If you’re the kind of cultured Northeasterner who finds nothing funnier than making fun of people from, say, Alabama and how stupid they are, spend a couple of days in Hawai’i and see how quickly you reassess your hierarchy of dumb.
Adam Carolla was right. Hawai’ians are stupid for several reasons, a major one being that the islands are only so big. And so isolated. The unavoidable inbreeding puts the royal houses of Europe to shame. Also, the Hawai’ian alphabet has only 12 letters, making it impossible to articulate any abstract or higher-level thoughts.
Here’s an example of how dumb Hawai’ians are. The Hawai’ian word for “half” is hapa, which is obviously a corruption of the English word. There’s no f sound in Hawai’ian, so they went with the closest substitute they had available, p. Every Hawai’ian word has to end in a vowel, hence hapa. Now…
The islands were discovered around 600. Captain Cook didn’t show up until 1778. These people went 1200 years (and presumably would have gone longer) without anyone ever saying, “I just split this thing in two, and now I need a name for each piece.”
For those of you in the rest of the world, who can read, we present yet another edition of the Carnival of Wealth. Personal finance wisdom (and occasionally, what only Hawai’ians might consider wisdom) from our favorite bloggers. Shall we?
Madison du Paix at My Dollar Plan submitted her post 3 seconds after last week’s carnival went live, and seeing as we no longer have a formal deadline, it’s only fair that she go first. Madison writes about the (groan) “fiscal cliff”, the most preposterous scaremongering story to hit our national consciousness since Orson Welles convinced some dullards that Martians were colonizing our planet. (Remarkably, some of the dullards lived on the Mainland.) There was no “cliff”, metaphorical or otherwise, that our economy was going to go over. Although it was preposterous that our elected superiors gave us barely 2 days’ notice as to what our 2013 tax rates would be. Said superiors will continue to spend money we not only don’t have but will never have the creditworthiness to borrow. They’ll continue to raise taxes. Our economy will remain stagnant. But boy, that Sophisticate-in-Chief is a charmer. And our incoming House members and Senators? So enlightened and diverse! More ladies (and Buddhists, and bisexuals) than ever! Remember, their identities and personae are far more important than what they’re pitching.
Oh yeah, Madison’s post. She summarizes – quite beautifully – what the fiscal cliff deal means for our taxes.
The Control Your Cash Woman of the Year makes her awaited return to these parts. When the year began, Paula Pant of Afford Anything and her boyfriend wanted to see if they could live on one income. Not because she wanted to sit at home and eat bonbons while crafting tea cozies to sell on Etsy, but because she wanted to take one of their incomes (hers) and invest every farthing of it. Paula did – well, the two of them did – and she gives the results.
This is why we named her our Woman of the Year, and why the balloting was not close. Paula does not come from exorbitant means. Yet she’s in her 20s and is not only deriving much of her income from investments, she’s doing it while living a rich and fascinating life. She’s visited more countries than all of you combined. She has the freedom most of you dream of only in theory, and will spend all day justifying why it’s impossible to achieve in practice. Yet she’s doing it and will continue to.
Even more remarkably, she’s not one of these obsessive cheapskates who vacations exclusively in adjacent counties and collects notable rocks while doing so. She doesn’t merely have freedom, she capitalizes on it. We should all live like Paula. But no, keep slaving away at that job you hate in the hopes that a few years down the road, you can get promoted and commit even more of your finite existence to said job.
Suba Iyer from Wealth Informatics? Where has she been? (Note her name – well, her maiden name – at the top of our main page.) Today we found out that she’s spent…$95,000 on rent for the last 5 years. The definitive spicy meatball. In some places that kind of money will buy you a decent house, not all of them Detroit neighborhoods. She negotiated a lower monthly obligation, which isn’t quite as good as buying, but it’s far better than paying too much rent.
The ever-mysterious Dividend Growth Investor gives his response to the “fiscal cliff”. He feels that such ephemeral concerns are meaningless when his holding period is, and we quote, “forever”. Man, he’s not kidding about preferring dividends over appreciation. Again, D.G. Investor gives his handy capsules of some of the obscure companies that he invests in:
The Coca-Cola Company (KO), a beverage company, engages in the manufacture, marketing, and sale of nonalcoholic beverages worldwide.
From PKamp3 at DQYDJ.net (that’s Don’t Quit Your Day Job, ICYDK) comes a fantastic recurring feature: he and the rest of his brain trust use option prices to determine where the S&P 500 is going to end up. Last time, their predictions failed egregiously. But like Thomas Edison figuring out ways not to create an incandescent light bulb, the DQYDJ team has taken its failure and made something of it.
Jake Thompson at Becoming Your Own Bank is relentless, if nothing else. Long story short, his site is a commercial for the family business – not just life insurance, but whole life insurance, which is the worst kind. His post does give us an opportunity to offer up some handy grammar tips:
- Possessives take an apostrophe, plurals don’t.
