Go to Jeff Salisbury LWGate Home Page.From: persfin-digest <owner-persfin-digest@shore.net>
Subject: persfin-digest V4 #4
Date: Thu, 6 Mar 1997 20:02:52 -0500 (EST)
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persfin-digest Thursday, March 6 1997 Volume 04 : Number 004
IN THIS ISSUE:
ADVERTISEMENT: LAN ACCESS TO MCI MAIL
joint tenant--community property
backup devices - We Use CD-ROMs
Re: Reporting State Tax Refund on Federal Tax Returns
Re: Please clarify "active participant"
Re: Where to Buy Treasuries and STRIPs
Any Mutual Funds Invest in Penny Stocks?
Info on CO-Generating Furnace wanted
Re:writing off expenses for my MLM ventur? (by Kristina)
Re: possible incorrect IRA deduction
Re: Margin Interest (finance charges) deduction
Re: Mac Recommendations
RE: Using Zip Drives for Backups / Backup Strategy
Consider a Custom Made Computer
Year 2000 Issues - Do a 30 Year Bond Calculation on Your Spreadsheet
VMS User Responds
Re: Help with IRA tax question
RE: Destiny telecomm?
Stock Picking Tool, ERI?
Inadvertant lifetime subsciptions
Re: Paying Off The Mortgage
Pay-Off Mortgage Early
To Lock or Not To Lock (Interest Rate)?
Buying PC's, Iomega Zip
PBHG Growth and Computer backups / PBHG Growth
Which Tax Form Does a J-1 Visitor Use?
Emerging Technologies vs. Emerging Countries
Can you write off rent ?
CD's, treasuries Questions
Backup with Windows NT?
Can I Open an IRA While Contributing to a 401(K)?
Zip drive and PC advice
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----------------------------------------------------------------------
Date: Thu, 6 Mar 1997 19:28:50 -0500 (EST)
From: Oppenheimer Software <Connect-Sales@mcimail.com>
Subject: ADVERTISEMENT: LAN ACCESS TO MCI MAIL
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------------------------------
Date: Thu, 6 Mar 1997 19:31:04 -0500 (EST)
From: BOB FORD <BOB_FORD@compuserve.com>
Subject: joint tenant--community property
>Does anyone know the difference between "joint tenant
>with right of survivorship" and "community property"
>for residents of Californaia? This is for a house.
>Paul (fan@math.ucla.edu)
PAUL
I am not an attorney and the following is not legal advice. It is just my
opinion. If my opinion is wrong, someone please let me know.
In California, and I think in every other state, if you own a house in
"joint tenancy with right of survivorship", there is NO PROBATE of the
property on the death of one owner AND you can not will the property to
anyone. The other joint tenant or tenants become the owners of the
property NO MATTER WHAT YOUR WILL SAID.
California is one of the few states that have community property. In
community property states, all income and all assets (with a few
exceptions) are assumed to be owned equally by husband and wife. It does
not matter that only one spouse has income. This means that each spouse
owns one half of the assets and can will these assets to anyone they
choose.
Please check with you tax advisor before you make any decision on how to
own assets. Community property gets a new (market value) basis on the
death of one spouse. This may or may not be of benefit to you depending
on whether the market value of the home has gone up or down.
BOB FORD
------------------------------
Date: Thu, 6 Mar 1997 19:32:02 -0500 (EST)
From: "Nancy L. Jestel" <nbradley@Chem.LSA.umich.edu>
Subject: backup devices - We Use CD-ROMs
I do a lot of scientific imaging and statistical data processing. My
data files are regularly in excess of 50 MB. My collegues and I only
need a few days to fill those 1,2, and 3 gig harddrives. Because tapes
are so slow, zip's not big enough, and flop-ticals too unreliable, we
burn our own cd-roms. You can fit 650 MB to a CD (~$10-13 each, one time
use) and the burner is less than $1000 (runs on both mac and pc's with
SCSI). It's not an option for everyone, but it's been a lifesaver for
us!
Other people around here use Zip drives with fine success and the
portability is fantastic. I recommend them unless you have large files
or need to back up the whole system on a regular basis.
Whatever you choose, BACKUP BACKUP BACKUP BACKUP BACKUP BACKUP! It's not
worth the sorrow if you don't!
/n
Nancy Jestel
University of Michigan
Department of Chemistry
Raman Microscopy and Spectroscopic Imaging Laboratory
------------------------------
Date: Thu, 6 Mar 1997 19:32:32 -0500 (EST)
From: "Rip West" <rip@montrose.net>
Subject: Re: Reporting State Tax Refund on Federal Tax Returns
Douglas M. Williamson sez:
<<
. You received credit on your 1995 federal return for the refund and now
you must pay the piper back. You might want to consider amending your 1995
return if you are in a higher tax bracket for 1996.
>>
Not quite. You are on the cash basis for reporting taxes paid and received.
