The latest book review here on Richer by the Day is Thomas J. Stanley’s Stop Acting Rich … And Start Living Like a Real Millionaire.  Those familiar with Stanley’s other notable books, namely The Millionaire Next Door and The Millionaire Mind will see many familiar themes in Stop Acting Rich.  That’s not a criticism though, since this niche is where Stanley is at his best.  The differences between the three could be summarized as follows: The Millionaire Next Door described the typical millionaire, The Millionaire Mind revealed what they believe made them a success, and Stop Acting Rich explains why so many non-rich hyperspend and fail in their rich-emulation attempts.

Stop Acting Rich begins with an overview of the phenomenon whereby people try to emulate the rich, but fail miserably.  The problem, in simplified terms, is that they either emulate those with nearly limitless resources (whom they will never become) and/or the habits they believe the rich follow.  Unfortunately their beliefs of the rich are incorrect and so they act in many ways that are detrimental to their wealth.  The disheartening situation that many seem to find themselves in is a preference for appearing rich, rather than actually becoming rich.

Hyper-consumption and a desire to highlight our “wealth” through the showcase of status symbols

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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

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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

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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

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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

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My results from the second month of my Passive Versus Active Portfolio Experiment are now in.  They are as follows:

Month 2 Results

Passive: I had one transactions this month; a dividend reinvestment. My passive portfolio increased by a total of 10.32%. 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 five transactions this month; 3 purchases and 2 sales. My active portfolio increased by a total of 1.91%. This gain includes commissions, including the one I would have been charged had I liquidated my third position at the end of the month.

Benchmark: During the same time period, the S&P 500 increased by 1.97%.  For the first 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 two months, my passive investments have taken the lead in profitability.  Both my passive and active investments have beaten the benchmark return of the S&P 500.

Passive Return to Date:  21.56%

Active Return to Date:   13.99%

Benchmark Return to Date:  10.69%

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The Cash for Clunkers law is intended to jump start the auto industry by inspiring people to purchase new cars.  Touted secondary benefits include aiding consumers in new car purchases and various environmental benefits.  The program offers vouchers towards the purchase of a new car when an older, lower MPG car is traded-in.  The restrictions of the law make the program much less effective than it could have been and most consumers may be better off skipping the program entirely.

The voucher you receive would start at $3,500.  Your passenger car clunker must be at least 8 years old and have fuel efficiency at least 4 MPG worse than the new car.  If it’s 10 MPG worse, then you could get the larger voucher, worth $4,500.

If your car is at least 8 years old, congratulations.  Owning vehicles for a long time is a favorite technique of the frugally minded.  Driving a more fuel-efficient car sounds like a money savings potential as well.  So what’s the problem with the Cash for Clunkers program?

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At different times in our lives we may be lacking in friends, money, or both. While money is certainly important, you may often find that a friend is much more valuable.

Friends can provide lasting support and help us to endure periods with less money. They may allow us to find happiness in life even though money can rarely do the same. A life flush with money without a friend to enjoy it with doesn’t seem all that desirable. To be rich and lonely seems like a pathetic existence.

What is a friendship worth? Consider the support a friend provides during a tough time. In that sense, you can put a price on the value of a friendship. What amount of money would it take to help you endure a situation alone, without the benefit of a comforting friend? Even in a desperate financial situation, such as a recent layoff, you’ll probably find that the value of a friend remains high. A $10,000 windfall may help you to get by for a few more months, but a friend could provide value for an entire lifetime.

You might conclude that the best situation would be to have friends and money. That certainly seems rational. Then you’d have the resources to do the things you’d like to do and people with which to do them. Unfortunately, that situation can be difficult to achieve. Assuming the alternative is to have one or the other, would you rather have close friends or lots of money?

Traditionally, investment clubs were used as a way to learn about the seemingly complex and complicated world of investing.  Though the internet and other educational resources have grown to fill this role, you may still find considerable value in joining an investment club.

Investment clubs are groups that meet regularly to discuss investment opportunities.  Members contribute money to the club so that investments can be made.  At each meeting, members may report on a company, review an investment book, host a guest speaker, or simply discuss different strategies.  In the beginning, basic investment concepts may be covered as well.  Particularly in the early stages, many investment clubs focus on member education.  For more information on investment clubs and general investing events in your area, visit the National Association of Investors Corp. (NAIC).

Investment clubs do much more than simply improve your financial literacy.  They allow you to

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