- “Buy” is a synonym for “purchase”. “By” is something different.
- “Peace of mind” is an idiom meaning contentment, satisfaction. “Piece of mind” is an Iron Maiden album (and they were well aware of the homonym when they gave it that title, thanks.) Seriously, you have difficulty with this?
Also, while Jake’s post is undated, there’s a comment on it that’s dated 4 months ago. So thanks for giving us something timely, Ace. And even though we long ago lambasted the family patriarch’s book on whole life insurance, which is written even more ineptly than this whale patty of a blog post, the Thompsons still submit to the CoW. Good for them. Kids, banging your head against a wall repeatedly is crucial to your success in the real world. Especially if you supplement it with whole life insurance.
Let’s shower and rinse after that, and welcome Neal Frankle of Wealth Pilgrim back to the CoW. Neal received an all-encompassing and unbelievably general question from a reader – essentially, “How do I invest?” Obviously that requires a long and detailed answer which includes its own set of questions, but Neal manages to be both succinct and helpful in his response.
From Michael at Kitces.com, an analysis of more of the doublespeak and obscurantism surrounding the American Taxpayer Relief Act of 2012. If you’re retired, you can make a Qualified Charitable Distribution from an IRA. Remember, you’re not doing this to guarantee your place in heaven, but rather to limit any tax bite. One problem – the law wasn’t passed until after the 2012 tax year ended. What’s better than a Congress that not only doesn’t let its citizens know the tax schedule for the upcoming year, but keeps the previous year’s hidden too? Michael concludes that QCDs are largely a waste of time anyway, and that if you really want to give to charity and not the IRS, you should donate stocks that appreciated. Once again, Michael does some brilliant and vital if depressing work about what our taxes are going to look like over the next few lean years.
Andrew at 101 Centavos has an outlook similar to ours on the absurdity of the fiscal cliff. Andrew did the filthy but vital work of digging to see which companies and industries your elected representatives have chosen to be the winners and losers this time out. Wind energy gets yet another chance to pretend to be profitable, government ward General Electric gets to defer taxes. Andrew explains it in his inimitable way:
Calling the office of national politicians, also a pointless exercise for an individual
peasantvoter. Like leveling up in a video game, it’s a short-term false accomplishment. There, got my “voice” heard.
Trent Lott was a Republican. John Breaux, a Democrat. And yet here they are hand-in-hand, working for the same lobbying outfit. Might even shower together at the same gym, for all we know.
Andrew doesn’t just complain, though. He tells ordinary, non-connected folk what they can do to minimize the damage and be less poor in the coming years, which is the pusillanimous 21st century version of what used to be the American Dream.
You people could’ve nominated Ron Paul for the presidency, the one guy with enough guts to point out the rapidly falling sky. But no, he’s crazy.
Yes. Teacher Man at Young & Thrifty asks if you should get a Costco membership. We did this 3 years ago, but the lessons still apply. Teacher Man lists some disadvantages to shopping at Costco, one of which isn’t valid at all:
You really can’t walk out of there without spending at least $75 to $100
(He means “at least $75”, or possibly “at least $100”, but he can’t mean both.)
You’re not supposed to walk out of there without spending at least $75. (Or $100.) It’s called bulk shopping. Your humble bloggers dropped $206 at the nearby Costco today in fact, and can now go the next 6 weeks without buying eggs, or mahi mahi, or chicken, or bacon, or cat litter. And of course, the thrilling conclusion:
Readers, do you think Costco is worth it or not?
Have a Roth IRA and a traditional one? Michael at Financial Ramblings says that’s the way to go, arguing that if you contribute to a Roth up to the amount where you don’t have to pay any taxes on withdrawals ($19,500 in his example), and put the remainder of your contributions in a traditional IRA, you’ll lower your tax liability as much as possible.
Needs editing, but here’s another debut CoW entry – this one from James at Free in 10 Years. James offers data to buttress the argument that impulse buying is a legitimate phenomenon. Did you know people buy more convertibles when it’s unseasonably warm? And more 4-wheel drive vehicles when it’s snowy? James also recommends that you “plan purchases in advance”, which is a much better idea than planning them retroactively.
Charles Davis at Wallet Hub explains how mortgage points work, and does so clearly and concisely. If you’re not familiar, mortgage points are a means for saving money by paying up front instead of deferring over decades. Pay 1% of your mortgage balance immediately, and it might knock ¼ or ½ of a percentage, uh, …point off your interest rate. Despite their confusing name, mortgage points are useful to both borrowers and lenders. Charles illustrates how mortgage points work in more detail than we have time for here.
Finally, Liana Arnold from Card Hub has returned from her brief incapacitation to give us the credit card landscape report. Which is…? Glad you asked. She shows how annual percentage rates, introductory rates etc. have moved over the past 3 months. The data are fascinating (reward bonuses have increased 15%?) and go back several years.