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Latest News About Personal Finance

Losses To Romance Scams Reached a Record $304 Million in 2020

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The current COVID-19 pandemic and the subsequent stay-at-home and social distancing directives might have played a major role in romance scams losses reaching record levels in 2020, the US Federal Trade Commission said in a report last week. ZDNet reports:

Total losses were estimated at a record $304 million, up about 50% from 2019, with the average loss last year being estimated at $2,500 per individual.

“From 2016 to 2020, reported total dollar losses increased more than fourfold, and the number of reports nearly tripled,” the agency said.

The FTC believes that the 50% spike in extra losses recorded in 2020 can be attributed to the COVID-19 pandemic, which has limited people’s ability to meet in person and has forced more users towards using online long-distance and impersonal communications, such as dating apps.

In most cases, the ruse of these scams is that the targets of a romance scam have to send money back to the crooks.

Virtual Property Sells for $1.5M in Ether, Smashing NFT Record

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A piece of virtual land on blockchain marketplace and gaming platform Axie Infinity has just sold for a record-breaking sum in cryptocurrency. Coindesk reports:

At around 23:00 UTC on Monday, one of the platform’s newest community members, “Flying Falcon,” purchased the digital estate of nine adjacent Genesis blocks for 888.25 ether, roughly $1.5 million at the time.

The transaction marks the largest non-fungible token (NFT) transaction of all time, as tracked on-chain by crypto collectibles data site NonFungible. Formerly, the “Formula 1 Grand Prix de Monaco 2020 1A” NFT from F1 Delta Time held the record at $224,111 in ETH, the site told CoinDesk.

“As Genesis land plots are the rarest and best-positioned plots in Axie Infinity they were a natural fit for my thesis,” Flying Falcon told CoinDesk via email. “What we’re witnessing is a historic moment; the rise of digital nations with their own system of clearly delineated, irrevocable property rights.”

While the “epic 9” plot is by far the NFT sector’s largest sale to date, there are roughly three other plots going for much higher: from 100 to 10,000 ETH.

Making More Money Really Does Make People Happier, Study Says

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The old saying goes “money can’t buy happiness,” but a new study finds that’s not exactly true. Although previous studies find there’s a limit to how much a person’s income impacts their happiness, a researcher from the University of Pennsylvania says the sky’s the limit when it comes to money’s influence over well-being. Study Finds reports:

Killingsworth’s study examined nearly two million data points from over 33,000 people; each providing a moment-to-moment snapshot of their daily lives. Other studies on income and happiness concluded that money stops mattering at around $75,000. The results of the new study, however, reveal that rising income continues to affect the earner’s well-being even into the hundreds of thousands of dollars…

After calculating the well-being of each person in the study, Killingsworth compared the results to each participant’s income. According to a 2010 paper, experienced well-being plateaus when someone hits $75,000 in annual salary. The new results find that number may have to change.

“It’s a compelling possibility, the idea that money stops mattering above that point, at least for how people actually feel moment to moment,” the researcher says. “But when I looked across a wide range of income levels, I found that all forms of well-being continued to rise with income. I don’t see any sort of kink in the curve, an inflection point where money stops mattering. Instead, it keeps increasing.”

The Best States for Entrepreneurs in 2021

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Despite the events of the past year, 2021 is an ideal time to start a business, as the pandemic has caused people to flock to the online sphere. A study by The Pew Research Center reveals that 53% of Americans find the internet to be essential for them during the pandemic, while 34% find it “important, but not essential.” This statistic is proof that now is the time to build a company, as the increased internet traffic makes it easier to promote and advertise one’s goods or services.

Though current events make it a good idea to start a business venture, beginning entrepreneurs still need to put a lot of thought into how they want to build up their company. One of the most important things to consider, for instance, is where you’ll be basing your business. If you need some guidance in that department, read on, because we’ll be listing five of the best states to open a business in 2021.

California

Though California is notorious for having among the highest taxes in the country, it’s still a great place to start a company, be it a corporation or an LLC. For one, it’s filled with college towns where you’ll find plenty of talented people to hire. Plus, it’s a place where almost every type of business has an existing market, from restaurant businesses to entertainment companies. If you’re looking to start a technology business, then Silicon Valley is the place to be. There are tons of companies to learn from and experts to build a network with.

