Taxing Matters
A 3/22 article posted on Bankrate.com shows just how far some people will go to try to save on their taxes. There’s the man who had been claiming his dog “Red” as a dependent for years; the man who had his furniture store torched after failing in his efforts to sell it, and who then collected $500,000 from his insurance company only to be caught when he tried to deduct the $10,000 he paid to the arsonist as a “consulting fee;” and, lastly, there’s the man who accidentally flushed his dentures down the toilet and tried to claim the loss as an “act of God casualty loss.”
Matt’s View
While such tax-saving efforts are both humorous and either illegal or at least unallowable, no one is required to overpay on their taxes. Yet, as of mid March of this year, that’s exactly what 80% of filers had done, with the average refund totaling nearly $2,400 – up from around $2,300 last year. Anyone in that camp who’d like to stop giving the government a free loan should use the IRS online W-4 Calculator and then have their withholding adjusted accordingly.
Inherit the Wind
A 3/26 New York Times article with a title so good we had to repurpose it for this summary, reported that while some analysts see future inheritances as the safety net that will rescue baby boomers from their poor savings habits, new statistics tell a different story. First, some 86% of households are not expecting any inheritance at all. And, of those that do receive one, the median inheritance in 2004 was $29,000 – not exactly an amount that’ll change anyone’s retirement.
It’s true that the overall inheritance pie has grown to nearly $200 billion annually – more than three times the amount passed down in the mid 70’s. However, the vast majority of that is passed down to relatively few families. According to research from Boston College’s Center for Wealth and Philanthropy, more than half is concentrated in just 7% of estates. As the Times reporter concluded, the best bequest families can leave their heirs “would be a good bit of advice: save.”
Matt’s View
Isn’t it true that the best financial advice is usually the simplest, like the reporter’s conclusion to save? Other guidance that falls into that camp includes “live beneath your means” and “don’t charge what you can’t afford.”
Leasing the Good Life
Leasing has now spread beyond apartments and cars to include items such as purses – that’s right, handbags. According to an Associated Press story that appeared in the Chicago Tribune on 3/27, a growing number of companies are targeting “the affluent who don’t want to hold on to anything for long and those less monied folks who want to get a taste of the lifestyles of the rich.” One company profiled in the story, Bag Borrow or Steal, allows customers to borrow costly designer handbags for a monthly membership fee. A seller of secondhand high-end goods quoted in the story, said, “The whole mind-set is changing. Customers are no longer buying things to hold onto."
Matt’s View
As is usually the case when it comes to wise money management, the best advice is to go counter-trend and buy last year’s or the previous year’s “must-have” items at deep discounts.
The article also illustrated how the frenzy to come out with ever more frequent “new and improved” products is impacting people’s behavior related to their hobbies. Golf equipment maker Callaway reported that golfers now typically trade in entire sets of clubs every three to four years instead of every five to six. Callaway is playing both ends of the market, giving discounts on expensive new clubs to consumer-oriented golfers eager to trade in their “old” clubs, and selling the used clubs to the more steward-oriented players on www.callawaygolfpreowned.com .
Tweens on the Line
A 3/28 Business Week Online story described how telecommunications companies are teaming with toy makers to capitalize on what they perceive to be the next hot market for cell phones: tweens. The number of 8- to 12-year-olds using cell phones, currently over 5 million, is expected to double in the next four years. Marketers see untapped potential in the fact that a mere 27% of tweens currently have cell phones. So, they’re tailoring products to meet youngsters’ unique “needs” – designing phones with large buttons and co-branding their offerings with Disney and Hasbro.
Matt’s View
While some of the tween-targeted cell phones have features parents would approve of like walkie-talkie communication capabilities within a short range, the marketers want to get kids hooked early, so much the better in order to upgrade them to costly services later on such as music and video game downloads and text messaging, and to be able to offer up their large base of tween customers to eager advertisers.
For some parents, giving their young children cell phones provides very tempting added measures of security and convenience – the benefits marketers emphasize to the parents. However, in this parent’s view, in order to be considered, such phones should have only the most basic communication capabilities – no downloading, no text messaging, and no chatting with friends; it’s only for communication between parent and child or for emergency calls.
Born to Buy
Every parent of kids who are not out on their own yet should read “Born to Buy.” Author Juliet Schor, whose previous books include “The Overworked American” and “The Overspent American,” presents a compelling look at the materialistic attitude of...
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“What the Bible has to say about money is not often heard in British churches, so it was a real joy to have Matt Bell come over for a series of talks and workshops. In a society where many inside and outside the church are drowning in debt and financial wisdom is in short supply, Matt offers a much-needed biblical corrective that is full of hope and joy. I wholeheartedly endorse his work and look forward to his next visit to these shores!”