Archives For April 2010

I Won $500!

Corey —  April 16, 2010

       A while back, I wrote an article titled “What Caused the Economic Downturn? How Do We Rebound?” It was an entry for the What Would John Templeton Say? blog contest. With a top prize of $500, second place of $300, and third place of $200, I thought there would be plenty of entries. Unfortunately for the website running the contest, there weren’t. (Though that was fortunate for me!)

       Apparently some people thought it was too complicated to garner many entries. I think that’s crazy. It wasn’t very difficult at all. The premise was simple. Taking John Templeton’s lecture “The Religious Foundation of Liberty and Enterprise” into account, which vice is most responsible for the recent economic downturn and which virtue is most important to the economy’s rebound? To learn what John Templeton described as the economic vices and virtues, you simply had to read 10 short posts on the website. Here they are:

Economic Vices:

Economic Virtues:

       That was it. I didn’t find the reading or concepts very difficult at all. I think I spent a total of 2-3 hours reading, preparing my thoughts, and writing my entry. Even if I had only won third place, that still would have been a nice return on my time (better than most of the articles I have written…).

       I’m not sure what the personal finance lesson is here. When the risks are low and potential rewards high (or just moderately high) then take your chances? Or maybe it’s just to keep your eyes open for opportunities and be ready to take action. What do you think?

Contentment Is Not Complacency

Corey —  April 15, 2010

       Are you put off by “contentment”? Does it sound like apathy to you? A lack of ambition?

       Americans as a whole do not value the idea of contentment. It sounds too much like complacency – like you’ve given up and are just accepting things the way they are. We value the mindset of ambition and a strong desire for success. And too often we think contentment means no ambition at all.

       As Christians, we need to understand that the two are not necessarily opposed. While contentment is definitely not going to lead to a strong desire for material or worldly success, it does not preclude us from spiritual ambition for God (not a desire to magnify ourselves). Neither is contentment an excuse to be lazy.

       Rather, contentment is the state of being satisfied in the sufficiency of Christ. Our happiness is not dictated by circumstances or our possessions. We find joy in knowing that Christ meets all our needs. It’s important that we have a good understanding of contentment before we dismiss it as something that’s undesirable in our culture.

Contentment Is Fulfillment

       Contentment in Christ means we have found fulfillment in Him. Our purpose and meaning in life are defined by God’s purpose for us. We are happy to do His work and to seek His will for our lives. We don’t measure our success by the world’s standards. God’s standards are not the world’s standards. And that’s why the world sees contentment as weakness, as diffidence, as resignation. The world is darkened in its understanding and cannot see the light of God’s truth.

Contentment Is Sufficiency

       Contentment in Christ is being satisfied in Him. We focus on the value of the eternal life He gives us. We understand its worth is far above riches and luxury. And because we realize we now have that immeasurable gift of eternal life, we are not consumed by greed and a lust for more and better “stuff”. We recognize that Christ fulfills all of our needs and we are happy in Him.

Contentment Is Appreciation

       Contentment is an active appreciation of what we have and a determination to make the most of it. It gets to the root of stewardship – understanding who truly owns all of what we have and desiring to manage it well. It rejects the notion that “I won’t be happy until I get more.” It is fueled by thankfulness and resourcefulness. Contentment is a mark of wisdom.

Contentment Is a Choice

       It is clear that contentment is a choice. It doesn’t just happen. We must choose to present ourselves as a living sacrifice to God and follow His will. We must choose to focus on the value of eternal life and the riches we have in Christ. We must choose to appreciate God’s blessings in our lives and manage them well for His glory.

       Every single day we must make a choice to be content in Christ. We have an unbridled ambition to glorify Him in all we do. Our strong desire to be more like Him and to serve God does not lead to laziness or complacency. Rather, it energizes us work hard for the advancement of the Kingdom – in our personal lives and in the world.

       How would you describe contentment? What attracts you to contentment in Christ? What drives you away (or puts barriers in your path)? Please share your thoughts in the comments below.

