Archive for March, 2014:

Home-Equity loans about to cause problems

Written on March 26th, 2014 by Jamesno shouts

Here is a leftover from the housing bubble that many have overlooked, home equity lines of credit.  If you have a HELOC or Second mortgage that was a 10 year interest only you may want to dust off the paperwork and see when it becomes an amortizing loan or worse yet if a balloon payment is due at the end of the term.

Marketwatch has a good article about how this could broadside homeowners over the next few years:


Filed under General Tags:

last minute IRA and Tax facts

Written on March 25th, 2014 by Jamesno shouts

Just a couple of weeks until the filing deadline for taxes and here are some IRA facts you need to know:

#1:  If making a non-deductible IRA Contribution you need to file form 8606 with your tax return.  This form establishes a basis so when you take money out of this IRA in the future you won’t be taxed on this contribution a second time.  Anyone at any income level can make a non-deductible IRA contribution, so if you choose to do so remember to establish a basis with the IRS through this form.

#2:  Referring up to item 1, if you have an IRA where you have been putting in money each year but not deducting because your income level is to high, please keep this IRA segregated from any other IRA’s you may have.  The reason is you don’t want to mix after-tax (non deductible) IRA money with pretax (rollover) IRA money, if you do then sorting out your basis at some future point in retirement will be a nightmare.

#3:  you don’t report Roth IRA contributions as they are all after tax (non-deductible), so you can contribute to a Roth for 2013 even if you have already filed your taxes this year.  Just make sure to tell your custodian to code the contribution for 2013.  (You must get this in by April 15th)

#4:  for 2013 tax year the contribution limit for Roth or traditional IRA is $5500.  If over age 50 you can toss in an extra $1000.

#5:  if making a Roth contribution for 2013 tax year the income limit phase out for married filing jointly is $178k to $188k.  For Singles it is $112k to $127k.

#6: if you (and spouse) are covered by a 401k plan or similar retirement plan at work, then you can only make “deductible” IRA contributions if you are below the phase out range of $95k to $115k AGI.

#7: if your employer offers a Roth 401k option at work, it has no bearing on your ability to contribute to a Roth IRA.  As long as you are under the income thresholds, then you have the option to do a Roth IRA as well.

#8:  lastly, at least one spouse has to have “earned” income to contribute to a traditional or Roth IRA.  If one has W2 or self-employed Sch. C income, then you can contribute and make a spousal IRA contribution as well.

no bubble here, please move along

Written on March 12th, 2014 by Jamesno shouts

Almost as if it is a game.  You get billions based on your companies valuation, why not go by someone else with all that play money?   I think we have seen this story before and it didn’t end well.

Maker of Candy Crush Game Seeks Valuation near $7.6 Billion:

Facebook buying app maker WhatsApp for $19 Billon:




Filed under General Tags:

rental cars & HOA’s

Written on March 11th, 2014 by Jamesno shouts

Okay, its a strange title with absolutely nothing in common except protecting yourself from surprise out of pocket expenses.  Both topics sort of popped in my head recently so thought a combo 2 for 1 blog post was warranted.

First topic:  Should I purchase the optional insurance when renting a car?

With Spring/Summer travel season coming up the question is do you take the insurance they offer when renting a car?  My gut reaction up to this point has always been, absolutely not!  My existing auto insurance extends to rental cars so why waste the money.  However, after the workshop the P&C agent gave a few weeks ago I am rethinking this.  For one, if you travel out of the country and rent a car you may or may not be covered.  If you are covered your liability limits might not be in full effect.  Second, if you are in a wreck or the car is stolen you still have your deductibles and the hassle of dealing with rental car agency to settle the claim.  By taking the rental car insurance any problems are transferred to them and you don’t have to deal with it.

I know this isn’t a frugal way of thinking of this, but just throwing out a counter argument for you to consider.  Along these lines many credit cards offer insurance on rentals as well.  Just know in advance of your travels what your auto policy covers and credit card covers, it could definitely pay off.  For more reading here is another article on the subject:


Second topic: Did you look at your HOA’s financial position before buying your home?

A conversation with a client who happens to be a real estate attorney along with an article in this months Kiplinger got me thinking of this topic.  How many of us actually knew the financial position of our Homeowners Association when we bought our home or condo?  I certainly didn’t and it never crossed my mind to ask for a copy of the HOA financials before buying my home.  However, ask anyone who has moved into a community only to get hit with a large special assessment and you quickly learn why it is important to know the financial position of your community up front.  With the real estate bust many HOA’s are still underfunded and if large repairs are needed in the community (pool, tennis other amenities), then all residents will get hit with an assessment.  For condo/townhome owners with shared roofs or structural items this is especially true as those assessments can be many thousands of dollars.

Before you buy, ask for a copy of the HOA’s financials and take a look at their reserves in relation to the most recent reserve study.  Buying into a community that is well funded will make your wallet much happier.