From: owner-persfin-digest@lists.xmission.com (persfin-digest) To: persfin-digest@lists.xmission.com Subject: persfin-digest V5 #52 Reply-To: persfin Sender: owner-persfin-digest@lists.xmission.com Errors-To: owner-persfin-digest@lists.xmission.com Precedence: bulk Content-Transfer-Encoding: quoted-printable X-No-Archive: yes persfin-digest Monday, September 28 1998 Volume 05 : Number 052 In this issue of the Personal Finance Digest: Re: QUESTION about Tax Brackets... Re: When to refinance a mortgage? Capitol One "best" mutual funds RE: Mutual Fund Results Re: When to refinance a mortgage? Re:Reaching age 70.5 in Dec 98 Undoing Roth Re: when to refinance? Reaching 70.5 age and IRA/Keogh Plans housesitters RE: house sitters Re: house sitters Car lease through business The messages posted to the Persfin-Digest are opinions and are not intended to substitute for qualified professional advice. Subscribers should seek the services of qualified professionals for such advice. The publisher, Internet provider, and Digest contributors cannot be held responsible for any loss incurred as a result of the application of any of the information provided here. To ask questions or provide answers, send your email to "persfin-digest@lists.xmission.com". Also, you can "reply" to the persfin-digest and your email tool should fill in the same address. However, if you "reply", be sure to edit the subject field in your email to reflect your topic. Copyright (c) 1998, Jeff Salisbury POSTED SUBSCRIPTION FEE: $20/year. Payment is optional. You will not be billed. The Digest is available to all subscribers, whether or not they pay. I do not discriminate either in favor of paying subscribers or against nonpaying subscribers. If you feel that the information presented here is worth the fee, and you feel comfortable paying it, send cash, check, or money order (U.S. funds), payable to "Jeff Salisbury", to: Jeff Salisbury 65 North 1300 East Logan, Utah 84321 Payment will be acknowledged by e-mail if you include an e-mail address. Subscribe: e-mail majordomo@xmission.com, text: subscribe persfin-digest Unsubscribe: e-mail majordomo@xmission.net, text: unsubscribe persfin-digest ---------------------------------------------------------------------- Date: Sun, 20 Sep 1998 14:25:49 -0400 From: Rich Carreiro Subject: Re: QUESTION about Tax Brackets... The federal tax brackets are listed on the final page of the Form 1040 instructions (and on the instructions to Form 1040ES), both of which are available on the IRS web site. The tax rates range from 15% to 39.6% (though in some cases capital gains can be taxed as low as 10%). State tax brackets will be state specific. Check the income tax form instructions for your own state. Rich Carreiro rlcarr@animato.pn.com P5-100/RedHat Linux 4.1 - - ------------------------------ Date: Sun, 20 Sep 1998 14:27:48 -0400 From: Rich Carreiro Subject: Re: When to refinance a mortgage? > I keep watching the mortgage rates drop. How many points below my > original rate should they fall before I consider refinancing? There's no single answer. It depends on how long you plan to stay in the house, how much in transaction fees the re-fi will cost, etc. Basically, it's worth re-financing if over the remaining time you plan to stay in the house, the money saved by the lower payments will make up for what it costs you to do the re-fi. Rich Carreiro rlcarr@animato.pn.com P5-100/RedHat Linux 4.1 - - ------------------------------ Date: Sun, 20 Sep 98 10:55:04 EDT From: rashea Subject: Capitol One Due to family difficulties, a friend asked me to take over as custodian of his Capitol One account while he went abroad to deal with the problems. He wrote a letter to Capitol One giving me authority over the account, had it notarized and mailed it to them. Over a couple of months, I paid off the balance on the account and the account went inactive. Several months later, Capitol One posted a yearly renewal fee of $25 to the account. I wrote them a letter and ask that the fee be waived for the year, as the account would be inactive. No response. The next month's statement had a late fee of $25 on it. I wrote again and also called "customer relations". They refused to allow me to deactivate the account. They said only the primary cardholder could do this. I sent a message and told him the problem. Meanwhile, it got to be late in the month and I thought I might get another late fee, so I sent them the balance due. I heard from my friend a week or so later and he said he had cancelled the account and they had said they would cancel all fees. The next statement I get, they had charged the check I'd sent them against the account and waived another $25 in late fees. I was outraged and called and spoke to a customer relations supervisor, who, despite a twenty minute conversation saying he understood the circumstances, absolutely refused to refund the fees. When he said, "Is there anything else I can help you with today?" I wanted to strangle him. Since that was not