How to Garden: When to Plant

Corey —  April 14, 2010

       Knowing when to plant is one of the keys to having a successful garden. However, it’s not an exact science. But with a combination of knowing your average last spring frost date and general guidelines for each plant you can get a good idea of when it’s best to plant your vegetables and fruits.

Average Last Spring Frost Date

       Your average last spring frost date tells when when you can be fairly certain the chance of frost is low. This is important because some plants can’t handle frost and will die if exposed to those low temperatures. You can find out the average last spring frost date in your area by calling your local Cooperative Extension office, which you can find on the USDA’s website.

       However, I found the average last spring frost date for my area quite easily on the National Climatic Data Center’s website. Their charts will also show you the average first fall frost dates as well.

       In finding the average spring frost date, pick your state and then a city near you. Look at the 32 degree row and then find the corresponding date under the 50% probability column and the 10% probability column. Using the 50% probability date there’s only a 50% chance it will frost after that date. If you want to play it safe, go for the 10% probability date (meaning only a 10% chance of frost after that date). These dates are based on information gathered from 1971 to 2000.

When to Plant What

       After you know the average last spring frost date for your area, you simply need to know which plants like it cold and which ones don’t. Here’s a summary of when to plant what:

Very Early Spring (4 to 6 weeks before the last frost date)

  • Peas
  • Spinach
  • Onions (sets)
  • Garlic
  • Lettuce
  • Broccoli
  • Cauliflower
  • Cabbage
  • Potatoes
  • Chives

Early Spring (2 to 4 weeks before the last frost date)

  • Beets
  • Carrots
  • Radishes
  • Sage
  • Thyme
  • Dill

Mid-Spring (at or just after the last frost date)

  • Green Beans
  • Corn

Late Spring (2 to 4 weeks after the last frost date)

  • Cucumbers
  • Cantaloupe/Muskmelon
  • Watermelon
  • Sweet & Hot Peppers
  • Tomatoes
  • Basil
  • Cilantro
  • Summer Squash
  • Pumpkins
  • Eggplant

       Finally, if you’d like more information about specific plants I recommend Harvest to Table’s articles on “how to grow…” and their archives. Obviously there’s more to gardening than choosing a general method and knowing when to plant, so you can use Harvest to Table as a resource for your more specific questions. I’ll continue to add more articles about gardening, but since we’re already into the season this year I wanted to give you a more comprehensive resource. Happy gardening!

       A couple weeks ago a friend asked me how he could get out of paying Social Security taxes. He feels like there won’t be any Social Security for him when he retires, so he’d rather just save up the money himself. I had done some research on the same topic a couple years ago and I brushed up on it again recently. Here’s how you can get out of paying Social Security and Medicare taxes.

IRS Form 4029

       IRS Form 4029 is an application for exemption from Social Security and Medicare taxes and a waiver of benefits from those programs. However, there are a few catches:

  1. You must be a member of a religious group that teaches against insurance (for conscientious reasons – not because they believe it won’t be around to pay you benefits). This group must also provide a reasonable level of living for its dependent members. Finally, it must have existed continuously since December 31, 1950. It doesn’t matter if you think your group fits the description. It must be approved by the Social Security Administration. Generally, only the Amish and very conservative Mennonite groups will qualify for this specific form. I’m part of a Mennonite church and I don’t think we’d even qualify (unless the SSA knows little about the differences among Mennonites).
  2.  

  3. You’re giving up all rights to any benefits you’d be entitled to under Social Security or Medicare. So you better be ready to replace its purpose in terms of life insurance, retirement income, disability insurance, and medical insurance. While that’s no small task, my rough calculations show you’d probably be better off doing those things yourself if you’re young and make more than $30,000/year.
  4.  

  5. This exemption only applies to your self-employment earnings and earnings from employers who also qualify for this exemption. Qualifying employers will be limited to individuals, partnerships, some LLCs, and religious organizations. If you work for a corporation (C or S), this won’t do you much good. Unless, of course, you’re paid as an independent contractor and issued a Form 1099-MISC, in which case you’d be filing Schedule C and be subject to self-employment taxes.
  6.  

  7. As soon as you are no longer eligible, this exemption ends. So if you leave your religious group or if the SSA determines your group no longer qualifies, you’re back to square one. However, you can become eligible for Social Security and Medicare benefits once the exemption no longer applies.