Therefore, you can not choose between reporting the refund in the year
received vs the year deducted. You must report it in the year received (to
the extent that you received a tax benefit in the year deducted).
rip
------------------------------
Date: Thu, 6 Mar 1997 19:33:27 -0500 (EST)
From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: Re: Please clarify "active participant"
[Disclaimer: this is my opinion, not advice. I am not a professional.]
>If the plan is a "defined benefit plan", one is deemed a
>participant if _not specifically excluded_, regardless of
>whether one chooses to contribute, and if the plan is a
>"defined contribution plan", one is only an active participant
>if one makes contributions or if contributions are made
>by the employer on behalf of the employee?
To my understanding (from reading the relevant IRS notice and from
seeing this thread discussed countless times by the tax pros on
misc.taxes.moderated), you are exactly correct. The relevant IRS
notice (87-16, I believe) has in fact been put online by one of the
m.t.m. pros (Ed Zollars). Check out his WWW site at
http://www.getnet.com/~hmtzcpas and look for a link pointing to said
notice.
>I was recently told that if one is *eligible* for an employer
>sponsored retirement plan, one is always deemed an "active
>participant", whether or not one contributes.
This appears to be common misconception, unfortunately shared by many
employers who thus mistakenly (IMHO) check off the "Pension Plan" box
on the W-2.
Rich Carreiro
rlcarr@animato.pn.com
------------------------------
Date: Thu, 6 Mar 1997 19:34:27 -0500 (EST)
From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: Re: Where to Buy Treasuries and STRIPs
>So where do you get Treasury bonds? What's a STRIP? And do only
You can buy T-bills, notes, and bonds at auction commission-free from
the US Treasury's TreasuryDirect program. The only catch is that the
securities basically have to be held to maturity (you can sell them
ahead of time, but it's a hassle as you'll have to open an account
with a broker and deal with annoying paperwork to transfer the
Treasuries to the broker to be able to sell them).
You can also buy all of the above through your favorite broker. You
can buy currently-existing Treasuries or new ones at auction. You
will either be charged a separately stated commission, or will pay no
explicit commission but will be sold the Treasury on a marked-up basis
(are any brokers slimy enough to do both?)
A STRIP stands for something like "Separately Traded Registered
Interest and Principal" [I probably have the acronym expansion
slightly wrong]. They are US Treasury zero-coupon bonds. They pay no
interest and are therefore sold at a discount to face value -- the
difference between purchase price and face value being your interest.
For example, you can buy $10,000 face value of a 4-year STRIP for
around $7,950. This works out to a 6%/yr return. Note, however, that
even though STRIPs don't pay explicit interest, the IRS requires you
to compute and pay taxes on the imputed interest each year. You do
get to increase your basis by the imputed interest, however. STRIPs
(like any zero) do have the advantage of providing an absolutely
certain rate of return when held to maturity, since there is no
thrown-off interest that you have to reinvest (an alternative way of
looking at it is that the interest is implicitly reinvested in the
zero).
The interest on all forms of Treasuries (including STRIP imputed
interest) is federally taxable, but is exempt from all state and local
taxes. Also, the value of Treasuries is exempt from state and local
intangibles taxes.
>banks issue CD's? Won't I also have to make sure that all the money
Yes, only banks issue CDs. However, many banks issue negotiable CDs
(which still carry FDIC insurance if under $100,000) that can be bought
and sold through brokers.
>comes available about the same time, or can you sell off a 5 year
>Treasury bond a little early with no appreciable loss?
Yes. To have no risk at all of loss you'll have to buy the
instruments with maturity dates corresponding to when you need the
money. If you are using a broker that shouldn't be hard, since you
can find something maturing on the 15th of just about any month.
Going through TreasuryDirect it's a little harder -- you need to get a
copy of the auction schedule and do some figuring.
As for selling a 5yr T-bond early, it depends. Heck, if interest
rates have fallen since you bought the bond, you'll may well able to
sell it for more than you paid for it. Or you might have to sell it
for less. Now, if "a little early" is on the order of 1 to 2 months,
any loss you might have would be pretty minimal, and would more than
be made up for by the interest you received over the life of the bond.
Rich Carreiro
rlcarr@animato.pn.com
------------------------------
Date: Thu, 6 Mar 1997 19:35:03 -0500 (EST)
From: colston@viagrafix.com (Lloyd Colston)
Subject: Any Mutual Funds Invest in Penny Stocks?
Is there a mutual fund that invests in Penny Stock?
- --
Lloyd Colston Success comes in cans, not can'ts
Pryor, OK USA social worker, writer, editor
Free membership business group: http://www.isbc.com
http://www.viagrafix.com/colston/index.htm
------------------------------
Date: Thu, 6 Mar 1997 19:35:47 -0500 (EST)
From: ktjensen@juno.com
Subject: Info on CO-Generating Furnace wanted
I was looking for the old info on the co-generating furnace
that was put in PERSFIN about a month ago. Can someone
send me email direct with this info again??
