three months as all the wedding expenses get combined with all sorts of honeymoon expenses for a wonderfully expensive quarter. Let’s say the wedding catering costs approximately $15,000. On a conventional credit card, that’s still a nice fat $150 (not fat compared to the cost of course) cash back which is nice. At 5% that amount blossoms to $750! While it won’t replace typical wedding cost cutting strategies, it’s certainly nice to get a little off the top just for using a credit card.

The fine print says “Your Citi CashReturns Card account (“Card Account”) will receive a rebate based upon eligible transactions appearing on your current month’s billing statement.” Which reads to me like you can charge the maximum, pay it off mid-month, then charge some more, pay it off; and have every transaction count towards cashback. The credit limit we have on the card simply isn’t enough to cover all the charges in the short period of time so our mid-billing period payments still have to go if we want to maximize the returns. Lastly, another thing we’ve done is consolidated all of the Citi accounts into that card to increase the credit limit to the max.

There you have it, a slap-my-forehead-its-so-obvious type of idea my friend suggested that should help us out just nicely.

Incidentally, I find it amazing that vendors aren’t willing to cut you a price break to work with cash or check considering the fees they have to pay, oh well, our gain anyway.


 Taxes 
6
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Dumb Year End Money Moves: Marriage, AMT, Bonuses & More

The blogosphere is chock full of things you should do at the end of the year, like making donations and saving kittens, but what about those things you shouldn’t be doing? I’ve put my brain on the subject and while I’m not a tax expert, I believe the following list is a good start of things to avoid doing near the end of the year if you want to save yourself a few tax dollars.

1. Don’t Get Married:

The marriage penalty pretty much sucks (but marriage is awesome!) and your filing status for the year is based on your filing status when the year ends, December 31st. It doesn’t matter if you get married 11:59pm on December 31st or 12:01am on January 1st, your filing status is married no matter what. Is the marriage penalty really that bad? Two singles making $70k a year will pay a total of $13,923.75 each in taxes, or $27,847.5 combined. A married couple making $140k a year combined will pay $28,192.50 – $345 more. I don’t know about you but I’d rather put that $345 into my pocket than Uncle Sam’s.

2. Prepaying Taxes & Other Unallowable Deductions under AMT

The Alternative Minimum Tax is an ugly word lots of people have been throwing around lately and it has the potential of taking a positive tax move and turning it into a hugely negative one. Prepaying certain deductible expenses, such as state/local/property taxes, early allows you to take the deduction earlier – that’s a positive tax move. However, if you are subject to the AMT, you aren’t allowed to take those deductions so you face the double whammy of prepaying your taxes (you lose interest on the money in a bank account) plus you get no benefit for doing so (tax deduction).

First determine if you’re subject to AMT (there is no 2007 calculator, I would just use the 2006). If you are, don’t prepay these normally deductible expenses (state and local income taxes and property taxes, un-reimbursed business expenses, child-tax credits, tax-preparation fees, legal fees, home-equity loan interest). If you are, then try to prepay them if you can so they can be applied to your 2007 tax bill, instead of your 2008 tax bill.

3. Don’t Sell Stock – Lower Capital Gains Rates in 2008

If you’re in the 10% or 15% income tax bracket, next year that your long term capital gains tax will fall to 0%, so wait a few more weeks if you’ve been thinking of pulling the plug on an investment.

4. Defer Compensation If You Can

The following moves all fall under the greater heading of deferring compensation because money you earn in December 2007 is taxed on April 2008. Money earned in January 2008 is taxed in April 2009 – a significant difference for such a short delay.

  • 4a. Don’t Take That Bonus (Yet): Bonuses are hot but try to push the payment of that year end bonus to the new year and you can push the tax bill to next year also.
  • 4b. Don’t Take A Capital Gain (Yet): Much like a bonus, don’t take a capital gain near the end of the year when you can push it to next year. The reasoning is the same – you get your cash in a few weeks and you get the tax bill in over twelve months. If you have a loss this year, you can even use that to reduce your income. (plus, you might be seeing lower tax rates)

This is part of a Money Blog Network group project in which we discuss some great year end money moves, I went against the grain with this one. If you can think of any moves one should avoid at the end of the year or have any thoughts on any of these, please do share them and I’ll add it to the post.


 Shopping 
43
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Synthetic Diamond Engagement Rings

When I read this question about “fake” engagement rings, I was pretty surprised. Essentially a young man wants to get his girlfriend a nice engagement rings but can’t afford a “real” diamond yet so he was going to buy her a synthetic diamond and then make the swap later. What he wants to know is whether he should tell her or just make the Indiana Jones type swap when she’s not paying attention. Okay, I may have laughed when I read how ludicrous of a question this was, in part because of the deception and in part because of the emphasis on “real” vs. “fake” (synthetic).

Obviously the experts tell him to be truthful with his girlfriend, you had to have seen that coming (especially since it’s a column about ethics), but I want to address the idea of synthetic diamonds. By synthetic diamonds, I mean diamonds that are lab created and not nature created; I don’t consider actually fake diamonds, like QVC’s Diamonique®, to be synthetic. Lab created diamonds are actual diamonds except they are absolutely perfect and generally cheaper than naturally occurring diamonds.