       Basically, not many people will qualify and the exemption is fairly limited (in terms of compensation affected). However, there is another form that serves a similar purpose, but it is even more limited than this one.

IRS Form 4361

       IRS Form 4361 is an application for exemption from self-employment taxes for ministers, members of religious orders, and christian science practitioners. Again, there are quite a few limitations:

  1. You must be an ordained, commissioned, or licensed minister for a church, a christian science practitioner, or a member of a religious order who has not taken a vow of poverty (like people who work for a monastery or convent but are not monks or nuns). That’s a narrow list.
  2.  

  3. You have to be conscientiously opposed or have religious beliefs that are opposed to receiving benefits from public insurance based on the performance of your duties as a minister, christian science practitioner, or member of a religious order.
  4.  

  5. This exemption only applies to your earnings in that role. If you have another job, you’ll still have to pay Social Security and Medicare taxes on those earnings and you’ll be eligible for benefits based on those earnings.

       Again, this exemption is very limited in terms of who qualifies and in its scope.

The Rest of Us Will Just Have to Deal with It

       There are no other ways to remain a U.S. Citizen and not pay Social Security and Medicare taxes unless you’re willing to move out of the country. But the real question is whether Social Security will actually run out of benefits by the time today’s young people retire. Everyone bases the idea that Social Security won’t be around on the intermediate projection in the 2008 Trustees Report. But you need to realize three things:

  1. These are projections based on assumptions. There are no guarantees. People are estimating what they think will happen and running scenarios based on numerous variables. There is much room for error in these calculations.
  2.  

  3. Even under these projects, Social Security can still pay 75-78% of scheduled benefits. That’s not great news, but it’s not the end of Social Security either.
  4.  

  5. The “fixes” needed are relatively simple and not very drastic either. An increase in the Social Security tax, delay in retirement age, reduction in benefits, or a combination of all three could easily change the projections. In fact, a combination of all three solutions would probably be quite beneficial and have only a slight impact on individual situations.

       With that said, I’m still not a huge proponent of the system and I’d gladly save on my own if I had the option. But Social Security was put into place partly because people don’t save on their own. If the current state of personal finances in America is any indication, we’d likely have millions of poverty-stricken elderly due to a lack of financial discipline.

       Maybe you don’t have all your tax documents yet, or maybe you just forgot – but if you can’t file your taxes on time there’s a simple solution. All you need to do is file for an automatic extension of your tax return.

Form 4868

       IRS Form 4868 will let you apply for an automatic 6 month extension on the due date of your tax return. You must file this form by April 15, and you can file it electronically or by paper. There’s also an option to pay by credit card or debit card over the phone or online but a convenience fee will apply. Either way, you’ll still have to pay any taxes you owe by April 15. That means you’ll have to estimate your tax liability. And you’ll want to get it close to right because interest charges will apply to any unpaid portion. If you pay at least 90% of your actual tax liability by April 15, you won’t have to worry about late payment penalties.

What if You’re Out of the Country?

       If you’re out of the country on April 15 and you’re a U.S. citizen or resident, you automatically get an extra 2 months to file your tax return without requesting an extension or filing Form 4868. If you still can’t file by June 15, then you’ll want to send in Form 4868 and pay any amount due by June 15.

Make Sure You Don’t Miss the Final Deadline!

       If you get your due date extended by 6 months, make sure you don’t miss the October 15 deadline! There’s a 5% late filing penalty for every month you’re late up to a maximum of 25% of your amount due. If you’re two months late, you’ll be charged at least $135 or the balance due, whichever is smaller. Don’t keep putting off your tax return even if you do get the extension.

How to Garden: Your Options

Corey —  April 9, 2010

       When it comes to gardening, you have several options to choose from. Your choice will depend on how much space you have, how much money you want to spend, and how much time you want to dedicate to gardening.