Also how do I search old PERSFIN articles. Is there an archive
available??
Send replys directly to ktjensen@juno.com
Thanks in advance
(Editor's Comment - No archive available right now. -IK)
------------------------------
Date: Thu, 6 Mar 1997 19:36:23 -0500 (EST)
From: "Louis J. Schwarz, CFP, RFC" <sfc@clark.net>
Subject: Re:writing off expenses for my MLM ventur? (by Kristina)
It is very tacky to deduct such MLM expenses unless you prove to the
IRS, if audited, that you did have a profit motive. A good recordkeeping
book will not be a good answer. Many people involved in MLMs are most
audited by the IRS lately.
- --
Louis J. Schwarz, CFP, RFC TTY 301-587-5996
Schwarz Financial Concepts FAX 301-587-5997
814 Thayer Avenue, Suite 301 Voice Relay 800-735-2258
Silver Spring, Maryland 20910-4500 Mailto:sfc@deafcfp.com
------------------------------
Date: Thu, 6 Mar 1997 19:37:03 -0500 (EST)
From: "Louis J. Schwarz, CFP, RFC" <sfc@clark.net>
Subject: Re: possible incorrect IRA deduction
>From: Shane Brewer <BREWERSH@UVSC.EDU>
This past year we mistakenly contributed a small amount
(<$500) to my wife's IRA (regular not spousal.) The problem
is she is not working and so the contributions we illegal
(?). We also claimed this as a deduction (contribution to
spouse's IRA) on Federal Taxes! I have no IRA and am the
only working member of our household. That is the
situation.
I have talked to my broker and he said he could remove the
illegal contributions from my wife's IRA (claiming them as
over contributions) and use them to start an IRA for myself,
thus eliminating the illegal contributions. In so doing, we
still can legally claim the IRA contribution deduction on
our taxes. The net result is that we will have claimed the
deduction as a contribution to my spouse's IRA instead of a
contribution to my IRA. Is this a problem? If so, how do
we correct it? Your timely response would be appreciated.
- --
Cannot answer correctly because of lack of more information re the
adjusted gross income and whether the wage-earned taxpayer is a
participant in company's retirement plan. However, you can split any
amount between $250 and $2250 for IRA account for both married spouses
as long as there is a maximum of $2,000 in either account. In your case,
it is all right that your spouse can have $500 but all you do is to
change from regular IRA account to spousal IRA account. May not be
necessarily to amend the tax return.
Be advised that this is only applying to the years prior to 1997.
Beginning with 1997, each IRA account can go up to $2,000 each.
Louis J. Schwarz, CFP, RFC TTY 301-587-5996
Schwarz Financial Concepts FAX 301-587-5997
814 Thayer Avenue, Suite 301 Voice Relay 800-735-2258
Silver Spring, Maryland 20910-4500 Mailto:sfc@deafcfp.com
------------------------------
Date: Thu, 6 Mar 1997 19:38:05 -0500 (EST)
From: "Louis J. Schwarz, CFP, RFC" <sfc@clark.net>
Subject: Re: Margin Interest (finance charges) deduction
>From: Rich Carreiro <rlcarr@animato.pn.com>
>I don't know if the margin interest in my stock account is consider as
>investment interest or investment expense. Anyone familiar to this?
Assuming you used the proceeds of the margin loan to buy
non-tax-exempt securities, the margin interest is investment interest
and is a Sched A deduction to the extent there was investment income
and also subject to the 2% of AGI floor.
If the margin loan was used to buy tax-exempt securities, or was not
used to buy securities at all (to buy a car, for example), the margin
interest is NOT deductible at all.
Rich Carreiro
- --
Rich is correct except that you have to use the form 4952, if required,
to list down those investment interest expenses (can be either margin or
any personal loan or credit card cash advance) as long as those money
are used to invest in income-producting products. From that form, you
will be instructed to copy the allowable investment interest expense
deduction to the Schedule A on line 13.
Also, was the investor aware of such margin loan at first place? If not,
he should have consulted the stockbroker why did he use margin without
his knowledge!
Louis J. Schwarz, CFP, RFC
Silver Spring, MD
------------------------------
Date: Thu, 6 Mar 1997 19:38:40 -0500 (EST)
From: WDStancil@aol.com
Subject: Re: Mac Recommendations
Well, since you did ask specifically for a Mac with a 604/604e processor,
look at the new 7300 (replaces the 7600).
7300/180 - 180MHz 604e, 16MB RAM, 2GB drive, 12x CD-ROM, 256KB cache - $2299.
7300/200 - 200MHz 604e, 32MB RAM, 2GB drive, 12x CD-ROM, 256KB cache - $2699.
A decent 17" monitor seems to run an add'l $800-$1000.
Or look at the new model 4400: 603e processor
4400/200 - 200MHz 603e, 16MB RAM, 1.2GB drive, 8X CD-ROM, 256KB cache -
$1699.
