Friday, May 27, 2011

Sprint Rip-Off Report

On the advice of another, I switched my cell phone to Sprint. Great customer service was the main reason for the switch with better prices a close second. Let me explain how it worked out.

First, the service sucked. Call quality is poor on good days and worse the rest of the time. When I called Sprint customer service they told me if I didn't like the service I could switch back to where I came from. I live in a rural area where Internet is hard to get. I use the cell phone as my Internet portal for modest speed. Sprint says they provide unlimited Internet without throttling. Two point here:
  1. Sprint can't throttle you back when they are so slow to start with. On multiple speed tests they run at only a third of what they promise. Dial up is only an inch away.
  2. Unlimited access means little when it is near impossible to download at any reasonable speed. How much can you download in a month at .08 Mbps?
If all this were not bad enough, Sprint now adds a $10 per month mandatory charge called the "Premium Data add-on Charge." This is pure rip-off. I was never informed of the Premium Data Add-on Charge when I switched. Since I did not see the charge until the first bill a cancellation fee will apply if I switch back now. Considering the quality, the $10 is 100% rip-off. Consider it $120 wasted every year. It does make the cancellation fee look cheap compared.

The Premium Date Add-on Charge is mandatory on all new accounts with smart phones with 3G/4G capabilities. Most areas do not get 4G. My Sprint 3G works less than half the time, including when I am at work in town. Current customers will get hosed with this rip-off fee when they upgrade their phone. I recommend you upgrade to a real telecommunications company instead.

Save yourself the high blood pressure and aggravation. Avoid Sprint.

Monday, May 23, 2011

If You Have a Good-Paying Job You're an #$@%$#!

Where did it all begin? When as a society did we decided anyone with a good job and salary is the enemy? There has been loathing of doctors for a long time over pay issues. Loathing for other top-earners has been less intense until now. Now, anyone making more than $30,000 a year is the problem vexing our economy and society. But are they really the pariahs we make them out to be?

Over the weekend I read an article on Yahoo (I will not provide a link as it will be a broken link before long) that shouted a small town in California is up in arms over lifeguards making over $200,000 per year. The reality is far from the headline. Exactly two people in the entire department made over $200K in wages and benefits. These two people worked there for over 20 years and were in management, not sitting on the lifeguard towers. However, people interviewed thought lifeguards should work for free since they get to watch girls in bikinis all day long. Really! The lifeguards make in the mid-teens per hour. They are trained and work long hours, getting overtime pay on a regular basis. Is it really a crime to pay people for working a job? Especially if they enjoy the work?

Earlier this year the teachers got kicked around by the state of Wisconsin due to the perceived excess wages and benefits teachers receive. So it is wrong to make a good living teaching our children? I think it more productive to work on education solutions preparing our children for our high tech economy. Does it make more sense to keep our best teachers, pay them well, and work together toward solutions everyone can live with?

What is the psychology behind this "hate the well-paid people" movement? The message is clear. When you despise someone for making more money you are in effect telling your own mind you also deserve less no matter how hard you work. There are people that are overpaid. There are underpaid people, too. Shooting the rich will not make the poor better off; it will not lower unemployment or balance the budget. It will just make everyone afraid to get that better paying job for fear of being shot next. Sounds like radical socialism to me. How did that work out for the Soviets?

Friday, May 20, 2011

Bartering and the IRS

Bartering is making a comeback. The current economic condition has a lot to do with it. The number of questions I field on bartering in a year would be covered by the number of fingers on one hand with fingers to spare until this year.

Certain bartering is not taxable or reportable income. Incidental exchanges, such as carpooling or buying someone lunch is not a real barter transaction. Even if you and a friend go to lunch once a week and take turns paying the bill, there is no obligation for either to continue picking up the tab. Giving a neighbor a hand once in a while is also not bartering.

The kind of bartering the IRS is interested in is commercial in nature. Example: I prepare your taxes without a fee if you clip my lawn. The value of the preparation is reportable income. Barter exchanges are growing in popularity and are required to issue an 1099-B to members that barter through the club. Any exchange of services of a business nature is bartering and reportable income.

Bartering income is reported on Schedule C for most taxpayers. You may have expenses to reduce the profit subject to income and self-employment taxes.

Bartering is fun and rewarding. Remember to observe all tax laws so it remains an enjoyable pastime.

Wednesday, May 11, 2011

Get a Pay Raise By the Minute

It is possible to determine the class a person comes from by their attitude toward money. You can spot a spendthrift a mile away before they spend a single penny. The same is true of frugal folks. You should also note that wealthy people are more frugal than middle class families. There are exceptions to the rules, but they are rare. Frugal people gather a million dollar plus liquid net worth in a relatively short time and no one knows it by the way they act. Poor folks spend what they can to look richer and the middle class spendthrift lives beyond his means on borrowed money ( and borrowed time) exuding the illusion of wealth.

I know people that carry a card in their shirt pocket that lists what they earn at their job by the year, month, week, day, hour, minute, and second. Tell said person to buy a soda from a vending machine and you will get a quick answer that they need to work just over two minutes for that one soda.

Here is what the card looks like:


The example is a hypothetical person, not a real person or client. However, a lot of people make $60,000 per year. Adjust the numbers to fit your personal situation.

These experiences pushed front and center as I started reading Jeff Yeager's latest book, The Cheapskate Next Door. When he states in chapter one that he knows people that carry an income card in their pocket a few clients came to mind. Every one of these clients is well off or wealthy with a liquid net worth of seven figures or higher.

