Another Euro Crisis?

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italy euro market volatility

Hold on to your lug nuts. It’s going to be a bumpy ride! Italy Euro Politics Once upon a time,  politicians in a given country disagreed about things. Those things were mostly domestic, although there has always been some foreign policy issues as well. What they didn’t used to do, was just throw out wholesale changes to the entire structure of the economy based upon a single election in which one side won 51% to 49%, or whatever. After the Brexit vote, all bets seem to be off in the world of political market stability. Which brings us to Italy. It seems that within Italian politics there are those who are what they call “Euro-skeptics”, which basically means that they aren’t in favor of the Euro and/or are not in favor of all the rules they must follow to be part of the Euro. Essentially, when the Euro was setup, everyone was very keen on all of the benefits a single European currency would drive. And, why not? There are many, many benefits. As with most things, however, there are some responsibilities too. This is because with a single currency not only are the benefits shared, but so are any …

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The Purpose of High Credit Card Limits

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floor installing progress

I’ve always wondered what the purpose of a $30,000 credit limit was. I get what the purpose is for the credit card company. They want you to spend more money and keep a balance on your card, but what would the purpose be for a responsible credit user, specifically one that pays the balance off every month. Using Your Credit Card for Everything If you don’t have the ability or the discipline to pay your card every month, then DO NOT use them in this way. But, for me, I use a Capital One Rewards Card as my primary means of spending. I get Capital One rewards points at the rate of 2 for every one dollar spent, or basically it works out to 2% cash back when I use the Purchase Eraser to wipe out travel spending from my card. (We travel a fair amount, it lets you look back 90 days, and it turns out some odd things like Uber rides, or Car2Go rentals end up getting coded as travel on your Capital One Statement.) At any time, I have a log of virtually everything I have purchased in a given month, going back 24 months. I print …

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Trump’s Trade War

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china trade war imports

Donald Trump launched a trade war –on purpose– by attaching large American import tariffs on steel and aluminum. These tariffs might have worked a decade or two ago, when both Republican and Democratic administrations were happy to watch American manufacturing gallop out of the country to cheaper producers, but these days, there aren’t many American steel mills and aluminum plants to protect. Still, based on Trump’s limited understanding of the economy and global trade, the tariffs make sense because American producers have been harmed by noncompetitive government subsides and subsequent dumping. Lost on Trump is that his own companies used cheaper, imported Chinese steel in most of his buildings. Trade Wars Have Casualties Trump’s oft cited target for unfair trade practices is China, although the steel and aluminum tariffs are hardly surgical strikes against the Chinese, impacting numerous other countries as well, including America’s trade, strategic, and global allies. Nonetheless, as far as Trump understands the economy these industries represent real, American manufacturing lost to “cheating” foreign competitors. When presented with the possibility of retaliation, Trump and his flunkies suggest that America can win any trade war. This is 100% true. No country can defeat America in a trade war IF the country …

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Quizzle Scam or Legit?

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Quizzle Scam graphic

I’ve gotten several requests for a Quizzle review. Quizzle is an online financial service that offers, according to the bold face type, a free credit report, free credit score and various financial tools. Whenever someone points me in the direction of a personal finance company like this the first thing I check is if I can sniff out a scam. Often, you can spot the scam coming before you even see the fine print. Obviously, if something isn’t on the up and up, then there is no reason to waste any time on a review. So, is Quizzle legitimate, or is this all a big con job? Quick Quizzle Review The biggest red flag for the various free credit score or free credit report offers floating around out there is to look for the words “free trial.” Typically, the way the free credit score scam works is that a financial company (including all three major credit bureaus) offer you a free report in big, bold type and in smaller type, lower down on the page, inform you that it isn’t actually free at all. Instead, you are being offered an automatically renewing trial membership in a credit monitoring program that …

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401k Fiduciary Rule

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401k fees savings fiduciary

Politics sometimes makes it hard to get straight information about important topics relating to your finances. In this case, a court has struck down an Obama era rule that essentially applied the fiduciary standard to certain 401k advisors. According to the Republicans, this is a giant victory for freedom, and business, and enterprise. According to Democrats, this is a giant blow to fairness, and an attack on all hard-working Americans. As is so often the case when politicians get involved, the reality lies somewhere in between. What Is Fiduciary Standard? There is a HUGE amount of case law and statutes about what exactly makes up fiduciary standards, but for our purposes, the easiest way to understand is to compare to the other existing financial standard, suitability. I spend several years as a financial advisor. During that time, I was under the suitability standard. This meant that investments I recommended had to be suitable for my clients. In other words, I wasn’t supposed to be recommending highly-volatile, high-risk, futures contracts to my widowed, orphaned, school teacher, clients. Practically speaking, this standard had a lot less to do with what I wanted to recommend, and a lot more to do with what my company …

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Is Inflation Real Finally?