Real-world the 604e is only about 33% faster than an equivalent 603e system.
The 603e-based machines are positioned as the consumer-level products. (The
new 7300 is positioned towards businesses.)
You could take the $1000 difference between the 7300/200 and the 4400/200 and
pay for a great 17" monitor (and an additional 16MB RAM), especially given
the potential uses you mentioned.
As to ordering, if you have no local stores I'd pick up a copy of MacUser and
look at the big mail-order Mac houses:
MacWarehouse/MacConnection/MacZone. (Got the above info. from the latest
MacWarehouse catalog).
- -Dale (written on my Performa 640 - one of the last non-PowerPC Mac models).
------------------------------
Date: Thu, 6 Mar 1997 19:40:04 -0500 (EST)
From: Mike Stefani <stefani_m@orgella.com>
Subject: RE: Using Zip Drives for Backups / Backup Strategy
>
>(Editor's Question - Anyone use the Iomega Zip drives? They give you
>removable 100MB backups. Also, I wonder how many people are backing up
>their 2 Gig hard drives, and to what? diskettes? tape? If not, one
>morning you'll turn on your PC and you'll lose a *lot* of data. -IK)
>
Ira-
Zip drives work very well, and removable disks are much, much faster than
tapes.
The backup strategy which works for me:
1) Do a "system" backup: Backup your OS (operating system) and program
directories, and put this in a safe place. This will likely take more than
one Zip disk (i.e., more than 100MB,) and can be time consuming. But, you
only need to do it once in a while. This is a "convenience" backup- saving
you the trouble of reinstalling software after a disaster.
2) Frequently do a data backup. The frequency depends upon the individual-
how painful would it be to lose 1 days work? 3 days work? 1 weeks work?
3) Ideally, you should maintain 2 copies of data backup disks, and
alternate them. Backup onto set "A" the first time, onto "B" the second
time, back to "A" the third time, etc. This gives you the two most recent
sets to restore from at any time, and prevents total loss of data if your
system goes down during a backup operation (don't chuckle- guess how many
people notice "a little problem" and then start their backup...)
Note that this strategy requires a little foresight- if you have nto
organized your directories to maintain separate locations for data and
applications, this backup strategy requires a lot of user input to select
files each time. And, if backing up is not simple, it won't get done
frequently enough.
An aside on Zip's: get an internal drive, or a SCSI interface drive if
possible- much, much faster than the parallel port version. And, for big
hard disks, a Jaz drive makes much more sense if it is within your budget.
Syquest also makes good removable drives. Sorry if this became too long
winded.
Mike Stefani
E-mail: stefani_m@orgella.com
------------------------------
Date: Thu, 6 Mar 1997 19:41:17 -0500 (EST)
From: John.Wolf@corp.wrgrace.com
Subject: Consider a Custom Made Computer
One option not discussed but proved good for me was going through a
local company who will custom make a computer for you. The drawbacks
are that you have to investigate what you want, and they will use
copy-brand pieces like a keyboard, pc-box and maybe even monitor. All
interior parts of your choosing ie Pentium chips, Soundblaster etc. I
found it to be cheaper by about 200 bucks than mail ordering the same
system. Things such as memory are market driven, so it can be cheaper
one month, more the next. The kicker for me was that the person who
builds my computer is also the person who would service it. This
particular place gave me a 2 year parts and labor warranty. These
systems are also built to upgrade easily (ie plenty of room for
additional memory, processors, hard drives to be installed with ease).
I would recommend that you look around as I went to 3 different custom
built stores and did the price comparison. They will also throw is
software to sweeten the deal, also a bargaining chip. It is wise to
ask for references or look at how long the group has been there, as you
don't want to buy one and these folks disapppear. I have had
absolutuely NO problems with mine since I bought it 6 months ago.
Hope this helps,
John
------------------------------
Date: Thu, 6 Mar 1997 19:42:24 -0500 (EST)
From: Allen Spann <atspann@pclink.com>
Subject: Year 2000 Issues - Do a 30 Year Bond Calculation on Your Spreadsheet
Recently there was the suggestion that this is primarily a mainframe
problem and that newer PC/Mac's are pretty much prepared for yr 2000.
Depending on your application, I doubt that PC/Mac software designers
have really covered all the bases. Put another way- if you use a lot of
different types of software in your environment- don't assume it's all
set for year 2000. A minor example for Excel 5 users (Excel 7?)- enter
the following dates in mm/dd/yy format: 1/1/19 and 1/1/20. The first is
treated as Jan 1, 2019; the second is Jan 1, 1920. This can be an issue
right now if you are doing 30 bond calculations. I'll wager there are
even more serious (and far more subtle) issues lurking in the shadows.