Considering that the concept of the diamond engagement ring was a creation of De Beers, does it really matter, I mean when it really comes down to it, how much it costs? That’s really the only distinguishing feature between a synthetic diamond and a real diamond – the cost. Does your love mean any more or less because the diamond was created by a guy in a lab coat or eons of pressure? Probably not.

Your fiancee’s (or your) friends will still oogle over the ring, oblivious to its actual origin (no one will ask for the diamond’s birth certificate because no one will care) because that doesn’t matter. Most are just caught up in the excitement of another engagement and ultimately, the ring is only a small part of the bigger picture.

Personally, I didn’t get a synthetic diamond because it never entered my mind as an option, probably because De Beers and the diamond cartel has me, along with a whole bunch of other people, thoroughly brainwashed. :)


 Personal Finance 
9
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Ha! Weddings Are Scams! I Knew It!

Laura Rowley, a Yahoo Finance columnist, exposes the “Wedding-Industrial Complex” for what it is… a bunch of nice emotional things coupled with a bunch of “traditions” created by companies to sell more stuff. She references Rebecca Mead’s One Perfect Day: The Selling of the American Wedding, which you may recognize since I linked to a Devil’s Advocate article about how you shouldn’t get married.

Scam #1: It costs $28,000

It doesn’t have to cost $28,000 but the industry keeps pounding into the minds of brides and grooms to the point where people believe that’s how much you have to spend. I think our wedding is going to cost around that much because we’ll be inviting approximately 200 people and food (including the incidentals like tables, chairs, tablecloths, servers, cooks, etc) will be nearly $20,000 alone. Is that necessary? No. Is it nice to have? Yes, but not 100% necessary which is the point.

Scam #2-#0394820934: All those institutions you thought were cultural, they’re actually commercial.

“The engagement ring was invented by [diamond producer] De Beers in the 1930s and 1940s,” she says. “The so-called traditional bridesmaid luncheon, rehearsal dinner, pre-wedding barbecue, and post-wedding brunch don’t have a basis in history. It’s easier to say no to things like that if you understand that it’s not wrong to not do them.”

Amazing huh? I think I’m going to get that book.


 Devil's Advocate 
43
comments

Don’t Get Married

Devils Advocate Logo
This is a Devil's Advocate post.

Marriage is nice in principle but when it comes down to the dollars and cents, is it really truly worth it? According to some statistics in Rebecca Mead’s new book One Perfect Day: The Selling of the American Wedding (tip of the hat to Freakonomics blog), the average cost of a wedding is $27,852. Compare that to the median income in 2005 of $46,326 (Wikipedia) and you’ll wonder where people find the cash to pay for their weddings, let alone the financial pain brought on by the government.

The Marriage Tax

Let’s say you make $60,000 and the love of your life makes $60,000 too. If you remained unmarried, your couple’s total tax owed is $22,847.50 ($11,423.75 each) not counting any deductions. If you were to get married, you would owe $22,847.50 as well; being married doesn’t hurt right? What if you made $90,000 and the love of your life made $90,000? As single filers, you’d pay a combined $38621.50 in tax. As two happily single but committed persons, you’d pay $38,621.50 ($19,310.75 each); $39,392.50 if you were married, a difference of $771. As you make more and more money, the difference becomes more acute. So, either don’t get married, or don’t make a lot of money… a fair decision for someone to have to make right?

Here are the tax tables for a reference:

Tax Rate Married Filing Jointly Single
10% $0 to $15,650 $0 to $7,825
15% $15,650 to $63,700 $7,825 to $31,850
25% $63,700 to $128,500 $31,850 to $77,100
28% $128,500 to $195,850 $77,100 to $160,850
33% $195,850 to $349,700 $160,850 to $349,700
35% $349,700 to infinity $349,700 to infinity

(full marginal tax tables)

Weddings Are Expensive

I mentioned it before but the average wedding is somewhere in the $25-$28k range, which is about a down payment on a house in most areas. While everyone loves a party and loves the celebration, the sheer expense of it all almost makes you want to elope or hit up Vegas, doesn’t it? Not only are weddings expensive, they’re often stressful as you want your wedding day to be perfect. That means the food must be good, the drink must be good, the guests must be happy, the ceremony must go off without a hitch, the rings can’t get lost, the weather can’t turn sour, the reception hall can’t lose electricity, and so on and so forth. Considering how little of that you can actually control, it makes for quite a stressful day doesn’t it? Oh, and it’ll cost you a pretty penny or two (million).

You Lose Half Your Stuff

From now on everything you earn, you only get half (and that’s the half after the tax man takes his cut, which gets bigger and bigger with every dollar). If things don’t work out, he or she gets to keep half of it if you walk away for the always popular “irreconcilable differences” excuse. Yuck!

So the moral of today’s story is: don’t get married. Oh, and I’m preparing myself for the beat down that is likely going to occur at the hands of my lovely, brilliant, special, wonderful, and most-important-person-in-my-life fiancee once she reads this… but remember, Devil’s Advocate means that most people don’t agree (including myself, especially in this case!) and I was just trying to find a way to argue the other side. I’m still getting married. I hope. :)


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