Not much on the frugal front to report, and frankly I’m worried the Frugal Friday thing is getting a bit tired. And frugality is beginning to confuse me.
Not Made of Money picked up the Homemade Maple Syrup post I discussed last week as a guest post. Just in case I was being too subtle last time, what they are discussing is making fake maple syrup, which is awful stuff, and real maple syrup is very cheap to make yourself, provided you have the right kind of tree and some simple tools. (It is also, I am told, hard work. I buy the stuff in the store like everybody else.)
Not Made of Money also had a post on what has become a recurring theme here, Other Uses for Dryer Sheets. I guess I must be really missing out, because I’ve never used a dryer sheet in my life, even for its intended purpose. I guess I just assumed that a frugal person would also forgo this luxury.
Moolanomy has a regular feature called “Ask The Expert With Larry Swedroe” in which readers ask a question related to investing. Last week the question came from the host of Gather Little by Little, who insists on calling himself Glblguy. Apparently in earnest, he asked “When deciding to purchase individual stocks, what process do you go through to determine if the stock is a good buy or not?”
Swedroe was firm and to the point in his reply. “No one should own individual stocks.”
As painful as it is for me to write this, I basically agree. Painful not just because agreeing with others is against my nature, but because I love buying individual stocks. Few things are as much fun. The stock market is an ever-changing universe of stories, ideas, and theories of the future where I can match wits with other participants and actually bet money on the proposition that I am smarter than everybody else. Awesome.
But I am a professional. I trade stocks for a living. (Or at least I used to, before, uh, certain unfortunate developments.) You, I am assuming, are a productive member of society with a job producing a thing or service of value.
As readers of this blog probably know, Get Rich Slowly is one of the most important and widely read blogs in the personal finance space. Wise Bread ranks it #8. It has more than 81,000 subscribers and a Google PageRank of 5. (That’s good, trust me.)
Early yesterday morning it posted a guest post from CJ at WiseMoneyMatters entitled “Why You Shouldn’t Keep a Mortgage Just for the Tax Deduction.” It is not, to say the least, a work of great insight. Filled with breathless explanations of the painfully obvious, it contains such gems as an explanation that a tax deduction reduces your taxable income not the taxes you pay. And it makes some remarkably unfounded generalizations, such as that the reader is unlikely to itemize deductions in the absence of mortgage interest.
But what made the post worth discussing here is something that it lacked, or at least lacked by the time I read it yesterday evening. Apparently, as originally posted the piece contained an “offending section” that betrayed a fundamental lack of understanding of how income taxes work, specifically the difference between marginal and average tax rates.
Last Wednesday brought us details of the administration’s plan to help homeowners hurt by the housing and credit crises. In the days that followed, we got a tidal wave of commentary from the mainstream media and blogosphere.
For those of you able to block the whole thing out, I’ll recap. The plan is really two separate schemes, the Home Affordable Refinance program and the Home Affordable Modification program. (Congrats to the Treasury for avoiding calling them together the Home Affordable Refinance and Modification program, whose unfortunate acronym, HARM, would have been fodder for clowns like me. They also get points for being so Orwellian with a straight face. The avowed goal of the Home Affordable programs is to support house prices, making them less affordable.)
The refinance program is relatively simple. If you a) owe less than $729,750 b) have a mortgage owned by Fannie Mae or Freddie Mac c) have a loan to value ratio of between 80% and 105% and d) are otherwise creditworthy, Fannie/Freddie will allow you to refinance at current rates. In other words, you get a pass on not having enough equity in the house, which is not that huge a concession given that you already owe the money to Fannie/Freddie.
Reaction to this half of the Grand Scheme can be described as largely polite. The Baglady did pointedly argue that it is a non-event, as Fannie/Freddie have been looking the other way on equity levels for a while, performing “streamlined” refinances that skip the tedious appraisal step. But most blogs (e.g. No Credit Needed and Gather Little by Little) and news accounts (Wall Street Journal and NY Daily News) just passed along the plan outline without comment.
It’s been a while since I could stay up past 11:30 and longer since I wanted to, but I came across this and thought I would share.
I have a feeling that in the future I will be saying many non-nice things about Timothy Geithner. I’d like to apologize in advance. His is a very hard job and I am sure that if I met him in person I would find him intelligent and charming. Too bad he’s so utterly clueless.
All advice in this blog is guaranteed to be worth at least what you paid for it, or double your money back. All persons dealing with matters of personal finance are advised to gather information from blogs, books, radio and TV, consult with professionals, discuss the matter with anybody who will listen, and then make their own decision. Because it’s their money.
last week as a guest post. Just in case I was being too subtle last time, what they are discussing is making fake maple syrup, which is awful stuff, and real maple syrup is very cheap to make yourself, provided you have the right kind of tree and some simple tools. (It is also, I am told, hard work. I buy the stuff in the store like everybody else.)
Frugal Friday, Frugality | Frank Curmudgeon | 
March 13, 2009 4:20 pm | 
Comments (4) 
the Tax Deduction
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