Containers

container garden on the patio by thomas pix on Flickr       Container gardening is a great choice if you have limited space or limited desire to garden. It doesn’t take much time and you don’t have to worry about weeds. But you still get to enjoy the vegetables of your labor. You can use just about any container you can get your hands on (as long as it won’t leach poisonous chemicals into the soil). It doesn’t even need to be very deep – you can grow quite a bit of stuff in just six inches of soil. (I know. I’ve done it!) You’ll just need a few holes in the bottom for drainage. You can find cheap options for containers by looking creatively around your house, going to yard sales, or stopping by your local thrift store.

       If you decide to go the container route, you’ll need to realize that you won’t be able to produce very much unless you have tons of containers. You’ll also need a source for soil. If you’re going to dig it up out of your yard (or somewhere else), then you’ll probably need to add compost or other soil amendments to get good results. Otherwise, you can just buy potting soil and mix it with compost.

       If you’ve never gardened before, start small with container gardening. This way you can see how much you’ll enjoy gardening before making any big investments.

Raised Beds

Square Foot Garden Bed by mlwhitt on Flickr       Raised beds are just a variant of container gardening. Put a few boards together with screws, cover the ground with landscaping cloth (to reduce weeds), and throw in some soil. Now you’ve got one giant container for your garden. It should be at least six inches deep, and you’ll need somewhere to put it. Full sun is best, but you can grow all sorts of vegetables in partial shade. If you find you need to grow more stuff but don’t want to rip up your yard, you can just build another raised bed. Easy expansion!

       Raised beds require a bit of work the first year, but they’re pretty easy to maintain after that. If you start with a good soil mix, it’ll be easy to pull any weeds that sprout and to harvest your vegetables. A great book for getting started on this is Mel Bartholomew’s All New Square Foot Gardening: Grow More in Less Space!. It’s how I learned about it and I still use some of his techniques despite having gone to a regular old patch of ground.

       Another interesting concept that I haven’t tried yet is column or vertical gardening. I was first introduced to the idea at Journey to Forever’s article on Growing Columns. I haven’t tried it yet, but I hope to! It’d be a great way to get a lot of growing area in very little ground space. Journey to Forever also has lots of information on square foot gardening as well.

Garden Patch

Vegetable Garden by Southern Foodways Alliance on Flickr       This is the typical image that comes to mind when we talk about gardening – a rectangular piece of ground that’s been tilled up and is ready to plant. This option can require the most work and/or money. You don’t have to buy the soil, but you’ll probably need to add something to it and you’ll have to work it. Oh, and you’ll need the space and willingness (or permission) to tear up a patch of your yard!

       Compost is a cheap way to fix soil, but that takes time. A gas-powered tiller makes quick work of most small gardens, but then you’re looking at a large up-front cost or rental fees. There are other methods to work the ground but they’ll break your spirit and back if you’re not ready for them.

       As I mentioned before, we have a typical garden but I don’t use the row method. You know – long rows with three foot wide aisles between each row. Instead, I’ve taken the concepts of square foot gardening and applied them to what looks like a typical garden. There’s less wasted space and less weeds to pull this way.

A Final Word

       I’ll talk more about the specifics of gardening in later posts, so make sure you sign up for free updates to Provident Planning if you’re interested. But if you’re considering starting a garden because you think it’ll save you tons of money you need to proceed with caution. Gardening can save you some money but probably not as much as you think. This is especially true if you don’t have a big freezer and take time to preserve your harvest.

       You should garden because you enjoy it or because you want the convenience of fresh vegetables just outside your door. It is a hobby that can pay for itself. But once you factor in your time you’re not really “saving” a ton of money. Like most other things, if you’re only in it for the money you’ll burn out fast. So if that’s you, start small and see if you like gardening. Then you can go bigger. Just be careful or you’ll find that gardening is costing you money instead of saving it!

       Beginning February 22, 2010, banks and credit card companies had to start complying with the Credit Card Accountability, Responsibility and Disclosure Act (Credit CARD Act). (Who comes up with these names???) Here’s a summary of the new rules.