Texas

Texas has the country’s second-largest economy (next to California) and is the fourth highest in terms of the increase in small businesses, making it startup-friendly. The state also borders Mexico, giving business owners the option to hire bilingual staff. Finally, office rental fees and energy bills are considerably cheaper here than in the rest of the country, so fledgling businesses will have more resources to devote to growth.

Delaware

Delaware is an ideal state to open a business, given that it has no sales taxes. This applies whether the company is physically based in Delaware or outside. Plus, there are no corporate income taxes on goods or services. But what sets this state apart from the rest is its Chancery Court, a court dedicated to business entity cases. This makes it easier to enlist legal help and speeds up business-related court proceedings.

Florida

Next is Florida — a state that continually ranks among the most entrepreneur-friendly states in the country. And there’s a good reason for this. Entrepreneurs looking to start an LLC in the Florida have plenty to look forward to, such as a large and diverse pool of talent, excellent state infrastructure, and a rebounding economy. Key to the success of many Florida-based entrepreneurs is the business-friendly tax climate, too, as personal income is not taxed on the state level. This is especially beneficial for small entrepreneurs running LLCs or sole proprietorships. To add to that, Florida draws thousands of tourists yearly, providing more opportunities for you to make sales.

Nevada

Lastly, there’s Nevada, one of the most tax-friendly states in the country. It has no business income tax, franchise tax, gift tax, or personal income tax. This is because most of Nevada’s tax revenue comes from the casino and hospitality industries. This gives business owners the opportunity to devote most of their income to growing their company.

Those were five of the best states to start a business in 2021. Each one is beneficial to entrepreneurs in different ways, so make sure to do more research before making your decision. If you want to learn more, check out our List of the Most Tax-Friendly States article. It’ll give you an idea of how much your company will earn should you decide to start a business in a particular state.

Lost Passwords Lock Millionaires Out of Their Bitcoin Fortunes

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Stefan Thomas, a German-born programmer living in San Francisco, has two guesses left to figure out a password that is worth, as of this week, about $220 million. The New York Times reports:

The password will let him unlock a small hard drive, known as an IronKey, which contains the private keys to a digital wallet that holds 7,002 Bitcoin. While the price of Bitcoin dropped sharply on Monday, it is still up more than 50 percent from just a month ago when it passed its previous all-time high around $20,000.

The problem is that Mr. Thomas years ago lost the paper where he wrote down the password for his IronKey, which gives users 10 guesses before it seizes up and encrypts its contents forever. He has since tried eight of his most commonly used password formulations — to no avail.

“I would just lay in bed and think about it,” Mr. Thomas said. “Then I would go to the computer with some new strategy, and it wouldn’t work, and I would be desperate again.”

Bitcoin, which has been on an extraordinary and volatile eight-month run, has made a lot of its holders very rich in a short period of time, even as the coronavirus pandemic has ravaged the world economy.

But the cryptocurrency’s unusual nature has also meant that there are many people who are locked out of their Bitcoin fortunes as a result of lost or forgotten keys. They have been forced to watch, helpless, as the price has risen and fallen dramatically, unable to cash in on their digital wealth.

Of the existing 18.5 million Bitcoin, around 20 percent — currently worth around $140 billion — appear to be in lost or otherwise stranded wallets, according to the cryptocurrency data firm Chainalysis. Wallet Recovery Services, a business that helps find lost digital keys, said it has gotten 70 requests a day from people who want help recovering their riches, three times the number of a month ago.

Bitcoin owners who are locked out of their wallets speak of endless days and nights of frustration as they have tried to access their fortunes. Many have owned the coins since Bitcoin’s early days a decade ago, when no one had confidence that the tokens would be worth anything.

Bitcoin Worth $34,000, But Here’s Why Warren Buffett Will Never Own It

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Bitcoin soared to $34,000 yesterday—but here’s why Warren Buffett will never own Bitcoin. Zack Friedman writes on Forbes:

Buffett has called Bitcoin, among other names, “rat poison squared” and has said he won’t ever buy the cryptocurrency. “I don’t have any cryptocurrency and I never will,” Buffett told CNBC in February, when Bitcoin was trading at about $10,000. Here are 3 reasons why Buffett will never own Bitcoin, no matter how high the price of Bitcoin soars:

Buffett believes that Bitcoin has no underlying value. As a value investor, Buffett invests in companies that are undervalued, produce stable and recurring cash flow and have the ability to increase in book value. To Buffett, Bitcoin doesn’t produce earnings or dividends. Rather, the value of Bitcoin is simply what one person is willing to pay for it. In this regard, Bitcoin is no different than the tulip craze of 1637. Therefore, Buffett believes that Bitcoin has no inherent value…

While all investing involves some degree of speculation, Buffett’s background is in insurance and risk mitigation. Buffett doesn’t invest in “high fliers” — that’s not his game. His game is “buy and hold” — forever. He invests in companies that grow over time, steadily and consistently.