Allen Spann
Minneapolis
------------------------------
Date: Thu, 6 Mar 1997 19:43:19 -0500 (EST)
From: Jeff Morgan <morgajs@parsec.com>
Subject: VMS User Responds
>From: Ian Haggard <ian@shellus.com>
>Subject: Consider a Custom Built PC
>
>> Unless it happens to be a Vax or Alpha running VMS,
>
>In which case it's already obsolete ;^) As a Unix'er, I couldn't resist
>that dig at VMS. I'm amazed to hear people still run that old OS...
>
As a "VMSer", I feel compelled to respond. As I outlined in a
private message to Ian, that "obsolete" "old" OS is in V7.1 now,
and is *still* the most robust, secure, functional and user-friendly
OS on the planet.
It runs on both Vax and Alpha platforms, and is the only
OS that supports true clustering. NT "clusters" don't even
come close to the functionality of VMS clusters.
Compare the intuitive ease of use of VMS HELP, vs.
the cryptic *nix "man" function.
Compare the ease of use and functionality of the VMS EVE
editor with the maddening syntax of "vi".
There are no known VMS viruses. That surely can't be
said for *nix.
Can *nix security be applied to individual objects, with
each individual process on the system having the ability
to be granted several discrete types of access? Not a
problem with VMS.
The only "problem" with VMS is that DEC fell asleep at the
marketing wheel.
- --
Jeff Morgan - mailto:morgajs@parsec.com
------------------------------
Date: Thu, 6 Mar 1997 19:44:02 -0500 (EST)
From: jimm@hi.com (Jim McGrath)
Subject: Re: Help with IRA tax question
>
> This past year we mistakenly contributed a small amount
> (<$500) to my wife's IRA (regular not spousal.) The problem
> is she is not working and so the contributions we illegal
> (?). We also claimed this as a deduction (contribution to
> spouse's IRA) on Federal Taxes! I have no IRA and am the
> only working member of our household. That is the
> situation.
I don't understand the distinction you are making between a "regular"
and "spousal" IRA. There is no need to segregate IRA accounts in this
manner. It appears to me that you have made a perfectly legal IRA
contribution.
> I have talked to my broker and he said he could remove the
> illegal contributions from my wife's IRA (claiming them as
> over contributions) and use them to start an IRA for myself,
> thus eliminating the illegal contributions. In so doing, we
> still can legally claim the IRA contribution deduction on
> our taxes. The net result is that we will have claimed the
> deduction as a contribution to my spouse's IRA instead of a
> contribution to my IRA. Is this a problem? If so, how do
> we correct it? Your timely response would be appreciated.
I'd be very careful here. If, as I believe, the contribution was
legal you would be taking a premature distribution from your wife's
IRA and be subject to the 10% penalty. I'm sure others will comment.
Jim McGrath
------------------------------
Date: Thu, 6 Mar 1997 19:45:06 -0500 (EST)
From: "Mitchell, David D (d4dmitc)" <D4DMITC@msg.PacBell.COM>
Subject: RE: Destiny telecomm?
>> H. Larki wrote:
>>>I was wondering if anyone has any experience with Destiny telecomm?
>>>A friend of mine is trying to get me to join in and I wanted to know
>>>if this is another Amway, or is it different? I'm not the type who
>>>does to well with MLM schemes....I'm just not aggressive enough to
>>>be successful at recruiting people. He says that this bussiness is
>>>the best he has ever seen, and that it will sell very easily once
>>>people learn about it. I will be going to one of their meetings in
>>>a few days, and I wanted to get your opinions on it first, since there
>>>are some really smart people on this list. Please let me know at
>>>larki@wv.mentorg.com, or just post it to the list.
Destiny was featured in our local paper a few days ago. I believe the
gist of the article was that the State of California is trying to shut
it down. The state's position is that it is an illegal pyramid scheme
which requires that you "buy into" the company. Destiny's position is
that it is a legit MLM organization and that you do not have to "buy
into" anything. As I recall from skimming the article, Destiny sells
pre-paid phone cards in large values ($100 and up). You re-sell these
for a profit. You make commissions by recruiting others to work under
you.
Keep your eyes open.
Dave
------------------------------
Date: Thu, 6 Mar 1997 19:46:15 -0500 (EST)
From: jcpannell@juno.com
Subject: Stock Picking Tool, ERI?
In a recent WSJ Alfred Rappaport wrote of a stock picking tool that shows
great predictive power. He calls it the expectations risk index (ERI).
Does anyone know if the ERI is calculated by any analysts currently? How
would this research be found?
jcpannell@juno.com
------------------------------
Date: Thu, 6 Mar 1997 19:47:26 -0500 (EST)
From: eric <73354.3477@CompuServe.COM>
Subject: Inadvertant lifetime subsciptions
I have subscribed to many financial newsletters, using my credit card.
These subscriptions have been for a definite time period- with the usual
numerous renewal requests. However, "Investor's Hotline" is definitely
different! The subscription runs indefinitely- with NO renewal notice.
