There has been a ton of confusion about whether money received through the Cash for Clunkers program is taxable.  What follows is my opinion of both the cause of the confusion and the reality of the situation.  Much of the confusion is based on a news article quoting Minnehaha County (South Dakota) Treasurer Pam Nelson.  In the article Some Surprised by ‘Clunker’ Tax, she is quoted as saying (regarding CARS participants)   “They didn’t realize that would be taxable. A lot of people don’t realize that. So they’re not happy and kind of surprised when they find that out”

When people started hearing that the Cash for Clunkers credit was taxable, they may have falsely concluded that it was subject to federal income tax.  This does not seem to be the case.  The official CARS website specifically states that the credit is not taxed as income to the consumers that participate in the program.  So you will not have to pay federal income tax on the credit as you might for a forgiven or canceled debt.

That is not to say that the Cash for Clunkers’ credit is free from tax.  In many states

Continue >>

Richer by the Day regulars know that I read a lot of books.  I often review relevant books here and host book giveaways as well.  In the course of those efforts, I was surprised to learn that there really isn’t a centralized place for people to collect, share, and discuss various book reviews.  There are many book review sites, but they are generally for user’s own reviews or discussions of the books themselves.  I envisioned a site where many reviews for a book could be submitted and users could vote for the best review.  Then, others considering the book could find reviews and opinions all in one place.  They could limit themselves to the best ranking review, or view them all.  Since this type of social bookmarking for book reviews didn’t seem to exist, I took it upon myself to create such a site.  The result is bookreviewmark.net.

The site is still in beta testing, but I’d be thrilled if any Richer by the Day readers would give it a try.  To help entice you, I’ll be hosting another giveaway to coincide with the beta testing period.  I will be giving away 5 personal finance or investing themed books from my large collection on October 1st.  All users of Book Review Mark will be eligible.  Each book review you add to the site or vote you cast for other reviews will count as an additional entry.

Thanks for your help in this effort and happy reading!

I’m always intrigued by advice that goes against conventional wisdom.  That’s not to say that I’ll necessarily follow or advocate using such advice, but considering alternative points of view can either strengthen your conviction in your current course of action or open up superior alternatives.  The specifics of one’s situation can also lead to a solution that wouldn’t necessarily benefit the majority of people.

I recently picked up a few personal finance books at my library’s annual book sale.  For a dollar a bagful, I grabbed any that looked even slightly interesting.  One of the books was an older title, How to Get What You Want In Life With the Money You Already Have by Carol Keeffe.  The non-conventional advice was that you should pay the minimum on your credit cards.

It took some restraint to continue reading after seeing that advice in print, but following the author’s logic there may be cases where that is an appropriate course of action.  Her basic premise was that

Continue >>

My results from the third month of my Passive Versus Active Portfolio Experiment have been in for a while, but I’m just now getting around to publishing them.  They are as follows:

Month 3 Results

Passive: I had one transactions this month; a dividend reinvestment. My passive portfolio increased by a total of 6.20%. This gain includes the commission that would have been charged had I liquidated my position at the end of the month.  My dividend reinvestment is not subject to a commission.

Active: I had three transactions this month; 1 purchase, 1 dividend, and 1 sale. My active portfolio increased by a total of 0.88%. This gain includes commissions.

Benchmark: During the same time period, the S&P 500 increased by 3.62%.  For the second time, one of my investment portfolios (active) failed to beat the benchmark for the month.  My passive portfolio significantly outperformed the benchmark this past month.

Overall Results to Date

After three months, my passive investments have grown their lead

Continue >>

As regular readers have probably picked up on, I’ve been in the process of relocating once again.  This should be the last move for a very long time, perhaps ever.  I loved my time in the Midwest (and it certainly had its advantages), but I’m happy to be back in New England.  While many costs between the two locations are similar, there are a few differences worth considering.

Housing

This is the major difference.  In the Midwest, people complained about the high cost of housing, but they really had no idea how inexpensive it was.  One woman lamented that “you can’t even get a starter home for under $60K any more.”  I hate to tell her, but a comparable home here in New England costs upwards of $300K.  Out there we built a brand new, 5 bedroom home with all the upgrades for just over $200K.  Here we found a wonderful 4 bedroom home, built in the early 70s, that cost well over twice as much.  My mortgage payment basically tripled.  Higher property value also means

Continue >>