DIY Tax Software Is Ready to Take Over the Tax Season

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DIY tax software is a type of fintech that is enjoying its growing popularity right now. It’s true that the crisis of 2020 has brought down many industries. But some used the global change in circumstances as an opportunity to shine. The popularity of fintech, in particular, has grown at an unprecedented pace of +72%. Tax software is getting its chance to become a mass-use product right now as the new tax season arrives. The solutions that were mostly used by businesses are now accessible to everyone and are designed to handle personal taxes quite well. This type of software varies greatly by country and by its main purpose. It’s also growing more sophisticated with each new update.

Leading DIY Tax Software in the World: What Can It Do?

TurboTax (the USA)

TurboTax from the USA is developed by Intuit, one of the leading software providers today. It’s not the cheapest solution, but it’s definitely the most sophisticated one on the market. The cost is higher because the software offers a wide range of features that make it applicable to a variety of taxing scenarios. In fact, while it’s primarily American tax software, it has versions for a variety of other countries and expats. There is a free version, so everyone can try it out and see if it works for you personally.

TurboTax is easy to use despite the fact that it can complete complex calculations. The program itself will guide you to areas you need to focus on. The solution can integrate your W-2  form, no matter how many you have of those as well as 1099s.

Those who are self-employed or are using the Deluxe service package will be able to use a most helpful ItsDeductible feature. There is even a mobile app for your convenience. Note that if you are self-employed and use QuickBooks, you can connect it with TurboTax for expense tracking.

The solution offers a good customer support system as well, including TurboTax Live.

However, remember that no matter how sophisticated this solution is, it can only be used for rather straightforward tax reports. This is the same for all DIY tax software. People with very complicated taxes, for example if you have income from ventures abroad, should hire a personal accountant.

[Read more…]

Cable Companies Can No Longer ‘Rent’ You The Router You Already Own

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Is your internet service provider charging you every month for the cable modem or router that you purchased with your own money? Or, perhaps, have you never bothered to buy those items because you couldn’t escape the fee? That fee is illegal as of yesterday. The Verge reports:

Last year, Congress passed a law that should have fixed this ridiculous loophole as of June 20th, 2020 — and though the FCC managed to extend the deadline six months by spinning up some bullshit about how cable companies didn’t have the resources to stop charging you money, the law should take full effect Monday.

Do note that the actual text of the law still allows some BS to occur. If your ISP sends you a router, you’ll need to return it to avoid charges.

Frontier in particular has been notorious for charging customers $10 a month for their equipment “whether you use it or not” — the company’s words, not mine — but Frontier is clearly aware it won’t be able to do that anymore. Starting this month, the company’s equipment page has changed to remove the part where it talks about the mandatory fee.

First COVID-19 Vaccine Receives Emergency Approval in U.S.

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The Food and Drug Administration authorized BioNTech and Pfizer Inc.’s COVID-19 vaccine Friday evening, which will make it the first vaccine to reach Americans during the coronavirus pandemic. MarketWatch reports:

“The FDA’s authorization for emergency use of the first COVID-19 vaccine is a significant milestone in battling this devastating pandemic that has affected so many families in the United States and around the world,” FDA Commissioner Dr. Stephen Hahn said in a statement. “Today’s action follows an open and transparent review process that included input from independent scientific and public health experts and a thorough evaluation by the agency’s career scientists to ensure this vaccine met FDA’s rigorous, scientific standards for safety, effectiveness, and manufacturing quality needd to support emergency use authorization.”  

The vaccine — which was developed by Germany’s BioNTech, and is being commercialized by American pharmaceutical giant Pfizer — is the first COVID-19 vaccine to receive emergency use authorization in the U.S. and the first mRNA product to ever receive any type of regulatory approval. 

Since the first efficacy data was shared publicly, anticipation for the highly efficacious vaccine has largely sent up markets, which view vaccination as the beginning of the end of the COVID-19 crisis. Federal health officials have said the administration of the vaccine could begin within days of authorization.