My dad always said, "Son, it is not what you make; it is what you do with what you make." It took me forty years to figure it out. It is easier deciding if you want to spend money when you can equate it with how much time you will spend at work earning it. Spend $50 and you need to work another two hours.

The slow economic recovery has people thinking about money in ways not done for decades. It is survival mode for many. When unemployment is about to run out it takes desperate measures. Why wait. Take the necessary steps now so desperation is averted later.

It is always a good idea to wait before making a purchase. Think through what it will really cost you in life spent at work paying for it. And heaven forbid you pay interest to pay for a toy. Many folks pay a third or more of their income on their home. That means you spend nearly three hours at work every day just to pay the loan. Is it worth considering a smaller home and taking those extra hours with family? The choice is yours.

Try this for a week only. I do not want a lawsuit if someone goes into septic shock on my advice. Write down your income by year, month, week, day, hour, minute, and second. Keep it with you at all times. Before every purchase anything, check your chart to see how long you need to work to pay for the purchase. I bet you will put several items back on the shelf. Then you can cut your hours at work or retire years or decades early. Like I said, the choice is yours.

Tuesday, May 10, 2011

The Cost of Working and the Myth of Inflation

As an accountant I like to chop things into little bits to understand the data. A balance sheet or profit and loss statement provides valuable information about a business. Chopping the financial statements into bits gives me a better view and understanding of the inner working of the firm; comparing earning from month-to-month or year-over-year shows if the business is growing and if profitability is on track.

Individuals face the same financial decisions businesses do. The income and expense categories are different, as they are from business to business. Let me illustrate a different way of reviewing your personal finances. You drive to work daily and fill the car up with gas every week or so. Most people would view this expense as a $50 fill-up when the expense takes place. This gives a broad and deceptive overview of the cost of going to work. If we chop the data we get this: gas is around $4 a gallon as I write and if you drive 30 miles round-trip to work and your vehicle gets 30 miles to the gallon, it costs you $4 a day just to drive to work. If you drive an SUV it gets very expensive fast. (I used easy numbers. Here is the formula: price of gas/vehicles MPG=cost of gas per mile driven x miles driven=cost of trip.)

We can break this down even further. Four dollar gas in a vehicle that gets 30 MPG used 13.3 cents of gas per mile. This cost excludes all other auto expenses (depreciation, insurance, tires, oil changes and repairs). If you had to drop 13 cents into a jar every mile you drove, would you view gas price differently? Would you change your driving habits? Maybe drive the speed limit, coast into stops, and accelerate slowly? Hard research proves doing so increases fuel efficiency by 20% or more. That would cut the cost of gas per mile by 2.66 cents or about $200 per year just driving to work. Two hundred dollars is a small sum, but added to multiple area of living expenses grows to a tidy tax-free sum. (You do not pay taxes on reduced personal costs.)

What does inflation have to do with this? First, inflation is difficult to calculate. If car prices remain stable but the new models contain extra features, is this not deflation? Your new iPhone has more apps or more free minutes than the last cell plan for 10% more. Is this inflation or more purchased stuff in the form of a package deal?

Inflation in a single product in theory changes people's behaviors. Gas price goes up so the vacation in closer to home or cancelled. The drive to work is slower. Conservative driving can increase gas mileage 20% which equates to an 80 cents drop in the gas price for you with $4 at the pump prices. Higher beef prices leads people to buy more chicken. It works with most products. If one price goes up a replacement or substitute is found.

Thinking about what things really cost in the most basic units provides additional information to manage your finances. With the economy struggling and inflation in food and energy, it is a good idea to manage money better than ever. You will reach your goals quicker when you know where you started, where you are, and where you are going. It is a good idea to understand what each step costs.

Sunday, May 1, 2011

All Good Things

It was easy to see when it was Friday afternoon in my office for a long time. The boss, me, had an extra lively bounce in his step as the week approached end. And everyone knew why. It was card night.

"Playing cards with grandpa tonight?" I was asked by everyone. You bet I am. In my home, in my dining room, my grandfather, dad, two nephews, friends, neighbors, and I would gather for a night of sheepshead, the best card game ever played. My daughters watched four generations of Schroeder's sit at the same table week after week and play an old German game of cards, tell stories, and laugh. But all good things must end.

For years I deluded myself, wanting to believe it would last forever. This tax season lost that bounce as my grandfather felt the weight of the timekeeper. In mid-March he played his last game of cards at my daughter's birthday party before heading to the hospital and then nursing home. I visited often, watching a strong man yield to ninety years of life. Then, around 3:30 Good Friday afternoon, the card game ended forever. Easter Monday the family gathered one last time to honor our patriarch.

Last Friday we gathered for cards again without grandpa. It was a quiet night. It felt wrong. In honor of grandpa, we will continue on, enjoying the company of friends and family. All will remember in their own way.

I stopped writing for months as the workload of tax season and the desire to spend quality time with family left me without time to write. I'll get back in the saddle and write more. Grandpa would have wanted that. Next tax season should be happier.

I have no regrets spending time with family all these years. At times my workload left me so tired I could hardly think; I still made time for family. I do not regret one moment of it.

One his deathbed, my grandfather never once talked about money or work. He talked nonstop about family and that game of cards. He was the hardest working man I ever knew, but what he found most valuable was family and the time he spent with us. There is a lesson in there for all of us.