possible, I am posting this to the list so that others may know the very poor service I received from Capitol One. Don't ever expect them to treat you like anything but numbers if you ever have a problem with them. Roberta Healey @colgate.edu - - ------------------------------ Date: Sun, 20 Sep 1998 18:35:59 -0500 From: drstone@gsvms2.cc.gasou.edu Subject: "best" mutual funds Bob asked about a list of top-ranked mutual funds, according to recent results. Tom then wondered "what's the point?" (1) The "knowledge-is-good" reason: even if one is a long-term investor, it is still valuable to know what is happening. If your see own fund on Rukeyser's Top 100, then you at least get a warm feeling and some validation of your decision to invest in that fund. Or if your fund is one of Roy Weitz' Three-Alarm funds (i.e. not doing well against benchmarks), it might prompt you to do some investigating to see whether there has been some fundamental change in philosophy or management. That is, just seeing or not seeing a fund on a list is information, not necessarily cause to immediately buy or sell. (2) The "new-money" reason: I may have new money to invest, either now or soon, and should be investigating where to put it. Even if I decide to add to current investments, I should investigate first. A 1993 decision to dollar-cost-average into Fund X or Stock Y does not preclude a 1998 decision to invest into Fund Z if it seems better or if my needs or circumstances have changed. Checking to see which funds have done well lately is part of the picture. (Just be sure you don't think it's the whole picture.) David +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ David R. Stone Office Phone: 912-681-5335 Department of Mathematics and CS Office Fax: 912-681-0654 Georgia Southern University drstone@gsvms2.cc.gasou.edu Statesboro GA 30460-8093 Home Phone: 912-681-4048 "Make sure the same dog doesn't bite you twice." Chuck Berry - - ------------------------------ Date: Sun, 20 Sep 1998 20:02:19 -0400 From: kmealy@juno.com (Keith Mealy) Subject: RE: Mutual Fund Results I think the assumption is that some will use these numbers to pick which funds to buy today. I saw some interesting numbers presented by a mutual fund family that was pitching my company for 401(k) business. In 1994, the top quartile mutual funds for the prior 3 years was selected and followed thru 1997. For the top quartile funds, 48% of them were in the top *two* quartiles for the next three years. As you may recall, 1994 was not the best of years for the market, but the figures indicate that being in the top quartile funds over 1992-1994 had almost no correlation with how they performed 1995-1997. Some say that looking at past performance is like driving by looking in the rear-view mirror. Looking at the last week's or month's performance would then be like opening the driver's door and looking at the road under the door. - ------------------------------ WMAtca@aol.com wisely responded: There are several sites that publish their list of the "best" mutual funds, but what good are they? BobWo@aol.com asked: > > Can anyone tell me if there is a free web site that will list the top 25 > mutual funds for the prior month and/or for the prior week? Any help is > appreciated. _____________________________________________________________________ You don't need to buy Internet access to use free Internet e-mail. Get completely free e-mail from Juno at http://www.juno.com Or call Juno at (800) 654-JUNO [654-5866] - - ------------------------------ Date: Mon, 21 Sep 1998 01:11:15 -0400 From: "Steve Foulks" Subject: Re: When to refinance a mortgage? >From: "Robert Loeser" >Subject: When to refinance a mortgage? > I keep watching the mortgage rates drop. How many points below my > original rate should they fall before I consider refinancing? Unfortunately their is no simple rule of thumb that fits all scenarios. The basic theory is to calculate the net present value of the difference in cash flows between the old and new mortgages and compare that with the closing costs. If the positive NPV from refinancing exceeds the closing costs, then refinance. This is the technique that calculators and financial planning programs use but it is very crude and will give you wrong decisions depending upon what you will do with the extra money available from refinancing. If you are going to simply refinance your current debt, then these programs and calculators will do just fine. If you told me that you planned borrow an extra $20,000 to pay off 18% non deductible credit card debt or use the extra cash to put money into a ROTH IRA in a stock mutual that you couldn't do otherwise, then the decision is too complex for most refinancing programs. You will need to sit down with your computer spreadsheet and do a customized solution. First you may to learn about doing time value of money problems. I know most American's including myself don't like to have debt, after all it represents a financial risk. Why not do what bank's do - borrow as you much as you can from them at 6.5% (pre tax) and invest the extra money in a nice diversified portfolio of stocks (long run pre tax return of about 11%), preferably on a tax sheltered basis. With interest rates as low as they are today, pay off your load as slowly as possible. If this seems too aggressive why not refinance the loan and use the extra cash from smaller payments to increase your tax sheltered savings in stock mutual funds? - - ------------------------------ Date: Mon, 21 Sep 1998 01:12:06 -0400 From: "Steve Foulks" Subject: Re:Reaching age 70.5 in Dec 98 >From: "Marshall Farr" >Subject: Reaching age 70.5 in Dec 98 > I was 70 in June 98, and I know I have to start divesting myself of >some of my IRA and Keogh investments. Can someone point me to an >appropriate web site (or any other source of definitive info) that >gives an understandable explanation of the process and the actuarial >choices one has to select from? What forms need to be filed? I >assume one gets them from IRS, but I wrote them over 5 weeks ago, and >haven't received a response of any kind. I personally find IRS Publications 560 and 590 to be quite helpful. You can download these from http://www.irs.ustreas.gov/prod/forms_pubs/pubs.html or probably get them at your library. Are all tax-deferred >retirement investments such as IRAs and Keoghs counted together in >order to compute the current value of one's relevant investments? They aren't all the same although regular IRA's and Keogh rules are the same. Money in a ROTH IRA never has to be withdrawn, and some money in a 403(b) plan is not subject to a required withdrawal. >As of what point in time does one figure that current value? The value is the end of year value in the year before the distribution is used. If you wait until 4/15/ in the year after you turn 70.5 to make the distribution, you will need to make "two" distributions in that year - the April 15th distribution for the prior year and a distribution by 12/31 for the current year. Steven M. Foulks, CPA, CFP, PhD Northern Michigan University - - ------------------------------ Date: Sun, 20 Sep 1998 19:26:16 -0500 From: drstone@gsvms2.cc.gasou.edu Subject: Undoing Roth I know that Congress tinkered with the rules for Roth IRAs, so that it will be possible to "undo" a change. For instance, if I transformed my IRA to a Roth in May, then get a big salary bonus in December which bumps me over the $100,000 limit, then I have until April 15 to undo the conversion (in some fashion which I do not understand precisely). Does anybody know the rules well enough to answer questions: (1) What circumstances allow one to undo the conversion to Roth? (2) Could a person Roth, unRoth and then Roth again in 1998? Here's the idea that prompts such a question: if I had a deductible IRA and converted it to a Roth IRA early in the year, say May, 1998, then I owe income taxes on the value. But if it were all in stocks or mutual funds, there is a good chance the value is less now, so a conversion now would incur less taxes. Thanks for any help. David +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ David R. Stone Office Phone: 912-681-5335 Department of Mathematics and CS Office Fax: 912-681-0654 Georgia Southern University drstone@gsvms2.cc.gasou.edu Statesboro GA 30460-8093 Home Phone: 912-681-4048 "Make sure the same dog doesn't bite you twice." Chuck Berry - - ------------------------------ Date: Mon, 21 Sep 1998 09:34:34 -0600 From: "J. Morgan" Subject: Re: when to refinance? >Date: Tue, 15 Sep 1998 14:49 -0500 >From: "Robert Loeser" >Subject: When to refinance a mortgage? > > > I keep watching the mortgage rates drop. How many points below my > original rate should they fall before I consider refinancing? There's no set answer to this question. The old "rule of thumb" used to be two points. An alternate way to do it is to compare the costs to the savings. Compare your present principal and interest payment to what it would be if you refinanced. Then look at how much per month it will save. Compare that to the cost per month of closing on the new loan, then ask yourself how long you're going to be in the home. For instance, if it costs you $2400 to refinance, and your payment drops by $100 a month, it would make sense to do this if you plan on being in the house longer than 24 months, the break even point. Also consider whether you're paying PMI, and whether you will have to pay PMI on the new loan, and adjust your calculations accordingly. Another thing to look at is how fast you want to build up equity. You might, depending on rates, be able to go from a 30 year fixed loan to a 15 year fixed and keep the payments roughly the same, and build equity a bit faster. Hope this helps. - -- J. Morgan - - ------------------------------ Date: Mon, 21 Sep 1998 10:28:53 -0500 (CDT) From: ldavis@ix.netcom.com (Lynn R Davis) Subject: Reaching 70.5 age and IRA/Keogh Plans "Marshall Farr" wrote: I was 70 in June 98, and I know I have to start divesting myself of