Missing Credit Card Payments May Be an Early Sign of Dementia

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Patterns of missing credit card and loan payments could be an early indicator of dementia years before diagnosis, a new study says. CNN Health reports:

The study, published Monday in the medical journal JAMA, looked at Medicare patients living alone across the United States and analyzed their credit data and payments over time.

Researchers found that patients with Alzheimer’s disease and related dementia were more likely to miss payments up to six years before getting diagnosed, the study said. And, those poor financial actions led them to subprime credit scores two and a half years before diagnosis, as opposed to the patients without dementia.

“I think we were a little surprised that it was so common that we could really see it in the data,” lead author Lauren Hersch Nicholas told CNN. “Doctors colloquially say that you should look for dementia in the checkbook, but I don’t think we had any sense of for how many years in advance these effects could be happening.”

Nicholas is an associate professor at Johns Hopkins University. Researchers from Johns Hopkins and the Federal Reserve Board of Governors led the study.

Alzheimer’s dementia affects about 5.8 million Americans who are 65 and older, according to the Alzheimer’s Association. The number of Americans with the disease is projected to hit 13.8 million by 2050, the non-profit said.

Nearly Two-Thirds of Americans Are Living Paycheck to Paycheck During COVID Pandemic

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Money is not something anyone wants to worry about during the holidays. In a year still ravaged by the coronavirus pandemic and its economic fallout however, it appears many will be struggling through the most festive part of 2020. A survey finds over 60 percent of Americans say they’re now living paycheck-to-paycheck as the year draws to a close. Study Finds reports:

The poll of over 2,000 Americans, commissioned by Highland Solutions, wanted to see how spending habits and personal finances in the U.S. are holding up during the pandemic. Their results find 63 percent of respondents have cut back on their spending due to COVID. Six in 10 say they’re doing it to be more cautious, but 49 percent add it’s because of losing income at work.

Between making more frugal choices and statewide shutdowns across America, a majority of respondents say the normal “night out” is taking the biggest hit. Sixty-four percent are cutting down on dining out or ordering takeout. Another 61 percent add they’re seeing fewer movies, 55 percent are buying less clothing, and 52 percent are traveling less.

Reddit Has Become The Gospel of Personal Finance

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If you look beyond the memes, cat videos, and quirky acronyms (TIL, OP, ELI5) you’ll find a treasure trove of resources that will help you quickly get acquainted with the topics that have long eluded you. For me, even though I worked on Wall Street for nearly 15 years, Reddit is the first place I turn when I have a question about money. Khe Hy writes on Quartz:

To me, here’s what makes good financial advice: objectivity, accuracy, and relatability. With an alien mascot named Snoo, an impossibly sprawling site structure, and user anonymity, Reddit may seem like an unlikely place for the serious business of money. But in fact, it has each of these qualities in spades. 

According to Amazon’s Alexa, Reddit is the sixth most popular site in the US; the site reported 430 million active users at the end of 2019. Reddit is organized into niche communities (known as subreddits that begin with “r/”) with their own guidelines, norms, and moderators covering both mainstream (r/kpop) and obscure (r/namenerds for new parents seeking inspiration) topics. Because users self-select to be active in these communities, Redditors are known to be passionate and have been described as “offbeat, quirky, and anti-establishment.” All these qualities make it a great place for conversations about money. Consider the subreddit Frugal Living (r/Frugal), which shows what allows Reddit to offer better financial advice than many of those other sites: the Redditor community. Frugal Living’s mission statement is to “understand the resources that we have, and [how to spend] them wisely and deliberately” and this subreddit contains actionable tips on eking out that last bit of toothpaste, warnings that Amazon Day is pure marketing, and why you shouldn’t pay for scientific journals. These posts offer encouragement, collaboration, and a relatability that’s hard to find in the traditional financial press, no matter your financial situation. […] One final word of warning: no matter whether financial advice comes from the front page of the internet or the front page of the Wall Street Journal, it’s incumbent upon the buyer to scrutinize the details, lead with skepticism, and, when appropriate, consult with professionals.

Some of the communities that might help you with personal finance on Reddit include: Personal Finance, Frugal Living, Investing, Financial Independence / Retire Early, and Stocks.

Are We Trading Our Happiness for Modern Comforts?