Interest Rate Increases

       Credit card companies cannot increase your rate for the first 12 months after you open an account. But, as always, there are exceptions:

  • If your card has a variable interest rate tied to an index, your interest rate can go up whenever the index goes up.
  • If your card has an introductory rate, it must be fixed for 6 months. After that, your rate can go to whatever the company disclosed when you got the card.
  • Your rate can go up if you are more than 60 days late paying your bill.
  • Your rate can also go up if you’re in a “workout” agreement (debt management plan) with the credit card company but don’t pay as agreed.

       If your interest rate increases after the first year, the new rate will only apply to new charges you put on your card. Your old interest rate will still apply to any balance you have after that time.

       Also, credit card companies are required to give you 45 days notice before they raise your interest rate, change certain fees, or make other significant changes to the terms of your credit card. They must then give you the option to cancel the card before the increases take effect.

       If you decide to cancel the card, the company may close your account and require you to make higher payments. They can require you to pay off the remaining balance within five years. Or they can double the percentage required to make your minimum payment. Either option will result in a faster repayment of your credit card debt.

       But once again, there are exceptions to the 45 days notice rule. The credit card company doesn’t have to notify you if:

  • you have a variable interest rate tied to an index and the index goes up.
  • your introductory rate expires and increases to the rate described when you opened the card.
  • your rate increases because you fail to make the payments agreed to in your “workout” agreement.

Changes to Your Statement

       Credit card companies must now begin including information on how long it will take to pay off your credit card with every billing statement. I’ve already seen this change on my credit card statements, and I think it’s a good thing. I don’t know if people will actually read it, but at least the information is there for them to see. Companies must tell you how long it will take to pay off your card if you only make the minimum payment and how much your payment should be to pay it off within 36 months. Here’s an example of what this information will look like:

Credit CARD Act Billing Statement

Over-limit Transactions

       The new rules require you to opt-in to over-the-limit transactions if your credit card company wants to charge you an over-limit fee. If your credit card company lets a transaction go through that puts you over the limit, they can’t charge you an over-limit fee unless you opted in.

       Even if you do opt-in to over-limit transactions, the credit card company can only charge you one over-limit fee per billing cycle. You can always opt-out at any time.

Caps on Fees

       If your credit card company requires you to pay fees for the “privilege” of using their card, those fees cannot total more than 25% of the initial credit limit. So if you start out with a credit limit of $2,500, the company cannot charge you more than $625 in fees for the first year. Penalty and late payment fees do not count toward this limit.

       Personally, I don’t think this is going to change much of anything. If credit card companies want to charge you a high fee, all they have to do under this rule is give you a larger initial limit.

New Rules if You’re Under 21

       If you’re under 21, you’ll have to show that you can make the payments yourself (whatever that means…) or have a cosigner before you can open a credit card. Additionally, if you have a cosigner and want to increase the limit on your card, the cosigner must agree to the limit increase in writing.

       There are also some rules on where credit card companies can market their cards (around college campuses) and what incentives they can offer to students. Again, credit card companies will find ways around these rules so they’re useless in my opinion. (except for the credit limit increase…that might be good)

Payment Due Dates and Times

       Credit card companies must deliver your billing statement at least 21 days before your payment is due. Additionally, your payment due date must always be the same date each month. (For example, always on the 15th of the month or always on the last day of the month.) The payment cutoff time cannot be any earlier than 5 PM on the due date. And if your due date falls on a holiday or weekend, you have until the next business day to make your payment.

How Your Payments Are Applied

       If you ever pay more than the minimum payment, your credit card company must apply the extra toward your balances with the highest interest rate first. However, if you bought something under a “deferred interest plan” (you know, “no interest until…”), then there’s an exception. First, you may choose to apply your extra payments to the no interest balance first. Second, if you’re within two months of the end of your no interest period, then your credit card company must apply your entire payment to the no interest balance. This is to keep you from getting socked with hidden interest fees if you don’t pay it off by the end of the promotional period.

No Two-cycle Billing

       Credit card companies can only charge interest on balances in your current billing cycle. Two-cycle billing was a nasty trick that should have been outlawed as soon as it came out – but no one made you agree to it either. Doesn’t matter any more though since companies can’t use that billing method anymore.

Questions?

       That covers the basics of the Credit CARD Act. If you have any questions, let me know in the comments!