some of my IRA and Keogh investments. Can someone point me to an appropriate web site (or any other source of definitive info) that gives an understandable explanation of the process and the actuarial choices one has to select from? What forms need to be filed? I assume one gets them from IRS, but I wrote them over 5 weeks ago, and haven't received a response of any kind. Are all tax-deferred retirement investments such as IRAs and Keoghs counted together in order to compute the current value of one's relevant investments? As of what point in time does one figure that current value? Do any of the large fund operations such as Dreyfus, Vanguard, Fidelity, etc issue any free or low-cost booklets that explain how, when and what? Thanks. Marshall Farr Lynn Davis responded: The IRS publications on IRA's (not sure the pub number, but the people at the tax forms line will know) is available for FREE, and has the info you want. You must withdraw (and recognize for tax purposes) a certain percentage of your TOTAL IRA holdings THIS year based upon their total value as of 12/31 of LAST year. There are, as I recall, several choices on how to count "life expectancy", which depend in part upon the age of your beneficiary, if any. The same rules PROBABLY apply to your Keogh, EXCEPT that a Keogh is by definition its own pension plan and may have additional rules contained within its governing documents. So, you may need to consult those plan documents as well. With my father, we don't file any special reports. We simply make sure that the withdrawls each year equal at least the minimum calculated as the total value as of the previous year end divided by his IRS "life expectancy", and we found all of the information on how to do it in free IRS publications. Lynn Davis Fremont, CA - - ------------------------------ Date: Mon, 21 Sep 1998 11:01:01 -0700 (PDT) From: Kristina Miranda Subject: housesitters In general, a house sitter not only stays "rent free" but they will usually expect some kind of compensation. Usually $x/day. If you want some form of rent, you should advertise for "low rent for large house in exchange for care taking". I would imagine many people would be interested in renting a cheap house in exchange for keeping an eye on things. That way, they expect to pay all the utilities. They shouldn't, however, be expected to pay for utilities unrelated to their stay. For instance, electricity or water usage for the horses. You should start by adverstising to the people that you board for. They may have college aged kids that are interested in your property for a short term rental. The rent you charge should be 25% - 50% less than what they would pay for an apartment or whatever. You would be much better off if you could find a whole family to rent to for a while. A family would be more willing to pay a higher rent than a single person probably would. When my mom moved out of state, she looked for these kind of rentals until she was sure of the area she wanted to be in. Good luck, Kristina - - ------------------------------ Date: Mon, 21 Sep 1998 16:59:59 -0400 From: Rick.Schafer@bdk.com Subject: RE: house sitters I house-sat a 500 acre farm w/business buildings in New Hampshire in the '70's. There were sheep & horses & employees. My job was to keep the driveways & walks clear in the winter, and keep the house occupied nights etc. I did it for the free rent: it was very high living at the time as the place was a showplace inside and out and had spectacular views, had been on a calendar cover etc. How they found me (and vice versa) was at the time I was playing starving artist, living in a hillside cabin & working part time as a security guard at a wealthy 'Colony Club'. A friend's parents were members. They owned the farm and business & spent winters in Florida. So it was a case of who I knew and who they knew. I recently spoke with a guy who was house sitting for friends and he said they were paying him well to do it. I have no idea how much. Good luck! Rick Schafer - - ------------------------------ Date: Mon, 21 Sep 1998 18:44:24 PDT From: "sanjiv garg" Subject: Re: house sitters check out the caretaker gazette at: http://www.angelfire.com/wa/caretaker/ This publication matches up caretakers with owners. ______________________________________________________ Get Your Private, Free Email at http://www.hotmail.com - - ------------------------------ Date: Mon, 28 Sep 1998 11:54:20 -0400 From: "A D Tiwary" Subject: Car lease through business Is there a benefit to leasing a new car through my S Corp small business? It would be used for commuting, and occasional personal use. Apparently in the past, sales tax and certain fees were deductible through the corporation. Thx. - - ------------------------------ End of persfin-digest V5 #52 **************************** - To unsubscribe to persfin-digest, send an email to "majordomo@xmission.com" with "unsubscribe persfin-digest" in the body of the message. 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