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As society gets richer, people chase the wrong things. One of the greatest paradoxes in American life is that while, on average, existence has gotten more comfortable over time, happiness has fallen. The Atlantic reports:

According to the United States Census Bureau, average household income in the U.S., adjusted for inflation, was higher in 2019 than has ever been recorded for every income quintile. And although income inequality has risen, this has not been mirrored by inequality in the consumption of goods and services. For example, from 2008 to 2019, households in the lowest income quintile increased spending on eating out by an average of about 22 percent after correcting for inflation; the top quintile increased spending on eating out by an average of just under 8 percent. Meanwhile, domestic government services have increased significantly: For example, federal spending on education, training, employment, and social services increased from 2000 to 2019 by about 30 percent in inflation-adjusted terms.

New American homes in 2016 were 1,000 square feet larger than in 1973 and living space per person, on average, has nearly doubled. The number of Americans who use the internet increased from 52 to 90 percent from 2000 to 2019. The percentage who use social media grew from 5 to 72 percent from 2005 to 2019.

But amid these advances in quality of life across the income scale, average happiness is decreasing in the U.S. The General Social Survey, which has been measuring social trends among Americans every one or two years since 1972, shows a long-term, gradual decline in happiness—and rise in unhappiness—from 1988 to the present.

More Than 1 Million New Yorkers Can’t Afford Food

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The lines are long and the need is enormous. More than 1 million New Yorkers can’t afford food, and standing on long lines at food banks is now too common amid the pandemic. Pandemic worsens NYC’s food crisis. Fox 5 NY reports:

An estimated 1.5 million New Yorkers cannot afford food, according to the New York Times. Their only lifeline is a food pantry.

“I’m on a limited income. I visit every two to three weeks,” said Denise Allen, a mother of one.

Rapaport said there is so much need. So much so that for the last three days, Rapaport, his staff, and volunteers have been operating around the clock. All three locations are now open 24/7, feeding 1,500 families a day, but it is still not enough, he said.

Pandemic or Not, Some Assets and Services Grow Ever Hotter

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There is no doubt that the coronavirus pandemic will change the world. In fact, it already has changed the world, and it will keep going. Many of the reports and forecasts you can see today show devastating losses in some industries. Forecasts from economists and other experts predict a grim future drawing parallels with the Great Depression. Seeing how many businesses are failing because of lockdowns, a tragedy seems inevitable.

However, while this all is happening, some industries are growing and values of some assets are going up. It’s true that many companies are failing, but there are also those that report record increases in revenue. The stock market has all but recovered, largely due to the rapid gain by tech giants.

It’s true that there is a lot of uncertainty still. It’s also a fact that the global economy is going into a dangerous recession. However, while stressful the situation is not necessarily tragic. Changes will continue to spread as investors are reallocating their funds. Businesses will close and others will open. The change in consumer behavior will stick and we can expect to see even more overall digitalization.

But the real question is whether the powers that are going strong will be enough to hold the global economy back from total collapse?

Some Industries Are Doing Very Well Despite the Pandemic

Looking back at previous economic recessions, one thing remains quite stable. As the economy crashes, so do house prices. However, while the COVID-19 crisis is definitely one of the worst, its effect on real estate is different. Home prices continue to rise. In some countries, for example, Germany and South Korea, the housing market is growing so fast that local governments have to implement buyer restrictions. Even in America, which is admittedly struggling during this crisis, real estate value keeps increasing.

For the real estate market, the main reasons for growth are policies and a big change in buyers’ preferences. Lenders have to lower interest rates in response to the crisis. Governments in richer countries also launched policies that offer some leniency, like banning foreclosures for the duration of the pandemic. People also became more interested in purchasing bigger homes with gardens in suburban areas. The latter is, no doubt, in response to many companies accepting remote work as the new norm.

Residential real estate isn’t the only sector that’s doing well. Technology giants and startups alike are enjoying robust growth in this otherwise difficult time. As so many aspects of our everyday lives are getting transferred online, businesses that facilitate this transition are getting an unprecedented boost in interest.

Investors definitely caught on to that. Therefore, they started putting their money into tech companies and other industries that are fueled by the pandemic. Healthcare is definitely at the top there.

Even retail trade isn’t doing too badly. It’s true that the overall consumption level has gone down. This is an expected trend for an economic recession. However, online sales are growing super-fast. Therefore, online retailers, and the ones that were quick to change, are getting bigger revenues despite the pandemic. [Read more…]