They just kept charging my credit card. I (finally) caught on. Why
don't they all operate like this- it's a fantastic way to make money-
there must be lots of (careless) people like me who won't catch on for
varying lengths of time. BTW, I assume that "permanent " subscriptions
are legal.
------------------------------
Date: Thu, 6 Mar 1997 19:48:51 -0500 (EST)
From: nram@ix.gen.com
Subject: Re: Paying Off The Mortgage
>Personally, I'd pay off the mortgage. Our first mortgage was for $90k
>at ~$600/month. Of course, I'd lose the tax credit on the interest I
>paid and a few other small lumps of money here and there related to
>the same. However...
++++++++++++++++++++++++++++++++
I've had other people WARN me about losing the tax credit on the
mortgage interest paid. B U T tell me if I have a good understanding
of this procedure: I pay one dollar of interest and get 28 cents in
return as a tax credit. It doesn't seem like such a good deal - trading
$1.00 for 28 cents. Last year I paid about $11,000.00 in interest and
got $3,080 in tax credit. A person could go broke with that kind of
higher finance! The sad thing is that most people never think about
it and assume it's a good deal. Everyone should think about how
long they have been & will be doing that.
++++++++++++++++++++++++++++++++++
>
>Wouldn't it be great to be relieved from a $600 obligation each month?
>You're essentially living rent free. No more dealings with the
>mortgage company, no more double checking to make sure the payment got
>posted on time, no more wondering if we have enough money to buy
>groceries after the mortgage gets paid, no more checking refinance
>schedules, no more wondering: "Is it time to convert my ARM into a
>fixed rate mortgage?"...
++++++++++++++++++++
Yes to all of that PLUS it's the only way to pay the price that represents
what the house is WORTH. By paying the mortgage payments, you
wind-up paying 3 times the value of the house & the mortgage company
puts 2/3s of that in their pockets.
++++++++++++++++++++
>
>Yes, you're giving up some opportunity cost, but personally I'd rather
>have the peace of mind.
++++++++++++++++++
What are opportunity cost?
++++++++++++++++
>
>The mortgage payoff is a guaranteed 7% ROI,
>not a great ROI, but it is guaranteed.
++++++++++++++++++++++
In my case, last year I make a total of about $12,000.00 in mortgage
payments & over $11,000.00 of that was interest. That's over 90% not
7%. Everyone thinks they have a 7 or 8% loan & after a few years the
interest will decrease but they should take a closer look. This 90%
interest has been going on for over 10 years & will still be going on
10 years from now. So it's a GUARANTEED 90% ROI and it is good
for years. You can't get a guaranteed INVESTMENT like that.
+++++++++++++++++++++++
>Likewise investing a lump sum at any point in time is more risky than
>investing a steady amount over a period of time (which is what I'm
>assuming we/I/you would do with the extra $600 each month from not
>having to pay the mortgage).
+++++++++++++++++++++++++
Yes, 'dollar-cost-averaging' is the only way to go & by-the-way, that
is what the mortgage company has been & will be doing with the
90%+ interest they are collecting.
Did you know that a person with only an average income of $25,000
per year that works for 40 years produces One Million Dollars. The
sad part is that the Tax-Collectors & Creditors get 2/3s of it in interest
& taxes. That leaves $333,000 over 40 years or $8,325 per year to
live on.
I saw a piece on CNN News last week that said the average American
Credit Card Balance is a little over $6,000.00.
If someone buys $2,000 worth of furniture & puts it on a credit card &
pays just the minimum payment each month, it will take 30 years to
pay it off & will pay over $10,000.00 for the $2,000 worth of furniture.
The credit card companies have discovered that most people that
qualify for a credit card already have up to 3 cards. So the credit card
companies have decided the thing to do now is make it possible to
charge more things on credit cards. Have you noticed that movies,
fast food businesses, supermarkets, etc. now take credit cards?
That is why they named it "Master Card". Once you use the card,
they are your "Master".
"The Borrower is Slave to the Lender". . .that was written somewhere
a long time ago.
Wally
++++++++++++++++++++++
>Russell J Foster
>rjf@mcs.net
------------------------------
Date: Thu, 6 Mar 1997 19:49:54 -0500 (EST)
From: nram@ix.gen.com
Subject: Pay-Off Mortgage Early
>From: Rich Carreiro <rlcarr@animato.pn.com>
>Subject: Re: Tex asks about paying off mortgage
>Just remember that the interest rate you are being charged on the loan
>is to make up for the fact that future dollars are worth less than
>present dollars. Banks don't makes loans out of the goodness of their
>hearts :)
++++++++++++++++++++++++
That accounts for a VERY small part of the reason they charge over
90% interest & deceive us into thinking that they are only charging
7 or 8% interest. The large reason is PROFITS for themselves.
