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Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What one bit of financial advice do you wish you could've given yourself five years ago? ### Answer: Advice to myself: the benefits of being self-employed totally outweigh the risks! ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What one bit of financial advice do you wish you could've given yourself five years ago? ### Answer: Get an advanced degree. This should increase your earning power. Also learn how to use a computer, this should also tend to increase your earning power. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What one bit of financial advice do you wish you could've given yourself five years ago? ### Answer: I wish I would have known macro-economics taught by the Austrian School types at The Mises Institute. Their teachings would have compelled me to do the following: ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What one bit of financial advice do you wish you could've given yourself five years ago? ### Answer: Bank every dollar possible to have more cash available for investing during the 2008/2009 crisis. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What one bit of financial advice do you wish you could've given yourself five years ago? ### Answer: Planned my grocery shopping better. You can't just wake up on Saturday hungry go to the grocer and buy what looks good. Take the time to clip some coupons and more importantly make a shopping list. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What one bit of financial advice do you wish you could've given yourself five years ago? ### Answer: Do your homework on all types bonds and other lower-risk instruments, including bond funds and ETFs. I left too much money sitting around as cash over the last 5 years. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What one bit of financial advice do you wish you could've given yourself five years ago? ### Answer: When I was contracting I wish I had joined a tax efficient umbrella organisation rather than just work as a sole trader. I also wish I had put money aside to pay my taxes rather than just spend it all. :( ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Flexplan - a company is taking over another, do I pay the balance? ### Answer: This is only one of a series of questions your friend needs to understand. They will also need to know what happens to: vacation balances; the vacation earning schedule; retirement fund matching; the pension program; all the costs and rules regarding health, dental and vision;life insurance amounts. Some of these can be changed immediately. Some will not be changed this year because of IRS regulations. Everything can be changed by the next year. But there is no way to know if they will change a little a possible or as much a possible. It will depend on if they are buying the company, or if the company is going out of business and the new company is buying the remnants. They may also be essentially terminating the employees at the old place, and giving them the first opportunity for interviews. If they are essentially quitting they will not have to continue paying into the plan. The bad news is that their last day of work is also probably their last day to incur expenses that they can pay for with the flexible plan. If They are being purchased or absorbed the company will likely make no changes to the current plan, and fold them into the plan next year. I have been involved with company purchases and company splits, and this is how it was handled. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Can a company stop paying dividends? ### Answer: Yes. Companies increase, decrease, start paying and stop paying dividends when they think it appropriate. If a company has been going through some problems and makes a loss, or even a large decrease in profits, they can choose to stop paying dividends until things improve. Many companies did this during the Global Financial Crisis of 2007-08. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Can a company stop paying dividends? ### Answer: Dividends are supposed to be paid from company profits (in the current or previous financial years), there are nuances around what profits mean from country to country, but the link is the UK definition from the HMRC. Profits from previous financial years are commonly called retained earnings. There are a few items around this ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: CD interest rate US vs abroad, is there a catch? ### Answer: Part 1 Quite a few [or rather most] countries allow USD account. So there is no conversion. Just to illustrare; In India its allowed to have a USD account. The funds can be transfered as USD and withdrawn as USD, the interest is in USD. There no conversion at any point in time. Typically the rates for CD on USD account was Central Bank regulated rate of 5%, recently this was deregulated, and some banks offer around 7% interest. Why is the rate high on USD in India? - There is a trade deficit which means India gets less USD and has to pay More USD to buy stuff [Oil and other essential items]. - The balance is typically borrowed say from IMF or other countries etc. - Allowing Banks to offer high interest rate is one way to attract more USD into the country in short term. [because somepoint in time they may take back the USD out of India] So why isn't everyone jumping and making USD investiments in India? - The Non-Residents who eventually plan to come back have invested in USD in India. - There is a risk of regulation changes, ie if the Central Bank / Country comes up pressure for Forex Reserves, they may make it difficut to take back the USD. IE they may impose charges / taxes or force conversion on such accounts. - The KYC norms make it difficult for Indian Bank to attract US citizens [except Non Resident Indians] - Certain countries would have explicit regulations to prevent Other Nationals from investing in such products as they may lead to volatility [ie all of them suddenly pull out the funds] - There would be no insurance to foreign nationals. Part 2 The FDIC insurance is not the reason for lower rates. Most countires have similar insurance for Bank deposits for account holdes. The reason for lower interst rate is all the Goverments [China etc] park the excess funds in US Treasuries because; 1. It is safe 2. It is required for any international purchase 3. It is very liquid. Now if the US Fed started giving higher interest rates to tresaury bonds say 5%, it essentially paying more to other countries ... so its keeping the interest rates low even at 1% there are enough people [institutions / governemnts] who would keep the money with US Treasury. So the US Treasury has to make some revenue from the funds kept at it ... it lends at lower interest rates to Bank ... who in turn lend it to borrowers [both corporate and retail]. Now if they can borrow cheaply from Fed, why would they pay more to Individual Retail on CD?, they will pay less; because the lending rates are low as well. Part 3 Check out the regulations ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: CD interest rate US vs abroad, is there a catch? ### Answer: If you invest in a foreign bank you are subject to their financial rules and regulations. If you put your money with their CD it will be converted to UAH (grivna) and you will be paid back in UAH, which introduces the exchange rate risk. FDIC is not the only reason why a CD in a US bank pays a lower interest, but it could be seen as a contributing factor. It all comes down to risk and what the bank is willing to pay for your money, when a bank issues a CD they are entering the debt market and competing against other banks, governments, or anyone looking for money. If the yield from lending to one bank is the same as the yield of another, the logical choice would be whichever loan is less risky. So in order for the riskier bank to receive loans they must entice investors by offering a greater rate of return. In addition, if a bank isn't looking for loans they might be less inclined to pay for them. - See "What is the “Bernanke Twist” and “Operation Twist”? What exactly does it do?" If your looking to invest in the CD's of foreign banks I would suggest doing research on their regulations. Especially if and how your money is protected in the event the bank goes bust. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: CD interest rate US vs abroad, is there a catch? ### Answer: I think your approach of looking exclusively at USD deposits is a prudent one. Here are my responses to your questions. 1) It is highly unlikely that a USD deposit abroad be converted to local currency upon withdrawal. The reason for offering a deposit in a particular currency in the first place is that the bank wants to attract funds in this currency. 2) Interest rate is a function of various risks mostly supply and demand, central bank policy, perceived risk etc. In recent years low-interest rate policy as led by U.S., European and Japanese central banks has led particularly low yields in certain countries disregarding their level of risk, which can vary substantially (thus e.g. Eastern Europe has very low yields at the moment in spite of its perceived higher risk). Some countries offer depository insurance. 3) I would focus on banks which are among the largest in the country and boast good corporate governance i.e. their ownership is clean and transparent and they are true to their business purpose. Thus, ownership is key, then come financials. Country depository insurance, low external threat (low war risk) is also important. Most banks require a personal visit in order to open the account, thus I wouldn't split much further than 2-3 banks, assuming these are good quality. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is A Company Abusing The Tax Code When It Does This, And How Does The IRS Prevent It? ### Answer: A rather good IRS paper on the topic states that a donation of a business' in-kind inventory would be Under IRC 170(e)(1), however, the fair market value must be reduced by the amount of gain that would not be long-term capital gain if the property had been sold by the donor at the property's fair market value (determined at the time of the contribution). Under this rule, deductions for donated inventory are limited to the property's basis (generally its cost), where the fair market value exceeds the basis. There are references to IRC regulations in a narrative context you may find helpful: This paper goes on for 16 pages describing detailed exceptions and the political reasons for the exceptions (most of which are concerned with encouraging the donation of prepared food from restaurants/caterers to hunger charities by guaranteeing a value for something that would otherwise be trashed valueless); and a worked out example of fur coats that had a cost of goods of $200 and a market value of $1000. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Electric car lease or buy? ### Answer: There are some who argue that you should lease an electric car. These factors are in addition to all the normal pros and cons of leasing vs. buying. The technology is still new and is advancing rapidly. In 2-3 years, the newer model may have significantly improved features, range, and efficiency, as well as lower prices. If you are the type of person to upgrade regularly to the latest and greatest, leasing can make it a smoother transition. It is hard to predict the depreciation of the vehicles. This is both because of the above factors, but also because these kinds of cars are newer and so the statistical models used to predict their future values are less refined. The models for predicting gas car prices have been honed for decades. EV Manufacturers have in the past made some mistakes in their residual value estimations. When you lease a car, you get essentially an option to buy the car at the future predicted residual value. If, at the end of the lease, the market value of the car is higher than the residual value, you can purchase the car at the predetermined price, making yourself some extra money. If the value is lower than the residual, you can return the car or renegotiate. I know a relatively large number of electric vehicle owners. Most or all of the ones who got the vehicle new leased it. The rest bought used vehicles coming off lease, which can also be a good deal. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Electric car lease or buy? ### Answer: Electric does make a difference when considering whether to lease or buy. The make/model is something to consider. The state you live in also makes a difference. If you are purchasing a small electric compliance car (like the Fiat 500e), leasing is almost always a better deal. These cars are often only available in certain states (California and Oregon), and the lease deals available are very enticing. For example, the Fiat 500e is often available at well under $100/mo in a three-year lease with $0 down, while purchasing it would cost far more ($30k, minus credits/rebates = $20k), even when considering the residual value. If you want to own a Tesla Model S, I recommend purchasing a used car -- the market is somewhat flooded with used Teslas because some owners like to upgrade to the latest and greatest features and take a pretty big loss on their "old" Tesla. You can save a lot of money on a pre-owned Model S with relatively low miles, and the battery packs have been holding up well. If you have your heart set on a new Model S, I would treat it like any other vehicle and do the comparison of lease vs buy. One thing to keep in mind that buying a Model S before the end of 2016 will grandfather you into the free supercharging for life, which makes the car more valuable in the future. Right now (2016/2017) there is a $7500 federal tax credit when buying an electric vehicle. If you lease, the leasing company gets the credit, not you. The cost of the lease should indirectly reflect this credit, however. Some states have additional incentives. California has a $2500 rebate, for example, that you can receive even if you lease the vehicle. To summarize: a small compliance car often has very good reasons to lease. An expensive luxury car like the Tesla can be looked at like any other lease vs buy decision, and buying a used Model S may save the most money. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Electric car lease or buy? ### Answer: I would like to add that from my own research, a pro to leasing over buying a new vehicle would be that with the lease the entire 7,500 federal incentive is applied directly to the lease, or so they say. If you buy a new car you get a 7,500 federal tax incentive also but if you dont have 7,500 bucks in taxes this wont be as much value. It doesn't sense to me to buy used since you dont get the tax incentive and also if you're in california the 2,500 rebate only applies to buying new or leasing 30 month or longer. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Electric car lease or buy? ### Answer: I have coworker who reported that he leased a Nissan Leaf from 2013-2016 and was offered $4000 off the contracted purchase price at the end of the lease due to a glut of other lessees turning in for a lease on the newest model with greater range. It's not clear that this experience will be repeated by others three years from now, but there is enough uncertainty in the future electric car market that it's quite possible to have faster depreciation on a new vehicle than you might otherwise expect based on experience with conventional internal combustion powered vehicles. Leasing will remove that uncertainty. Purchasing a lease-return can also offer great value. I looked at the price for a lease return + a new battery with the extended range, and it was still significantly cheaper than buying a completely new vehicle. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Electric car lease or buy? ### Answer: The good news about maintenance is that there's much less scheduled maintenance because the cars are mechanically much simpler. See the official service schedule. Most of it is just "rotate tires / replace cabin air filter". The brake and suspension systems are very similar to those of a normal car and require comparable maintenance. The bad news is the battery will decay over time and is a major component of the cost of the car. From that link: In the UK, the LEAF’s standard battery capacity loss warranty is for 60,000 miles or five years So you should factor your warrantied battery lifetime into the depreciation calculation. I don't think there are going to be many ten- or twenty- year old electric cars from the current crop in 2030 or 2040 as they're still improving dramatically year-on-year. (Slightly too long for a comment, slightly too short for a proper answer) ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Electric car lease or buy? ### Answer: I might be missing something, but I always understood that leasing is about managing cash-flow in a business. You have a fixed monthly out-going as opposed to an up-front payment. My accountant (here in Germany) recommended: pay cash, take a loan (often the manufactures offer good rates) or lease - in that order. The leasing company has to raise the cash from somewhere and they don't want to make a loss on the deal. They will probably know better than I how to manage that and will therefore be calculating in the projected resale value at the end of the leasing period. I can't see how an electric car would make any difference here. These people are probably better informed about the resale value of any type of car than I am. My feeling is to buy using a loan from the manufacturer. The rates are often good and I have also got good deals on insurance as a part of that package. Here in Germany the sales tax (VAT) can be immediately claimed back in full when the loan deal is signed. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What are some valuable sources for investment experience, when there is very little to no money to start with? ### Answer: Fake stock market trading may teach you about trading, which isn't necessarily the same thing as investing. I think you need to understand how things work and how to read financial news and statistics before you start trading. Otherwise, you're just going to get frustrated when you mysteriously win and lose funny money. I'd suggest a few things: Also, don't get into individual stocks until you have at least $5k to invest -- focus on saving and use ETFs or mutual funds. You should always invest in around a half dozen diversified stocks at a time, and doing that with less than $1,000 a stock will make it impossible to trade and make money -- If a $100 stock position goes up 20%, you haven't cleared enough to pay your brokerage fees. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What are some valuable sources for investment experience, when there is very little to no money to start with? ### Answer: One way to start with stocks is by playing the fake stock market. Investigate what trading fees would be with a broker, then "invest" a certain amount of money - note it on paper or in a spreadsheet. Follow your stocks, make decisions on selling and buying, and see where you would be after a year or so. That way you can get an idea, even if not exactly precise, on what your returns would be if you really invested the money. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why did the stock chart for Facebook's first trading day show an initial price of $42 when the IPO price was $38? ### Answer: I'd add, this is actually the way any stock opens every day, i.e. the closing price of the prior day is what it is, but the opening price will reflect whatever news there was prior to the day's open. If you watch the business news, you'll often see that some stock has an order imbalance and has not opened yet, at the normal time. So, as Geo stated, those who were sold shares at the IPO price paid $38, but then the stock could open at whatever price was the point where bid and ask balanced. I snapped a screen capture of this chart on the first day of trading, the daily charts aren't archived where I can find them. This is from Yahoo Finance. You can see the $42 open from those who simply wanted in but couldn't wait, the willingness of sellers to grab their profit right back to what they paid, and then another wave of buying, but then a sell-off. It closed virtually unchanged from the IPO price. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why did the stock chart for Facebook's first trading day show an initial price of $42 when the IPO price was $38? ### Answer: The IPO price is set between the underwriters and the specialist in the NASDAQ. There are a lot of complexities on how to get to this price, everyone is trying to pull to their own side. In the Facebook example, the price was $38 for all IPO participants. Then, once the IPO went to the secondary market, the bid/ask drove the pricing. At the secondary market the price is driven by the demand and offer of the stock. That is, people who wanted to buy right after the IPO likely drove the initial price up. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What actions can I take against a bank for lack of customer service? ### Answer: Figure out who regulates the bank. Complain to your state banking/consumer affairs department. Complain to your state Attorney General. The Feds regulate most banks too, there are several different agencies, and I believe the way they regulate banks has changed recently. Try contacting the US Comptroller of the Currency. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What actions can I take against a bank for lack of customer service? ### Answer: I don't think the verbal confirmation from the branch manager is worth anything, unless you got it in writing it basically never happened. That said, what did you sign exactly? An application? I'd think they would be well within their rights to deny that, no matter what the branch manager said. If you actually signed a binding contract between you and the bank, things would be different but the fact that 'approval' was mentioned suggests that all you and the bank signed was an application and the bank manager made some unreasonable promises he or she doesn't want to be reminded of now. If the complaints department can't get off their collective backsides, a firm but polite letter to the CEO's office might help, or it might end up in the round filing cabinet. But it's worth a try. Other than that, if you are unhappy enough to go through the pain, you can try to remortgage with another bank and end the business relationship with your current bank. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What actions can I take against a bank for lack of customer service? ### Answer: You can complain to the Financial Ombudsman Service in Australia. I've never used them in particular but generally organizations will respond much faster once you get the ombudsman involved. However, since you say they've now kept their promises, the ombudsman is unlikely to do much more than listen sympathetically. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What is the minimum age for early retirement ### Answer: You can withdraw from CPP as early as 60. However, by doing so, you will permanently reduce the payments. The reduction is calculated based on average life expectancies. If you live for an average amount of time, that means you'll receive approximately the same total amount (after inflation adjustments) whether you start pulling from CPP at 60, 65, or even delay your pension later. People may have pensions through systems other than CPP. This is often true for big business or government work. They may work differently. People who retire at 55 with a pension are not getting their pension through CPP. A person retiring at 55 would need to wait at least five years to draw from the CPP, and ten years before he or she was eligible for a full pension through CPP. Canada also offers Old Age Security (OAS). This is only available once you are 65 years old or older, though this is changing. Starting in 2023, this will gradually change to 67 years or older. See this page for more details. As always, it's worth pointing out that the CPP and OAS will almost certainly not cover your full retirement expenses and you will need supplementary funds. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How to use a companion fare if the total fare cost is more than the companion fare limit ### Answer: You must buy both tickets in 1 transaction and the purchased ticket cannot be purchased with miles. You'll pay full price (technically a "paid published coach airfare") for the first ticket and enter in your discount code for the companion fare which will ring up as $99 + fees ($118 in your example). If the regular price is $500, you'll book 2 tickets for $618 (one fare at $500 and companion fare at $118). Companion Fare Discount Code Q & A What is the Companion Fare Discount Code that comes with my credit card? The Companion Fare Discount Code is offered to holders of the Alaska Airlines Visa Signature® Card, The Platinum Plus® MasterCard® and the Visa® Business Card. This Discount Code entitles the cardholder to purchase one round-trip coach companion fare on Alaska Airlines from $121 (USD) ($99 base fare plus applicable taxes and fees from $22 depending on your Alaska Airlines flight itinerary) when traveling with another passenger on a paid published coach airfare on the same itinerary, booked at the same time. Mileage cannot be used as a form of payment, however mileage credit accrual is allowed for both travelers. Travelers are responsible for all applicable taxes, fees, surcharges and applicable checked baggage fees. The Companion Fare Discount Code is not valid with award travel, and cannot be combined with other discounts. Source: Alaska Air Companion Fair Q&A ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why big clients want the contractor to be incorporated before giving them work ### Answer: They believe that it reduces the risk that Revenue Canada will deem you to be an employee and make them pay a whole pile of tax, EI, CPP and so on that should have been paid if you had been hired as an employee. It's my recollection that the employer gets dinged for both the employee and employer share of those withholdings (and generally the employer's share is larger than yours) so they really want to prevent it. There's a Revenue Canada publication about whether you're an employee or not. There's nothing on it about being incorporated, but still employers feel more protected when their contracts are incorporated. We did work as a sole proprietorship at the very beginning, so that we could deduct our losses against employment income earned earlier in the year, before we started the business. You can find clients who will take you on. We incorporated once the losses were over with (basically we had bought the equipment and office supplies we needed to get started.) It's a simple and relatively inexpensive thing to do, and gives clients a sense of protection. It won't protect you from your own poor decisions since you'll be a director of the firm. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Do gift cards expire? Does a gift certificate's value depreciate? How long can I keep them for? ### Answer: It depends on: In Canada, Ontario, Manitoba, Alberta and Nova Scotia have each enacted legislation to stop gift cards/certificates from expiring. Cards issued before the effective date are still subject to the old rules. The legislation came into effect: There are several common themes: There are still some unusual exemptions such as mall gift cards in Ontario, Manitoba: Ontario is the first jurisdiction in Canada to regulate gift cards. [...] Mall cards (e.g. Eaton Centre gift card) will be covered by the expiry date ban and the new disclosure rules. However, these cards can temporarily maintain their current fee structure while the provincial government examines options on how to best regulate these types of cards. This will allow more time to develop an approach that strikes the right balance for consumers and businesses. For specific details see the appropriate link. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How can one get their FICO/credit scores for free? (really free) ### Answer: As of 2014, this answer is deprecated. Read answer here for recent developments up to January 2015. You can get a free credit report yearly, but you don't get your credit score, just the content of your report. This is useful to make sure your credit history is correct, etc. To get that, visit annualcreditreport.com. Another site which will give you your score for free, really free with no strings attached, is creditkarma.com, which gives you your TransUnion credit score and full TransUnion credit report. The site is run by TransUnion and supported via advertising. At this point Equifax and Experian offer similar services via subscription, but not for free. Update 8/14/2015: CreditKarma now offers the Equifax information as part of their service. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How can one get their FICO/credit scores for free? (really free) ### Answer: I get my credit scores from all three bureaus for free - no gimmick. I use a combination of banks that offer this service to get my scores. I wrote about this sometime back in my blog. For credit report, the only place to go is AnnualCreditReport.com. I space it out so that I get one every 4 months since there is a once a year restriction per bureau. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How can one get their FICO/credit scores for free? (really free) ### Answer: I visited annualcreditreport.com to get my annual credit report. It is only the report, not the score or FICO score. This is the only outlet I know of that allows you to get your report for free, without a bunch of strings attached or crap to sign up for and cancel later. It was very easy. I was wary of putting in my private information, but how else can they possibly pull you up? Read the instructions carefully. You go to each bureau to fetch your report, and they dutifully give you a free report, but they push hard to try and sell you a score or a report service. It is easy to avoid these if you read carefully. Once you get a report, you have print it out or you can't see it again for another year. Each bureau has a different site, with different rules, and different identity checks to get in. Again, read the instructions and it isn't hard. Instead of printing, I just saved the page as HTML. You get one html file and a folder with all the images and other stuff. This suits me but you might like to print. After you get each report, you have to click a link to back to the annualcreditreport.com site. From there you go to the next bureau. Regarding a score. Everybody does it differently. Free Issac does FICO, but anybody who pulls your credit can generate a score however they like, so getting a score isn't anywhere near as important as making sure your report is accurate. You can use credit.com to simulate a score from one of the bureaus (I can't easily see which one at the moment). It is as easy as annualcreditreport.com and I have no issue getting a simulated score and report card. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How can one get their FICO/credit scores for free? (really free) ### Answer: I've seen credit cards that provide you your credit score for free, updated once a month and even charted over the last year. Unfortunately the bank I used to have this card with was bought and the purchasing bank discontinued the feature. Perhaps someone out there knows of some cards that still offer a feature like this? ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How can one get their FICO/credit scores for free? (really free) ### Answer: It appears that you already know this, but FICO credit scores (as controlled by Fair Isaac Corporation) are the real official credit scores, and FICO takes a cut on their production no matter which of the 3 major credit bureaus calculates the official score (all using slightly different methods). Be careful when obtaining a score for making a big decision that it is a FICO score, because relatively few lenders will lend based on a non-FICO score. That said, some non-FICO scores are easy to obtain and can be roughly translated to an approximation of your score. Barclays US/ Juniper Bank credit cards offer a free Transunion "TransRisk"(TM) score. The TransRisk score is a 900 point scale, while the FICO score is an 850 point scale. This is a simple ratio and you can calculate your approximate FICO score by the formula: ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How can one get their FICO/credit scores for free? (really free) ### Answer: Check with your bank. As of January, 2015, the following banks and credit unions are offering free credit-scores: Announced, in the pipeline: Source: Banks to offer FICO credit scores for free Personal Experience: I've been receiving free FICO score from my credit union for more than 6 months now. Advice: Most people have multiple bank/credit-union accounts. The FICO score will be the same whoever offers it. If none of your financial institutions offer you a free credit-score then you may opt for free services like creditkarma.com or other paid services. None of them are the widely used FICO scores, but they can be a good gauge of your credit standing. Please note that a credit-score is number summarizing your credit-report and should not be confused. In the news: ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How can one get their FICO/credit scores for free? (really free) ### Answer: Credit Sesame monitors your credit score for free. My understanding is that they make their money off of credit card referrals. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Bi-weekly payment option ### Answer: Your question is unclear about whether you are moving from bi-weekly payments or to bi-weekly payments. Let's calculate each case. Bi-weekly pay means you will be paid every two weeks. The amount for each payment will be your annual salary divided by 26, possibly with a small decrease (around 0.3%) to account for the fact that years are slightly longer than 52 weeks (i.e. there are slightly more than 26 two-week periods in a year), and possibly an even smaller adjustment to take account of the fact that some years are a day longer than that. You will be paid literally every 14 days (with some adjustments if a payday falls on a holiday) If you are going to be paid twice a month, then each payment will be your annual salary divided by 24. Typically you are paid on the same days of each month - for example the 1st and the fifteenth, or the last business day before those. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Bi-weekly payment option ### Answer: Biweekly pay for salaried employees is typically calculated as Annual-salary / 26. Twice a month pay for salaried employees is typically calculated as Annual-salary / 24. If you were getting paid twice a month and now are getting paid every other week, your paycheck will be roughly ( Twice-a-month-paycheck-amount * 24 / 26 ). If you were paid $1000 twice a month, you'll be paid $923 every other week. $1000 * 24 = $24K and $923 * 26 = $24K. You will get paid every other week regardless of month boundaries on a biweekly pay cycle. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Bi-weekly payment option ### Answer: One point that I don't see covered in the other answers yet: How does this affect the months that have 5 weeks. Do we actually lose two weeks a year? I get paid every two weeks, and pay day is always a Friday. Some months, I get paid 3 times - which is always great. If you live within your means, it's like an extra paycheck. All other months, I get paid two times. How many months a year do I get paid 3 times? 2. It will always be two, because there are 12 months. If you get paid twice a month, that's 24 pay checks, which is 2 shy of 26 pay checks - what we would expect if we were paid every two weeks. That means those 2 extra pay checks need to fall somewhere, and they will be on the months where your pay day is hit 5 times. For example, in 2014, there are 4 months with 5 Fridays: Jan May Aug Oct I got paid the second Friday of January, so I only got 2 checks in January. I will be paid on the first Friday of May, which means I will get 3 checks in May. My other triple-check month this year is October, so of course I am only going to be paid twice in August. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Should I be worried that I won't be given a receipt if I pay with cash? ### Answer: If this is because he wants to avoid paying taxes, will I get in trouble if I agree to have him work on my vehicle? You should check your state and local sales tax laws to be certain, but in my state you have no liability if he does not pay his taxes. That's his problem, not yours. The biggest risk for you is if something goes wrong, you have no proof that the work was ever done, so it's possible he could deny that any transaction ever took place and refuse to correct it or refund your money. So at worst you're out what you paid for the service, plus what it would cost you to fix it if you needed to and chose to do so. If you don't want to take that risk, then insist on a receipt or take you business elsewhere, but there's no criminal liability for you if he chooses not to report the income. EDIT Be aware, though that state tax is levied at the state and local level, so the laws of your individual state or city may be different. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Should I be worried that I won't be given a receipt if I pay with cash? ### Answer: There are number of reasons why someone doesn't want to give you a receipt for cash payment. Anything ranging from not wanting to pay taxes, to being able to deny you gave them money for service in the event you're not happy with the service and ask for money back. You won't get in trouble for giving him cash, however you should be worried because any "reputable" person providing any type of service/product will provide a receipt regardless of payment type. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Should I be worried that I won't be given a receipt if I pay with cash? ### Answer: In some states, it is your responsibility to pay the sales tax on a transaction, even if the party your purchase from doesn't collect it. This is common with online purchases across state lines; for example, here in Massachusetts, if I buy something from New Hampshire (where there is no sales tax), I am required to pay MA sales tax on the purchase when I file my income taxes. Buying a service that did not include taxes just shifts the burden of paperwork from the other party to me. Even if you would end up saving money by paying in cash, as other here have pointed out, you are sacrificing a degree of protection if something goes wrong with the transaction. He could take your money and walk away without doing the work, or do a sloppy job, or even damage your vehicle. Without a receipt, it is your word against his that the transaction ever even took place. Should you be worried that he is offering a discount for an under the table transaction? Probably not, as long as you don't take him up on it. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Canceling credit cards - insurance rate increase? ### Answer: You don't need to have a bunch of credit cards lying around; just a couple is fine. Get a "rewards" card (without annual fee) that pays you back for use, and use it regularly to buy groceries, for example. Pay it off promptly each month, using the rewards, if you like, to reduce the amount you have to send in. Or you can use the rewards for other purchases; some merchants offer $25 worth of merchandise for $20 in rewards. It used to be the case that you could negotiate a discount for paying cash rather than use a credit card, but that is a lot harder to do now, in many cases because credit-card company contracts with merchants prohibit this practice. Also, merchants often prefer credit cards rather than cash because money-handling is an issue (pay for an armored car to come pick up the day's receipts, or risk getting mugged on the way to the bank, possible burglaries if you leave the money overnight in the store, daily balancing of cash-register trays, etc.) So, not being in debt and being rich enough to not need to be in debt are laudable goals, and you have my best wishes that you will reach them soon, but getting rid of all your credit cards as a part of not being in debt may be more trouble than it is worth. Keep a couple, pay them off promptly, and if you are concerned about being in debt, you can time your charges so that you are in debt at most 2 or 3 days each month. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Canceling credit cards - insurance rate increase? ### Answer: The comments section to Dilip's reply is overflowing. First - the OP (Graphth) is correct in that credit scoring has become a game. A series of data points that predicts default probability, but of course, offers little chance to explain why you applied for 3 loans (all refinancing to save money on home or rentals) got new credit cards (to get better rewards) and have your average time with accounts drop like a rock (well, I canceled the old cards). The data doesn't dig that deep. To discuss the "Spend More With Plastic?" phenomenon - I have no skin in the game, I don't sell credit card services. So if the answer is yes, you spend more with cards, I'll accept that. Here's my issue - The studies are all contrived. Give college students $10 cash and $10 gift cards and send them into the cafeteria. Cute, but it produces no meaningful data. I can tell you that when I give my 13yr old $20 cash, it gets spent very wisely. A $20 Starbucks card, and she's treating friends and family to lattes. No study needed, the result is immediate and obvious. Any study worth looking at would first separate the population into two groups, those who pay in full each month and those who carry a balance. Then these two groups would need to be subdivided to study their behavior if they went all cash. Not a simply survey, and not cheap to get a study of the number of people you need for meaningful data. I've read quotes where The David claimed that card users spend 10% more than cash users. While I accept that Graphth's concern is valid, that he may spend more with cards than cash, there is no study (that I can find) which correlates to a percentage result as all studies appear to be contrived with small amounts to spend. As far as playing the game goes - I can charge gas, my cable bill, and a few other things whose dollar amounts can't change regardless. (Unless you're convinced I'll gas up and go joy-riding) Last - I'd love to see any link in the comments to a meaningful study. Quotes where conclusions are stated but no data or methodology don't add much to the discussion. Edit - Do You Spend More with Cash or Credit? is an article by a fellow Personal Finance Blogger. His conclusion is subjective of course, but along the same path that I'm on with this analysis. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Canceling credit cards - insurance rate increase? ### Answer: Your credit score can be part of the algorithm for setting your rates for auto insurance. It is one of many factors including sex, age, zip code, driving record, type of car... There are some states that are concerned about using credit scores, some sates have passed legislation regarding this issue ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Canceling credit cards - insurance rate increase? ### Answer: You can't ask insurers to use a particular score -- they have a state-approved underwriting model that they must follow consistently. Insurance companies make money by not paying claims, and poor credit score (including limit access to credit) increases the probability that you will file a small claim. Why? If you get into a minor accident (say $750 of damage) and have a $500 deductible, you are much less likely to file a claim to get $250 if you have access to a cash or credit lines to make the repairs yourself. If you feel that you are going to be penalized for closing credit card accounts, the solution is simple -- don't close them. Other than an event where you need to sever a relationship with a co-owner of an account (ie, you break up with your significant other, dissolve a business, etc) or avoid paying an annual fee, there is no advantage to you closing a revolving credit account, ever. If you cannot control your spending, throw the card in the shredder. Eventually, the credit card company will close your account for inactivity, which affects your credit to a lesser degree. (The big exception is if you carry sufficient balances on other cards, your credit utilization ratio goes up materially.) ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What's the benefit of a credit card with an annual fee, vs. a no-fee card? ### Answer: How would you respond to these cases: Limited card options - If someone has a bad credit record the cards available may only be those with an annual fee. Not everyone will have your credit record and thus access to the cards you have. Some annual fees may be waived in some cases - Thus, someone may have a card with a fee that could be waived if enough transactions are done on the card. Thus, if someone gives enough business to the credit card company, they will waive the fee. On the point of the rewards, if the card is from a specific retailer, there could be a 10% discount for using that card and if the person purchases more than a couple thousand dollars' worth from that store this is a savings of $200 from the retail prices compared to what would happen in other cases that more than offsets the annual fee. If someone likes to be a handyman and visits Home Depot often there may be programs to give rewards in this case. Credit cards can be useful for doing on-line purchases, flight reservations, rental cars and a few other purchases that to with cash or debit can be difficult if not close to impossible. Some airline cards have a fee, but presumably the perks provide a benefit that outweigh that fee over the year. I'm thinking of the Citibank cards tied to American Airlines, first year free, then an $85 fee. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What's the benefit of a credit card with an annual fee, vs. a no-fee card? ### Answer: Just to make this a little less vauge, I will base everything on the Mercedes Benz American Express (MB AMEX) card, which is the closest to a $100 annual fee I found on American Express's website. The benefits of a card with an annual fee generally are worth the cost if (and only if) you spend enough money on the card, and avoid paying interest to offset the benefit. Using the MB AMEX card as a reference, it offers 5X points for Mercedes Benz purchases, 3X points at gas stations, 2X points at restaurants, and 1X points everywhere else. Even if we only make purchases at the 1X rate, it only takes charging $10,000 to the card in a year in order to make up the difference. Not too hard to do on a card someone uses as their main method of payment. Every dollar spent at the higher rates only makes that easier. There are a number of other benefits as well. After spending $5,000 on the card in a year, you receive a $500 gift card towards the purchase of a Mercedes Benz car. For anyone on the market for a Mercedes Benz, the card pays for itself multiple times with just this benefit. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What is a checking account and how does it work? ### Answer: A checking account is one that permits the account holder to write demand drafts (checks), which can be given to other people as payment and processed by the banks to transfer those funds. (Think of a check as a non-electronic equivalent of a debit card transaction, if that makes more sense to you.) Outside of the ability to write checks, and the slightly lower interest rate usually offered to trade off against that convenience, there really is no significant difference between savings and checking accounts. The software needs to be designed to handle checking accounts if it's to be sold in the US, since many of us do still use checks for some transactions. Adding support for other currencies doesn't change that. If you don't need the ability to track which checks have or haven't been fully processed, I'd suggest that you either simply ignore the checking account feature, or use this category separation in whatever manner makes sense for the way you want to manage your money. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What is a checking account and how does it work? ### Answer: A savings account and a checking account (or a "demand" account, or a "transactional" account) have different regulations. For example, fractional reserve requirements are 10% against checking accounts, but 0% against savings accounts. The theory is that savings accounts are sticky, while checking accounts are hot money. So the Fed wants to stop banks from creating accounts that are regulated as savings accounts but have the features of checking accounts. In the past, this was done by forbidding banks to pay interest on checking accounts. They eliminated that rule back in the inflation years, and instead imposed the rule that to qualify as a savings accounts for regulatory purposes, banks must discourage you from using them as transactional accounts. For example, by limiting the number of withdrawals per month that can be made from a savings account. If the Fed gave up on trying to enforce a distinction, I suspect there would soon no longer be a distinction. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What is a checking account and how does it work? ### Answer: As others have noted, in the U.S. a checking account gives you the ability to write a check, while a savings account does not. I think you know what a check is even if you don't use them, right? Let me know if you need an explanation. Personally, I rarely write paper checks any more. I have an account for a small side business, and I haven't bothered to get new checks printed since I moved 6 years ago even though the checks still have my old address, because I've only written I think 3 paper checks on that account in that time. From the bank's point of view, there are all sorts of government regulations that are different for the two types of accounts. But that is probably of little concern to you unless you own a bank. If the software you have bought allows you to do the things you need to do regardless of whether you call the account "savings" or "checking", then ... who cares? I doubt that the banking software police will come to your house and beat you into unconsciousness and arrest you because you labeled an account "checking" that you were supposed to label "savings". If one account type does what you need to do and the other doesn't, then use the one that works. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What is the fastest way to retire, using passive income on real estate ### Answer: It is worth noting first that Real Estate is by no means passive income. The amount of effort and cost involved (maintenance, legal, advertising, insurance, finding the properties, ect.) can be staggering and require a good amount of specialized knowledge to do well. The amount you would have to pay a management company to do the work for you especially with only a few properties can wipe out much of the income while you keep the risk. However, keshlam's answer still applies pretty well in this case but with a lot more variability. One million dollars worth of property should get you there on average less if you do much of the work yourself. However, real estate because it is so local and done in ~100k chunks is a lot more variable than passive stocks and bonds, for instance, as you can get really lucky or really unlucky with location, the local economy, natural disasters, tenants... Taking out loans to get you to the million worth of property faster but can add a lot more risk to the process. Including the risk you wouldn't have any money on retirement. Investing in Real Estate can be a faster way to retirement than some, but it is more risky than many and definitely not passive. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What is the fastest way to retire, using passive income on real estate ### Answer: You can't calculate how many houses it will take. To do so you would have to know how much you can charge in rent compared to how much is costs to run that particular location. If the desirability of that location changes, so does the ability to rent the place, and so does the amount you can charge. It is possible to create a business in real estate that would allow you to generate retirement income. But you would be focusing all your income in your retirement years on one segment of the entire investment universe. The diversification would have to come from spreading the money through different types of real estate: condo, apartments, houses, commercial, warehouse, light industrial. You would even have to decide whether you want them all in one micro-market, or spread throughout a larger market, or an even wider area diversification. As your empire grew and you approached retirement age you would have to decide if you wanted to liquidate your investments to minimize risk. The long leases that provides stability of income would make it hard to sell quickly if the market in one area started to weaken. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: What is the fastest way to retire, using passive income on real estate ### Answer: Rule of thumb: To retire with a yearly income of $X, you need to save $(20*X) -- in other words, the safe assumption is that you'll average 4% returns on your stabilized savings/investments. In the case of retiring with a $50k passive pretax income, that means you need savings of $1M by the time you retire. If you want the $50,000 to be real post-tax spendable dollars, and your savings aren't in something like a Roth 401k or Roth IRA, increase that proportionately to account for taxes. How you get there depends on what you start with, how much you put into it every year, how you invest it and how many years you have before your retirement date. Passive investment alone will not do it unless you start with a lot of money; passive ongoing investment may depending on how much you can make yourself save when. To find out whether any specific plan will do what you need, you have to work with real numbers. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why should one only contribute up to the employer's match in a 401(k)? ### Answer: The matching funds are free money, so it is a very good idea to take that money off the table. Look at it as free 100% return: you deposit $1000, your employer matches that $1000, you now have $2000 in your 401(k). (Obviously, I'm keeping things simple. Vesting schedules mean that the employer match isn't yours to keep immediately, but rather after some time; usually in chunks.) Beyond the employer match, you need to consider what is available for investment in a 401(k). Typically, your options are more limited then in an IRA. The cost of the 401(k) should be considered, as it isn't trivial for most. (The specifics will of course vary, but in large IRA accounts are cheaper.) So, it's about the opportunity costs. Up to the employer match, it doesn't matter as much that your investment choices are more limited in a 401(k), because you're getting 100% return just on the matching funds. Once that is exhausted, you have more opportunity for returns, due to having more options available to you, by going with an account that provides more choices. The overall principle here is that you have to look at the whole picture. This is similar to the notion that you should pay-down your high interest debt before investing, because from the perspective of investing the interest you're paying represent a loss, or negative return on investment, since money is going out of your accounts. Specific to your question, you have to consider the various types of investment vehicles available to you. It is not just about 401(k) and IRA accounts. You may also consider a straight brokerage account, a savings account, CDs, etc. The costs and returns that you can typically expect are your guides through the available choices. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why should one only contribute up to the employer's match in a 401(k)? ### Answer: In addition to George Marian's excellent advice, I'll add that if you're hitting the limits on IRA contributions, then you'd go back to your 401(k). So, put enough into your 401(k) to get the match, then max out IRA contributions to give you access to more and better investment options, then go back to your 401(k) until you top that out as well, assuming you have that much available to invest for retirement. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why should one only contribute up to the employer's match in a 401(k)? ### Answer: I'd hazard that Jim is mostly worried that people are getting ripped off by high employer 401(k) fund fees. A lot of employers offer funds with fees over 1% a year. This sounds low-ish if you don't realize that the real (inflation-adjusted) return for the fund will probably average out to about 4%, so it's really something like a quarter of your earnings gone. With an IRA, you don't have to do that. You can get an IRA provider which offers good, cheap index funds and the like (cough Vanguard cough). Fund fees will probably be closer to 0.1%-ish. HOWEVER. The maximum IRA contribution in 2013 will be $5,500. The maximum for a 401(k) contribution will be $17,500. That extra capacity is enough to recommend a 401(k) over an IRA for many people. These people may be best served by putting money into the 401(k) and then rolling it over into a rollover IRA when they change jobs. Also, certain people have retirement plans which offer them good cheap index funds. These people probably don't need to worry quite as much. Finally, having two accounts is more complicated. Please contact someone who knows more about taxes than I am to figure out what limitations apply for contributing to both IRAs and 401(k)s in the same year. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why should one only contribute up to the employer's match in a 401(k)? ### Answer: Early this year I wrote an article Are you 401(k)o’ed? I described the data from a 401(k) expense survey and the punchline was that the average large retirement plan (over 1000 participants) expense was 1.08%, and for smaller plans it rose to 1.24%. As I commented below, if one's goal is to make deposits with income that avoid a tax of 25%, and hope to withdraw it at retirement at 15%, it doesn't take long for a 1% fee to completely negate the benefit of pretax savings. These numbers are averages, in the same article, I mention (ok, I brag) that my company plan has an S&P fund that costs .05%. That's 1% over 20 years. The sound bite of "deposit to the match" needs to be followed by "depending on the choice of investments and their expenses" within the 401(k). Every answer here has added excellent points, fennec's last sentence shouldn't be ignored, there's a phaseout for IRA deductibility, and another for Roth eligibility. For Married filing joint, IRA deduction starts to be lost at $92K, and Roth deposit disallowed at $173K. This adds a bit to the complexity of the decision, but doesn't change the implication of the 1%+ 401(k) fees. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why should one only contribute up to the employer's match in a 401(k)? ### Answer: Unfortunately, I missed most of segment and I didn't get to understand the Why? To begin with, Cramer is an entertainer and his business is pushing stocks. If you put money into mutual funds (which most 401k plans limit your investments to), then you are not purchasing his product. Also, many 401k plans have limited selections of funds, and many of those funds are not good performers. While his stock-picking track record is much better than mine, his isn't that great. He does point out that there are a lot of fees (mostly hidden) in 401k accounts. If you read your company's 5500 filing (especialy Schedule A), you can determine just how much your plan administrators are paying themselves. If paying excessive fees is your concern, then you should be rolling over your 401k into your IRA when you quit (or the employer-match vests, which ever is later). Finally, Cramer thinks that most of his audience will max out their IRA contributions and have only a little bit left for their 401k. I'm most definately "not most people" as I'm maxing out both my 401k and IRA contributions. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why should one only contribute up to the employer's match in a 401(k)? ### Answer: If you exceed the income limit for deducting a traditional IRA (which is very low if you are covered by a 401(k) ), then your IRA options are basically limited to a Roth IRA. The Cramer person probably meant to compare 401(k) and IRA from the same pre-/post-tax-ness, so i.e. Traditional 401(k) vs. Traditional IRA, or Roth 401(k) vs. Roth IRA. Comparing a Roth investment against a Traditional investment goes into a whole other topic that only confuses what is being discussed here. So if deducting a traditional IRA is ruled out, then I don't think Cramer's advice can be as simply applied regarding a Traditional 401(k). (However, by that logic, and since most people on 401(k) have Traditional 401(k), and if you are covered by a 401(k) then you cannot deduct a Traditional IRA unless you are super low income, that would mean Cramer's advice is not applicable in most situations. So I don't really know what to think here.) ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How To Record Income As An Affiliate ( UK ) ### Answer: Every bill you write counts as income (if the bill doesn't get paid, you would count that as an expense). In cases where you don't write bills, I think the payment you receive would count as income, but you might check that on the HMRC website. So to record your income, you can basically record the payments that you receive. Anything you pay out for your business is an expense. You keep a receipt for every expense - if you don't have a receipt, you can't count it as an expense, so keeping all the receipts is very, very important. An exception are investments, for example buying a computer that should last multiple years; there you can count a percentage of the investment as expense every year. All income, minus all expenses, is your profit. You pay tax and National Insurance contributions according to your profit. You can do whatever you like with the profit. Notice that I didn't mention any salary. Self employed means you have no salary, you have profits and do with them whatever you like. On the other hand, you pay taxes on these profits almost exactly as if they were income. If you have this blog but are also employed, you'll add the profits to your normal income statement. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How To Record Income As An Affiliate ( UK ) ### Answer: Adsense don't pay you daily. They pay you every month (as they have to calculate the final value). I'd say you only have to declare it when it hits your bank account. £60 actually isn't that much. It only took me a couple of months of just making a few quid, to making enough to get a monthly payment, and I only tot up what goes into my bank account. I've opened up a second account with my bank to send and receive payments relating to my online adventures. Then any in/out goes into a spreadsheet that I do at the end of the month keeping track of everything. If Mr. Taxman want to investigate at the end of the tax year, it's all logged in that account. It gets a bit murkier if you start doing US Amazon affiliates. The simplest method is to get the cheque delivered, and then log the amount that goes into your bank (after $->£ conversion). I have a Payoneer account, and transfer most of the money into my account (after it hits $500), and keep a little bit in for things I buy that are in USD. Hope that helps. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Quandl financial data : unexpected dividend ### Answer: For MCD, the 47¢ is a regular dividend on preferred stock (see SEC filing here). Common stock holders are not eligible for this amount, so you need to exclude this amount. For KMB, there was a spin-off of Halyard Health. From their IR page on the spin-off: Kimberly-Clark will distribute one share of Halyard common stock for every eight shares of Kimberly-Clark common stock you own as of the close of business on the record date. The deal closed on 2014-11-03. At the time HYH was worth $37.97 per share, so with a 1:8 ratio this is worth about $4.75. Assuming you were able to sell your HYH shares at this price, the "dividend" in the data is something you want to keep. With all the different types of corporate actions, this data is extremely hard to keep clean. It looks like the Quandl source is lacking here, so you may need to consider looking at other vendors. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How to help a financially self destructive person? ### Answer: I learned this from a business book on managing people, but I think it applies equally well here. You can't put in what God left out of people. I know several people with this mentality about money and you simply have to make your sculpture out of the clay you have. In this case, however, it seems that ship has sailed, considering it is your ex and you aren't on speaking terms. That would make it even harder, and it is debatable about whether it is your prerogative to even try. Just focus on the kids and make it clear to your wife that she needs to be providing the basics (food, shelter, heat, etc.) and don't escalate that unless it becomes a danger to the kids. In a non-judgmental way (towards your wife) I'd use it as an opportunity to teach your kids about financial responsibility and the dangers of overspending and get-rich quick schemes. It sounds like they have an example in their lives of the consequences of two very different ways of managing one's finances. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How to help a financially self destructive person? ### Answer: You say you're not on speaking terms: so you do it via your lawyer. You're divorced: so IMO your obligations are: a) To your kids b) Purely financial spousal support (if any) If she's irresponsible financially then maybe she isn't the best able to care for your children. Your lawyer ought to be able to tell you what the alternatives are (it's very state-specific so no general advice from the Internet, but if your lawyer can't do that then IMO you need a different lawyer who has more experience with divorce/custody cases). ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How to help a financially self destructive person? ### Answer: I'm afraid your best recourse may be legal. I don't know that internet is a necessity, but the court would frown upon anyone paying $4K for rent but not being able to afford to heat the water or turn the lights on. $48K a year net should be enough for her to at least keep the kids with these things. I don't know that you can educate her. Her issue is very deep-seated and far beyond a good financial planning type session. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How to help a financially self destructive person? ### Answer: You can't help people that don't want help, period. It just doesn't work, and you will waste your time and energy while making the other person mad. Both sides end up in the same place they started except now they are frustrated with each other. In a normal situation I would advise to stop enabling her by giving her money, but the court has already decided that part. There is no reason that she can't provide for her children on US$50k per year. In all honesty it sounds like she has a mental health problem and needs to see a professional. You, as the ex-husband, are probably not the right person to tell her that, though. If you really want to help her and are still on good terms with some friends or family members she trusts you could ask them to help her get help. They probably see the same mess that you and your kids do, but might need a little encouragement to act. The other option is if you sued for custody, based on living conditions, the possibility of losing her children and the child support might provide a much needed incentive to clean up her act. You probably won't win over a couple of incidents of the power being turned off and you will be putting your kids in the uncomfortable situation of telling on their mother though. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How to help a financially self destructive person? ### Answer: Back in the day, they had a highly effective solution for this type of crap, but it is frowned upon in modern society. The second-best solution would be to get your lawyer to put together a case that she is unfit to be around the children and that visitation rights should be revoked. Unfortunately, this will most likely not solve her problems, and she will probably become far worse as she feels more alone, alienated, miserable, and embarrassed. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How to help a financially self destructive person? ### Answer: Wow. Just ... wow. We all must start where we are, I guess. The past is the past. There almost certainly isn't a cheap way to fix this. You're already on the hook for $4k per month. Your money is enabling her behavior. You'd rather not enable her behavior, but the money is part of the consequences of your divorce, so into her bank account it goes. Those who control how much alimony your ex-wife receives might reach the conclusion she needs more. That's not a hard conclusion for them to make. It's not their money. The living conditions are hurting your kids, and that's unfortunate, but that's also part of the consequences of your divorce. If it's deemed that your kids are better off not visiting her, then you might be relieved of paying child support (since you're supporting them at that point) but you might still be supporting her until some trigger is met, which might be never. (You know those details better than I do, of course.) If she's already lost her house, filed for bankruptcy, borrowed money from people that she hasn't paid back, and gets a check from you each month and still has utilities shut off, she'll continue to deteriorate financially until she hits rock bottom. Then, and only then, will she see the need to fix her behavior. Now, the (possibly) million dollar question for you is, "Where is rock bottom?" Do what you can to make that happen sooner rather than later, because you'll likely be subsidizing her all the way down, and part of the way back up. You've lost most of the leverage you once had to change her behavior, but try every way you can. You might hit the jackpot. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: How to help a financially self destructive person? ### Answer: I am no expert by any means in divorce situations, but it seems like you probably have more than enough evidence (if you can back up everything you outlined here) that the living conditions an her place are not suitable for kids. This ought to be enough for you to gain sole custody of the kids. Maybe you didn't want to keep their mother in the equation for their benefit, but right now it's not to their benefit for her to be in the equation. The honest truth is that you're not in a position to help her being divorced. You can't force her to do anything as things stand now. But if you take legal actions to gain sole custody you might be able to lay down some conditions under which she could regain partial custody of the kids. This might be the "scare" approach you're looking for if she cares about her children. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Should I charge my children interest when they borrow money? ### Answer: I think there's value in charging family members/friends interest if it will make them take the loan seriously. The problem is that if you're thinking about charging interest because the person seems to be borrowing from you too cavalierly, it may be too late to make them take it seriously. In the situation you describe, if you're concerned about the loans being paid back, I think you need to have a serious conversation with the kids and make it clear you expect them to pay the loans back on whatever schedule you agreed to. If, based on your knowledge of your kids, you think charging interest would help motivate them to do this, great. If not, charging interest is unlikely to accomplish anything that the conversation itself won't accomplish. If you haven't previously outlined a specific schedule or set of expectations for how you want to be paid back, just doing that (in writing) may be enough to make them realize it's not a joke. The conventional wisdom is that you shouldn't lend money to anyone unless you're either a) okay with never being paid back; or b) willing to pursue legal remedies to ensure you're paid back. Most people aren't willing to sue their own family members over small loans, which means in most cases it's not a good idea to loan money to family unless you're "okay with" never being repaid (whatever level of "okay with" makes sense for you). I should note that I don't have kids; my advice here is just how I would handle it if I were considering loaning money to my brother or a close friend or the like. This means I don't really know anything about "teaching the kids about the real world", but I have to say my hunch is that if your kids are 25+ and married, it's too late to radically change their views on how "the real world" works; unless they had a very sheltered early adulthood, they've been living in the real world for too long and will have their own ideas of how it works. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Should I charge my children interest when they borrow money? ### Answer: Tell them you will not loan them any more money until their existing debts are paid off. This is closer to how the real world works and it won't come across as vengeful or like your changing your initial "contract". If they protest, lovingly tell them that your money is not their money, and that an interest free loan from their father is a privilege, not a right. As far as charging interest on your loans, go for it! Charge them 5% or something small. Just don't do it on the existing loans or that will come across as changing your initial "contract" again, and perhaps once they've proven themselves to be reliable borrowers they can once again earn the privilege to have an interest free loan. The book "The Millionaire Next Door" has really good thoughts on this in its section on Economic Outpatient Care. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Should I charge my children interest when they borrow money? ### Answer: Parents are eminently capable of gifting to their children. If it's a gift call it a gift. If it's not a gift, it's either a loan or a landmine for some future interpersonal familial interaction (parent-child or sibling-sibling). I an concerned by some phrasing in the OP that it is partially down this path here. If it's a loan, it should have the full ceremony of a loan: written terms and a payment plan (which could fairly be a 0% interest, single balloon payment in 10 years or conditional on sale of a house or such; it's still not a gift). ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Should I charge my children interest when they borrow money? ### Answer: Going from personal experience, my parents let my brother and me borrow money from them all the time. However there was always some noteworthy things to take into account. As an example, I borrowed a large sum of money on my student loan (we will just say it was $50,000). I had saved nearly $30,000 on my own and my parents lent me $10,000. I paid the remaining off over the course of about a year and a half. After this loan was paid off - I started paying my parents back. They dictated that I should not worry about paying them until my other interest loans were paid off. Once they were, my priority was to pay back my parents. Its supposed to help your children get ahead a little bit rather then sucking out interest from them. As long as the money was not needed elsewhere and is spent on something important I would not worry about it. Just make sure they are aware they are expected to pay it back in a reasonable amount of time or with specific requirements (such as after other loans are paid off). ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Should I charge my children interest when they borrow money? ### Answer: Would you expect your parents to charge you interest if you borrowed from them? Yes, if they said so when the money was borrowed. No, if there were no terms communicated when the money was borrowed. Expectations need to be clearly laid out up-front. What is your advice? I think you are asking the wrong question of whether or not you should charge interest. The real issue is that you are concerned about the 'borrowing', which are really turning out to be 'gifts'. The money amounts are not the issue as much as the lack of responsibility. Going back to your children and asking for interest will not fix this issue. This is my advice: This is a difficult process, and may not go over well with your children. Remember that this is not hurting them. You are actually hurting them more by allowing them to put off developing good habits, independence, and maturity. It is hard to see someone make choices that hurt themselves and others, but you cannot prevent them from making that choice. If they never feel the results of that choice, they will lack the motivation to change. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Should I charge my children interest when they borrow money? ### Answer: This is not really the focus of your question, but it's worth noting that if you live in the United States (which your profile says you do), there are tax implications for you (but not for your children), depending on whether or not you charge your children (enough) interest. If you charge less interest than the appropriate Applicable Federal Rate (for May 2016, at least 0.67%), you must pay taxes on the interest payments you would have received from the debtor if you had charged the AFR, provided that the loan is for $10,001 or more (p. 7). This is referred to as "imputed" income. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Should I charge my children interest when they borrow money? ### Answer: This is largely a cultural issue. I would be appalled at the very idea that my parents would charge me interest for lending me money. Just as they would be appalled if I were to do so if lending them money. I find the idea of attempting to make money off of your children fundamentally wrong. I realize that you only want to do this to teach them, that you have their best interests in mind and not your own profit. Nevertheless, what will actually happen were you to charge them interest is that you would accrue a monetary gain at the expense of your children. Is that really something you would be comfortable with? Now, as I stated at the beginning, this is clearly a cultural issue. Based on the other answers here, many cultures, probably including your own, find nothing wrong with this. I've even heard of people charging their adult children rent when they come home for the holidays, something that is completely baffling to me. The point I am trying to make is that asking other people's opinions on whether you should do this is not very useful unless those people share your own cultural background. My family and culture are such that the idea of charging interest to one's family members seems downright immoral to me. Given that you are asking here, it seems like you might be on the fence about it yourself. However, I freely admit that my answer is colored by my own cultural prejudices and may very well not be applicable to you. Still, ask yourself, is a relatively small amount of money in the grand scheme of things—or, for that matter, an entire fortune—worth jeopardizing your relationship with your children? Do you really believe that having their parents retroactively charge them interest for a loan will somehow teach them something about the "real world" that your already adult children don't know? One of the main reasons they came to you and didn't go to a bank is precisely that they expected the loan to be interest free. So, sure, tell them that you won't lend any more until they repay what they owe. Even better, sit them down and have an honest, adult conversation, explaining that the absence of the money they owe is making itself felt in your household and work out a way they can repay you. What, in my opinion, you most certainly shouldn't do is treat your relationship with your children as a regular business transaction. It isn't and I am sure you don't want it to be. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Should I charge my children interest when they borrow money? ### Answer: If they have borrowed money without paying it back, what makes you think you could get interest paid? The problem that you face first is to make clear to them that a loan is a loan. As long as they can get free money off you, they will keep borrowing. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Should I charge my children interest when they borrow money? ### Answer: Because this is Money.SE and you're connecting it to offspring, I'd think about a discussion with them to get their agreements. From my perspective, anything (my wife and) I have will go to offspring in the end. As such, everything borrowed and not repaid simply reduces the estate by that much. Among multiple offspring, such reductions should be against the borrower rather than spreading it out. That should be accounted for in whatever will is created. This would be the discussion point. It might also be discussed how or even if any interest should accrue for unpaid amounts. If, for example, a 1% APR is agreed upon for unpaid loans, then the final principle+interest amount is taken off of the borrower's inheritance. Existing outstanding loans might (or might not!) be useful examples for sample calculations if desired or needed. (If nothing else, they might serve as reminders that loans were not forgotten.) By having such a discussion, you can show that you are trying to plan for a fair distribution of your estate, perhaps thereby sidestepping any concern about charging interest to offspring for repaid loans. At the same time, you're handing over some financial responsibility, giving them a power of personal choice, which seems to be a part of what you're concerned about. Once such a discussion is started, it's possible that any question of interest will resolve itself naturally. The discussion almost necessarily must include all offspring at once. One will find it harder to negotiate from a standpoint of pure self-interest without objection from another. Think beforehand about what will be said and about what responses might come. Think things through as much as you can. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Should I charge my children interest when they borrow money? ### Answer: As per the age of your son you mentions i would suggest Yes, charge them an interest amount but lesser than the market rate. And give them a valid reason behind taking interest on given amount. The reason you might grab from below real incident happen with me at the time of Diwali last year. I am 26, and i am currently doing job and my salary is not so much that i can accomplish all my dreams of buying expensive Watch and many things. So i borrowed some strong amount from my mom. She gave me the amount but she asked me to pay interest of 5% and when i asked the reason behind demanding the interest she said something which was valuable things. She said me "If i would not give you money then you will definitely ask money from some money lenders or your friends because now that watch is your first priority. And in that case you need to pay the higher interest rate to them. And in life there might be situation where we would not capable to help you in terms of financial. So this is the time you should learn to pay interest and responsibility of borrowing amount and repaying it on time with interest rate. This will help you also to learn a lesson and our money will be withing home I am not expert in parenting because i am still unmarried but i shared my point of view for your question. Thanks ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Should I charge my children interest when they borrow money? ### Answer: In terms of preserving good relationships one approach is to charge a nominal rate of interest. maybe a few percent of the total and agree a time when it should be paid back. This may actually make them feel better about borrowing them money, especially, especially if it is something like business loan or buying a house or car. If they need the money for a real crisis and they have no clear strategy for paying it back then it may just be better all around if you make it clear that it is a gift. What you don't want to do is set up a situation where you are creating unnecessary problems down the road and that will very much depend on your individual relationship and how seriously you take the loan. Here it is important that you are completely open and honest about the arrangement so take the time to make sure that both parties understand exactly what they expect from each other. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is insurance worth it if you can afford to replace the item? If not, when is it? ### Answer: This entirely depends on two factors: Now let's look at what AppleCare gives you: What it covers is any manufacturing defect. It also covers you for phone support, as otherwise it's a $49-per-incident charge even for simple issues. It also covers any software issues that you may come across as long as the issues pertain to Apple software or the operating system itself. What it doesn't cover is any damage caused by the user. If you snap the corner of the screen, drop it, spill liquid on it, modify it, etc... then you're responsible for paying the repair costs. If you're outside of phone support, then you're going to have to pay someone to fix any problems you come across. Now if we're to trust this handy study done in 2009, then we can say that the 3-year failure rate for Macbooks and Macbook Pros is 17.4%. We could go ahead and say that $350 / $2000 = 17.5% so the chances match up, but what's the likelihood that Apple is going to cover the full $2000? Only under extreme cases are you losing the full $2000 (theft, shock damage, etc...), and those are all cases that Apple won't cover anyways. Instead we're looking at cases such as (Please keep in mind it has been several years since I worked for Apple, so these figures may be off): So this reduces our possible savings significantly. Let's then also look at what the warranty becomes after they fixed a part: A replacement part or Apple Product, including a user-installable part that has been installed in accordance with instructions provided by Apple, assumes the remaining term of the Warranty or ninety (90) days from the date of replacement or repair, whichever provides longer coverage for you. Which means in this case that you have a 90-day warranty after they've fixed an issue. This significantly reduces the likelihood of a same part going bad multiple times in a row. Therefore the chances of that $350 being worthwhile are very much against you. Even if the system does fail in some way, it is likely that the repair would be cheaper than the AppleCare. The chances of running into a repair or series of repairs that pays for the AppleCare and then some are astonishingly low. I would still get it if you were giving it to someone who was significantly lacking in any technology concepts (such as a parent or grandparent) as they are more likely to utilize the extended phone support, especially for smaller things that they might nag you about! ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is insurance worth it if you can afford to replace the item? If not, when is it? ### Answer: In general, if you can afford to replace something, you are able to "self-insure". You really want to understand a little of the statistics before you can make a generic call, but my rule of thumb is that insurance via "extended warranty" is rarely a good deal. Here is a simple expected value math formula you can apply (when the > is true, then you should buy it): replacement cost x likelihood of using warranty % > cost of insurance You can then back-compute, what is the likelihood that I'd need to lose this item to break even? Given your numbers: $2000 x Y > $350 or Y > (350/2000) or Y > 17.5% So if you think there is a 17.5% or greater chance that you'll need to have you system replaced (i.e. not just a simple fix) AND (as Scott pointed out) you'll be able to actually use the replacement warranty then the applecare is a good purchase. Note, this only applies to items you can replace out-of-pocket without significant burden, because if you didn't have the $10k to replace your car, it wouldn't matter if the insurance wasn't such a good deal (especially if you need the car to get to work, etc.) So the obvious question is: "Why would a for-profit company ever offer insurance on something they are statistically likely to lose money on?" The obvious answer is "they wouldn't," but that doesn't mean you should never buy this type of insurance, because you may have statistically significant circumstances. For instance, I purchased a $40 remote helicopter as a gift for my children. I also paid the $5 for a "no questions asked" warranty on it because, knowing my kids, I knew there was a nearly 100% chance they would break it at least once. In this case, this warranty was well worth the $5, because they did break it! Presumably they make money on these warranties because most of the purchasers of the plan are more attentive (or too lazy to make the claim) than in this case. Edit note: I incorporated Scott's comment about likelihood of being able to utilize the warranty into a combined "likelihood of using warranty" term. This term could be broken up into likelihood of needing replacement x likelihood of actually getting company to replace it I didn't do this above because it makes it a little harder to understand, and may not be a major factor in all cases, but you can definitely add it after the fact (i.e. if there's only a 90% chance Applecare will pay out at all, then divide the 17.5% by 0.9 to get 19.4% likelihood of needing the replacement for it to be cost effective). More complete formulas can be derived also (including terms for full replacement costs vs repair costs and including terms for "deductible" type costs or shipping), but I'm trying to keep things relatively simple for those who aren't statistics nerds like I am. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is insurance worth it if you can afford to replace the item? If not, when is it? ### Answer: In regards to purchasing full coverage on your car even if you can afford to replace it, consider the hassle you have to deal with an accident that is not just the cost. As an example, my sister's car was stolen and wrecked. It was her problem to go recover the car on the other side of the state such that she would not be paying the storage "fees" imposed by the sheriff of the other county. Had she had insurance they would have taken care of it call. Another story is that I rented a car and side swiped in the parking lot by a hit and run. I was responsible for the minor damage. I started down the path of paying out of pocket because it was small enough that I did not want to submit a claim. The rental car agency started to pile on extra fees such that it was worth it to turn in a claim. My insurance company was savvy enough to be able to dispute the extra charges. After I submitted it to the insurance company I basically did nothing. They took care of everything. So, in summary, when you buy full coverage on your car, it is not just a financial decision. It is also about not having to deal with a hassle. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is insurance worth it if you can afford to replace the item? If not, when is it? ### Answer: The answer to this question is very different depending on the type of item. From a purely financial perspective you would want to answer these questions which you may not have enough information to answer: Realistically the question I prefer to ask are: When something fails there is a big difference to me between having the cash and having an insurance policy that is suppose to cover it even if they are theoretically the same value. Some insurance policies may even be better than cash, like homeowners insurance might help take care of details like finding a contractor to fix the issue, finding temporary housing if your house burns down, etc. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is insurance worth it if you can afford to replace the item? If not, when is it? ### Answer: Insurance is for events that are both and Unexpected and, for many people, catastrophic events are, for example, sickness, disability, death, car accidents, house fires, and burglaries, for which you may buy health, disability, life, auto, home, and renter's insurance. It may be catastrophic for a family relying on a very old earner for that earner to die, and you can buy life insurance up to a very old age, but the premiums will reflect the likelihood of someone of that age dying within the covered period. The more expected an event is, the more anything referred to as insurance is actually forced savings. Health insurance with no copays on regular checkups expects the insured to use them, so the cost of those checkups plus a profit for the insurance company is factored into the premiums ahead of time. A wooden pencil breaking may be unexpected. Regardless of foreseeability, no one buys insurance on wooden pencils, as the loss of a pencil is not catastrophic. What is catastrophic can be context dependent. Health-care needs are typically unforeseeable, as you don't know when you'll get sick. For a billionaire, needing health-care, while unforeseeable, the situation would not be catastrophic, and the billionaire can easily self-insure his or her health to the same extent as most caps offered by health insurance companies. If you're on a fixed budget buying a laptop, if it unexpectedly failed, that would be catastrophic to you, so budgeting in the cost of insurance or an extended warranty while buying your laptop would probably make sense. Especially if you need that $2000 laptop, spending an extra 17.5% would safeguard against you having to come out of pocket and depleting your savings to replace it, even though that brings you to a grand total of $2350 before taxes. However, if you're in that tight of a situation, I would strongly recommend you to find a less expensive option that would allow you to self-insure. If you found a used laptop for much less (I can even see Apple selling refurbished Macs for less than $1000) you might decide that your budget allows you to self-insure, and you could profit from being careful with your hardware and resolving to cover any issues with it yourself. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is insurance worth it if you can afford to replace the item? If not, when is it? ### Answer: Extended warranty or insurance is a tricky thing. In general, the big screen TV, or other electronics are going to become obsolete before they fail. Laptops, even Macs, are at risk for higher failure rates than other electronics. The question remaining is whether after the item has reached its 3rd or 4th birthday, if you would already be in the market for a newer model. In the big picture, if you have the money to buy a new replacement, or pay for a repair, you are better off to avoid the insurance. The highest failures are in the first year (aka 'infant mortality') and after N years, closer to 7-10, enough for obsolescence, than in years 2-5. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is insurance worth it if you can afford to replace the item? If not, when is it? ### Answer: As a rule, purchasing fairly priced (minus a spread) insurance on items you can afford to replace is a bad idea. However, in addition to the points mentioned in the previous answers, one should note that many types of insurance are UNDERpriced because on average people do not make claims even though they are entitled to them. If you purchase something moderately priced at Best Buy and get the extended warranty and it breaks down a year later, you will be unlikely to even remember that you purchased the insurance much less go through the trouble of making a claim. More likely you will just go buy a replacement or whatever the latest and greatest iteration is. It's like homeowner's insurance--an amazing number of things is covered but no one ever makes claims, so it is cheap. If you are a person who remembers and utilizes warranties and insurance, there are many types of insurance that will save you money in expectation. The other thing is that you know more about your own riskiness than the insurer does. I had a girlfriend who bought super comprehensive insurance on her crappy old car. I was quite stern with her about it but could not change her mind. She totaled it a few months later. They bought her a replacement. She got in a more serious accident with that car and got yet another one in addition to payment of her medical care, which did not even go to her health care insurance. Yes, her rates went up, but not fast enough to deal with how risky she was. Another example: I used to carry an e-book reader around in my shirt pocket and read it any time I had a chance. Cheap item and not that delicate, but since I had it with me all the time and used it constantly, it was a big risk for the store. The extended warranty would have been a great idea. In short, avoid extended warranties and insurance on things you can afford to lose unless you know that you are high risk or are otherwise more likely than average to make a claim. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is insurance worth it if you can afford to replace the item? If not, when is it? ### Answer: As many other posters have pointed out, unless you know (and your insurer doesn't) that because of any reason you are more likely than the average to damage your computer, insuring it doesn't really make a lot of sense if you can comfortably replace it should the worst happen. In this particular case of a laptop, insurance is especially unattractive because computers depreciate fairly quickly. If you break it... ...and you're insured, you will get the very same laptop you bought more than a year ago. ...and you're not insured, you can choose to either find the same laptop at a substantially lower price (Apple does not really lower prices that much but you can probably get a refurbished unit, just like you could get with AppleCare) or spend the original amount in a newer and more powerful laptop. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is insurance worth it if you can afford to replace the item? If not, when is it? ### Answer: Generically, like farnsy noted in the other answer, you will only come ahead in dollar terms when you are significantly riskier than the average insuree. Otherwise the insurance company would have higher rates to make a profit. In the case of Apple Care there can arguably be other factors involved. If you did not insure your $2000 laptop and it broke (unfixably) just after the warranty period, would you replace it with a new Apple product? Maybe not, so Apple could lose a customer. That means they have an incentive to keep you happy. If your product breaks but insurance replaces it, you are a happier customer and more likely to buy other Apple products. This is not an incentive for traditional insurance companies that only do business in insurance. Now, with the profit margins Apple likes in general, I don't know if they've underpriced their insurance. I sort of doubt it even. But their margins on it are probably not high, meaning it's a closer call even if you are only averagely risky. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is insurance worth it if you can afford to replace the item? If not, when is it? ### Answer: The key point to answer the question is to consider risk aversion. Assume I suggest a game to you: Throw a coin and if you win, you get $5, if you lose nothing happens. Will you play the game? Of course, you will - you have nothing to lose! What if I suggest this: If you win, you get $10,000,005 and if you lose you must pay $10,000,000 (I also accept cars, houses, spouses, and kidneys as payment). While the expected value of the second game is the same as for the first, if you lose the second game you are more or less doomed to spend the rest of your life in poverty or not even have a rest of your life. Therefore, you will not wish to play the second game. Well, maybe you do - but probably only if you are very, very rich and can easily afford a loss (even if you had $11,000,000 you won't be as happy with a possible raise to $21,000,005 as you'd be unhappy with dropping to a mere $1,000,000, so you'd still not like to play). Some model this by taking logarithms: If your capital grows from $500 to $1000 or from $1000 to $2000, in both cases it doubles, hence is considered the same "personal gain", effectively. And, voíla, the logartithm of your capital grows by the same amount in both cases. This refelcts that a rich man will not be as happy about finding a $10 note as a poor man will be about finding a nickel. The effect of an insurance is that you replace an uncertain event of great damage with a certain event of little damage. Of course, the insurance company plays the same game, with roles swapped - so why do they play? One point is that they play the game very often, which tends to nivel the risks - unless you do something stupid and insure all inhabitants of San Francisco (and nobody else) against eqarthquakes. But also they have enough capital that they can afford to lose the game. In a fair situation, i.e. when the insurance costs just as much as damage cost multiplied with probability of damage, a rational you would eagerly buy the insurance because of risk aversion. Therefore, the insurance will in effect be able to charge more than the statistically fair price and many will still (gnawingly) buy it, and that's how they make a living. The decision how much more one is willing to accept as insurance cost is also a matter of whether you can afford a loss of the insured item easily, with regrets, barely, or not all. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is insurance worth it if you can afford to replace the item? If not, when is it? ### Answer: Another factor to consider is that resale value of the laptop is quite bit more if it is still under warranty. This would apply to people who replace their laptop often. It is higher because the purchaser can be assured they are not getting a lemon. I determined this by comparing prices on ebay before selling my computer. Of course, if you keep your laptop longer than the warranty, this means nothing. But for me it meant I could sell my old laptop quickly and for a better price. Because I used my laptop for work and totally depended on it, even one day of downtime would cost me a lot, so it was worthwhile to keep a relatively new laptop under warranty. Also, for those using Apple Care, there is an undocumented perk: Apple covered an out of warranty repair on a time capsule under my apple care for my laptop even tho they were not purchased at the same time. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Is insurance worth it if you can afford to replace the item? If not, when is it? ### Answer: Can you afford to replace it? What does that mean? Even if insuring means overpaying, it does spread the risk. NB: This example is not about the Applecare program, which I think is a waste of money for many people. Others have explained very well if it would work for you or not. I have a Macbook but no Applecare. I have an expensive smartphone with insurance for dropping and water damage, but not theft. After one year I cancel this insurance. I don't have $200K in my bank account. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Do companies only pay dividends if they are in profit? ### Answer: Yes the company can still pay dividends even if they aren't making a profit. 1) If the firm has been around, it might have made profits in the past years, which it might be still carrying (check for retained earnings in the financial statements). 2) Some firms in the past have had taken up debt to return the money to shareholders as dividends. 3) It might sell a part of it's assets and return the gain as dividends. 4) They might be bought by some other firm, which returns cash to shareholders to keep them happy. It pays to keep an eye on the financial statements of the company to check how much liquid money they might be carrying around to pay shareholders as dividends. They can stop paying dividends whenever they want. Apple didn't pay a dividend while Steve Jobs was around, even though they were making billions in profits. Many companies don't pay dividends because they find it more beneficial to continue investing in their business rather than returning money to shareholders. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: I keep getting overcharged at the grocery store. Foul play? ### Answer: Of course, there is no way for us to know whether or not the clerk is trying to rip you off $1.29 at a time, but I can't understand the possible motivation for doing so. I would imagine that most people would catch this at some point, so for a store to consistently overcharge for something like this is really bad for business. They would be risking upsetting a customer all for the potential gain of $1.29. I have to assume that it is not malice, but incompetence. We don't know what caused the clerk to be confused, but it is not really our concern. From what I can tell, you've gotten the right price in the end. You were ultimately charged for two drinks, and the extra $1.29 that you were charged was refunded. Since it happened three times, you have to decide how badly you want these drinks in the future. If you choose to return, you'll just have to expect the possibility that it will ring up incorrectly, and you'll have to get it fixed. If that seems like too much hassle, then don't return to this store. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why is auto insurance ridiculously overpriced for those who drive few miles? ### Answer: There are several aspects to this but at a high level it boils down to A lot goes in to insurance rating and risk projecting. You can't adjust a single variable and expect a proportional change in your premium, 7,000 miles per year just won't be 70% of the cost of 10,000 miles per year, because there are a lot of other things in play as well. To further address premium adjustments. Consider this: Even if your liability coverage did scale with perfect correlation to your mileage (using the same 70% from above, 7,000 miles per year versus 10,000 miles per year) then your premium composition is: $200 to $170 is 15%. No change will have a direct linear correlation to your total premium because there are different component pieces of the total premium. Fixed costs may be built in to the amounts for other component pieces of the premium, for example maybe no line of coverage ever has a cost below $X. Obviously these numbers are all made up Additionally, and also less considered is the fact that your liability also scales because of a lot of factors that have nothing to do with you. It might be the other cars that are on the road, it might be that more densely populated areas have more fender benders. For example if you live in Beverly Hills you have a much higher likelihood of accidentally bumping a $70-$80-$90-$100k+ car than you do in say, rural Wisconsin. If your zip code is gentrifying and everyone starts buying Mercedes, your liability coverage increases. You can not adjust one single variable and decide that you are lower risk than all insurers think you are. If you shop this coverage and all insurers are within a nominal margin of pricing for the same coverage levels, there isn't much to argue with; you are simply riskier than you think you are and the variable you are focused on is not as meaningful as you think it is. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why is auto insurance ridiculously overpriced for those who drive few miles? ### Answer: Not all miles carry the same amount of risk. A survey by Progressive indicated that accidents are most likely to occur within 5 miles of home, and 77% of accidents occur within 15 miles of home. Only 1% of accidents occurred 50 or more miles from home. That's from 2002, but it seems unlikely to have changed much. Since the miles closest to your home carry more risk, they cost more, and low-mileage discounts reflect that. There are per-mile insurance options in a few states which could save you money, but they do constant monitoring via that ODB2 telematics device, and other insurers offer discounts if you accept their monitoring either in perpetuity or for a limited period of time. Without monitoring, insurers don't know if that 4,000 miles of driving is spread into a few mid-day trips each week, or maybe you're doing all that driving from midnight to 4am on weekends (fatalities far more likely), or from 5-7pm during weekdays (accidents far more likely). Personally, I save ~10% by being a 'low-mileage' driver, and am currently in the middle of a 90-day monitoring, so might go lower, but given that accidents are far more likely close to home, 10% feels pretty significant and appropriate. ###end
Below is an instruction that describes a task. Write a response that appropriately completes the request. ### Question: Why is auto insurance ridiculously overpriced for those who drive few miles? ### Answer: 4000 miles a year is not a few! European average is about 9000... But nevertheless... But when it comes to risk, then: 1) Nothing stops you from changing circumstances and drive 10 times as much as in previous yers. The insurance remains the same. The only thing the insurance company can do is to charge you more next year (taking the miles you've made this year as a basis for calculations)* 2) Drivers who drive very seldom are a huge risk because of their low experience. I know a few people that drive more than 100 miles only a few times a year, and on average once a year have accident during that drives. It doesn't mean that an average sunday driver have similar risk of accident as daily driver, but it's in no way similar. *) Germany/Switzerland based, the whole EU is likely to be the same ###end

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