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The Fed has been raising interest rates over the last few years based on fears of inflation that never seemed to come to pass. But, with monetary policy still very loose, and investors in a good mood pushing the stock market higher and higher (with a few days of correction last week), the rising rates seemed to have no real effect on the economy. Unfortunately, this is the way economic policy works. Nothing happens, until it does, and then you have to hope that you already got it right. Inflation in January The 12-month rate for wholesale inflation rose to 2.7% for January. That’s a pretty big number, and it’s the first one that actually suggests the Fed’s long feared inflation might actually be real. Before the data came out, the markets (and the Federal Reserve’s dot plot) anticipated three rates hikes in 2018. The current rate is 1.5%, and assuming the Fed follows it’s recent history by raising rates a quarter-percent (0.25%) each time, that means that interest rates would end the year at 2.25%. That’s hardly high, historically speaking, but definately higher than anything this market has seen in a long time. Add-in the fact that the Fed …

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How To Deduct Property Taxes

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Property taxes can be an important tax deduction for many home owners. Real estate taxes, in particular, can be a significant tax deduction.

Stock Market Correction

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After Monday’s stock market fall, there was a run up yesterday on Tuesday, then a little drop on Wednesday, and now a 1000+ point market drop again today. So, let’s get a headcount before we proceed. Stock Market Results Last Few Days Monday: -1175 Tuesday: +567 Wednesday: -19 Thursday: -1033 Add it all up, and you get -1,660 for the week. Oh, and by the way, the market was down 666 points last Friday. From the market’s high point, this equates to a drop of a little over 10% putting us into correction territory. (A correction is usually defined as a drop of 10%.) Do We Panic Now? Take a look at what I wrote about Monday’s big stock market drop. Although the market has dipped even further, the result remains the same. For long-term investors with a well diversified portfolio, the best course of action is to ignore all short-term market moves. Even if this is the beginning of a recession (We are totally due for one) the long-term scenario is still the same. The ever higher march of inflation, plus a U.S. economy that always comes back eventually means that holding on, and continuing to invest is the best solution for long-term investing …

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Stock Market Plunges – Shall We Panic?

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2018 crash stock market

The Dow Jones Industrial Average fell almost 1,200 points. The headlines scream “Largest 1-Day Point Drop in History.” — They say “point drop,” because as a percentage, this declines isn’t even close to the worst. As the Dow increases in value, the percentage of a point becomes a smaller number. This 1,200 points is equal to 4.6%. That’s nothing to sneeze at, but it is not anywhere near as bad on a percentage basis as the 508 point Black Monday crash, which at the time was a drop of 22%. (Could a Black Monday type crash happen again?) Perspective is fun! The 2018 Crash Before we decide to panic, let’s look into our crystal ball and see what will happen in the next few days. First, don’t expect any of the politicians who were taking credit for the stock market rising to come out and accept any blame for the market falling, even though, if one is true, the other must be true as well. The reality is that politicians are never responsible for short-term market moves, no matter how much they try and take the credit. So, this crash isn’t their fault, but the runup wasn’t to their credit …

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Can I Use My 529 Plan to Pay For K-12 Expenses

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529 plan tax law changes states

529 plans are a tax-advantaged account that allows saving and investing for college expenses. Before last year’s new tax law was passed, one got tax-deferred growth in the account, and tax-free withdrawals for qualified college expenses. Even better, there were very few 529 contribution limits on most plans. Now, the recent tax law has opened up another possible way to use 529 funds tax-free. 529 Plan Withdrawals Until 2018, you could not use your 529 plan to pay for anything other than higher education expenses, in other words, college. Withdrawals from a 529 plan for any other purpose were not only taxable, but subject to a 10 percent tax penalty. But, the new tax law passed at the end of 2017 changes the rules. This tax law allows parents to use up to $10,000 per child for elementary, or secondary education. In other words, you can use up to $10,000 from a 529 plan to pay for private school during the K-12 years. This is a big boon for those who send their kids to private schools. Interested in automatically investing for non-college expenses? Check out my Acorns reviews. Using 529 Money To Pay for Private School There is a …

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