The "Rule of 72" says you can divide the Rate of Inflation into 72 to
determine how many Years it will take for the Value of the Dollar to be
cut in half. Following this Rule, if you divide the 90% interest they are
charging on mortgages into 72, you will discover that it will take 80
years for the value of the dollar to fall in half. That means that the
$100,000 house mortgaged for 30 years will cost you $300,000 and
in another 50 years the value of the dollar would make the house
worth only $200,000, in future dollars but you paid $300,000 for it
50 years ago.
I think "They" use a sharper pencil to do their figuring than "We" do.
Wally
------------------------------
Date: Thu, 6 Mar 1997 19:50:49 -0500 (EST)
From: "J. Pat Martinez" <martinez@puccini.crl.umn.edu>
Subject: To Lock or Not To Lock (Interest Rate)?
Hello,
I'm about to buy my first home- Yee haw! Enought of that. I can either
lock in a rate this Friday at 7.75% at 1 1/8 points. Or I can wait another
month and lock in a rate at 7/8 of a point. My inclination is to pay the
extra one time fee of $312 (1/4 of a point) to lock in my rate now,
because I'm worried that interest rates will go up.
According to my calculation a jump from 7.75% to 8.00 % on a $125,000,
30 yr loan translates into an extra $260/year. Rather than just going on
my gut feelings and what I read about the economy in the newspaper, is
there a more reliable method to help me predict how interest rates
will change in the next month or so?
Pat M.
~ J. Pat Martinez ~ martinez@puccini.CRL.umn.edu
~ Univ. of Minnesota ~ Phone: (612) 625-2221
~ Dept. of Plant Pathology ~ Fax: (612) 625-9728
------------------------------
Date: Thu, 6 Mar 1997 19:51:45 -0500 (EST)
From: Frank Wagner <wagner@ececs.uc.edu>
Subject: Buying PC's, Iomega Zip
I have bought two PC's by mail order from ads in the Computer
Shopper. The first was a no name. It worked fine, the price was
right, but over the course of time I have replaced everything
including the power supply and the motherboard except the original
hard drive, though I did add another, larger drive to go with it.
The second time around I bought from Micron, based mainly on what
seemed to be their good reputation. That was only about six months
ago, but I have been very pleased with the product and with the
technical support I have gotten from them.
I also use the Iomega Zip drive, mostly for backup (though of course
not often enough) and for transfering stuff from my computer to
others at more distant sites.
In the best of circumstances its going to be a pain in the neck to
back up a two gigabyte drive. Fortunately you don't have to do it.
At least very often.
A better strategy is to keep program files and data files in seperate
locations, and then you just need to back up the data files, under
the theory that if program files are lost they can be recovered from
the original installation media.
As for keeping them in seperate locations, let me make a pitch for
Partition Magic. First let me say that I have no connection, direc
or indirect with the company that makes this product--I can't even
tell you what it is off the top of my head. But this is the
greatest thing since sliced bread, maybe even better than sliced
bread. Partitioning a hard disk used to be a real chancy, horrible
ordeal. Partition Magic makes it easy enough so your ten-year-old
who has just turned a computer on for the first time can do in a
breeze.
So you make a seperate partition to hold the data that your
applications use, which is usually a much simpler to do than
backing up the entire disk.
Frank Wagner
wagner@ececs.uc.edu
------------------------------
Date: Thu, 6 Mar 1997 19:52:17 -0500 (EST)
From: Scott Barnett <sab@newton.crisp.net>
Subject: PBHG Growth and Computer backups / PBHG Growth
Concerning the thread on computer backups, I've found that
most programs allow you to specify the "default" directory
where user files should be stored. Being originally a
Unix-head, I created a directory called \home on my machine,
and changed all the programs I use (Word, Quicken, ACT!, etc.)
to make the default location for storing/retrieving files point
to files in that directory. This makes backups pretty
painless since backing up the \home directory captures 95% of
everything I do. It's so small in some cases that I can even
use floppies, although I don't do it (I purchased an Iomega
Easy800 for $125 - you can't beat that!)
On an unrelated topic, I just put money into PBHG Growth for
my 2nd daughter's college fund. I had been following the fund
and realized it was down of late, but I thought the fundamentals
and the management was solid. However, it continues to drop even
more (> 10% in 1997). What are people's thoughts on this fund?
Should I bail and find something else? I'm looking at a 17+ year
horizon, so I'm willing/able to take some risk.
- --
Scott Barnett
sab@crisp.net
------------------------------
Date: Thu, 6 Mar 1997 19:52:44 -0500 (EST)
From: Scribler <scribler@erols.com>
Subject: Which Tax Form Does a J-1 Visitor Use?
I tried posting this before but I guess it missed your eyes
so I am trying again.
For a person working in US as an exchange visitor (J-1)
which tax form should he use? 1040, 1040A, or 1040NR?
also, are there any tax consultant in DC/MD/VA who can help?
------------------------------
Date: Thu, 6 Mar 1997 19:53:29 -0500 (EST)
From: MD4KIDS1@aol.com
Subject: Emerging Technologies vs. Emerging Countries
Recent results from mutual funds investing in emerging countries have not
been all that spectacular. Growth aside, the greater risk in investing in
emerging countries is the political risk. Example, present day Thailand.
Therefore, it is suggested that better to invest in emerging technologies
(telecom, for example) which will be in demand in the emerging countries.
The political risk is reduced. Invest also in companies doing a sizeable
business in emerging countries, Coke, Gillette, P & G, and other
telecom/pharmaceutical/health care industries.
So what is going to be emerging countries or emerging technologies ?
Any thoughts /
Asad in Canada
------------------------------
Date: Thu, 6 Mar 1997 19:54:33 -0500 (EST)
From: MD4KIDS1@aol.com
Subject: Can you write off rent ?
Although this question relates to the Canadian tax rules I would like to
hear from both sides of the border.
As a general rule expenses incurred to generate income are tax deductible.
Can this reasoning be applied to the following scenario.
The local hospital requires specialist physicians to be available (on
call) for 24 hours about 5 to 6 times a month. The hopsital will call the
physician as and when needed while the physician is on >>call<<. The
physician, must reach the hopsital in minutes, where there is a life/death
situation.
The physician's ability to respond quickly in an emergency increases
drastically if he lives close to the hospital. Now rent are astronomical
around the hopsital area which is situated in the older, established part
of the city. Can a physican claim rent or some part thereof as a business
expense, offsetting the income earned from these emergency hopistal
visits.
Your views, experience, from either side of the border will be
appreciated.
TIA
Wondering in Canada.
------------------------------
Date: Thu, 6 Mar 1997 19:55:59 -0500 (EST)
From: Jim_Shoenfelt@USFG.COM
Subject: CD's, treasuries Questions
My brother got $15K from the sale of a house. He won't need it for 6 mos.
Should he buy a US Treasury for better return than a bank CD?
Is there even such thing as a 6 mo treasury?
If so, does it yield more than bank CDs?
Are treasuries sold for as little as $15k?
Do you need to use a broker to buy treasuries?
If so, what charge should he expect?
I remember seeing in the libary a list of the country's highest CD returns
for that week. Does anyone know how I can get ahold of that information?
Are CD's FDIC insured?
Please respond to me off-list, too. Thanks,Jim
------------------------------
Date: Thu, 6 Mar 1997 19:56:39 -0500 (EST)
From: Roger Fischer <roger.fischer@medtronic.com>
Subject: Backup with Windows NT?
I've been following the thread on computers and backup, and have the
following question:
What do Windows NT users use to back up their 2+GB harddrives? I've heard
(from my work's Computer Services) that NT won't recognize any tapes but
those formatted with NT and that NT will not allow compression on tapes.
Since we're going to migrate from Windows 3.1 to NT at work, I plan to do
the same at home. Currently, I use a tape with compression to 800MB to
backup my 730MB harddrive.
I assembled my own PC from mail order parts, starting with a 286-12 with
4MB back in '79 and upgrading pieces of it over the years. Currently, have
a P90 with 32MB. My daughter gets my hand-me-downs, and charity gets hers.
TIA,
Roger Fischer
roger.fischer@medtronic.com
------------------------------
Date: Thu, 6 Mar 1997 19:57:58 -0500 (EST)
From: dysart@pacific.tensornet.com (Derek Dysart)
Subject: Can I Open an IRA While Contributing to a 401(K)?
Dear Persfiners,
I have simple question regrading IRA's. I am 24, and I
realize it's in my best interest to plan for retirement
now. More people in my generation believe that aliens have
landed on the earth, then they believe in getting social security
benefits. Currently I am making regular contributions to my
company's 401(k) program. I contribute 6%, and my company matches
3%. My question is, can I open an IRA while making contributions to
a 401(k)? Would any IRA contributions be tax deductible? Is there
a good resource for de-mystifying IRA's? Especially in relation to
other tax-sheltered retirement options.
Thanks for any information
Derek Dysart
------------------------------
Date: Thu, 6 Mar 1997 19:58:39 -0500 (EST)
From: "David F. Cameron" <dcameron@harper.cc.il.us>
Subject: Zip drive and PC advice
Thanks to all of you who responded to my initial question
for PC purchasing advice both privately and through Ira's
list. I received more messages privately than were posted
to persfin-digest, so if you are interested in getting
the entire list of responses, let me know. I will
forward them along. There are a couple people who have
asked for these already. You'll get them over the weekend.
I do have a comment on the zip drive. We have one where
I work. I use it to save all my project when I am done.
I do a lot of data analysis that involves 20-60 MB files.
As such, combined with the analysis output - each one
fits great on a zip cartridge. Access is very fast, and
has been reliable. I don't use it to back up hard drives,
but as kind of glorified floppies to save projects which
would take up 50 floppies. I highly recommend.
Dave Cameron
dcameron@harper.cc.il.us
------------------------------
End of persfin-digest V4 #4
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