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Latest News About Personal Finance

What are the HSA contribution limits?

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The IRS has announced the new 2017 contribution limits for health saving account. Each year the IRS provided the inflation-adjusted HSA contribution limits, along with minimum deductible and maximum out-of-pocket expenses for the high-deductible health plans. The health savings account annual limit for individuals rises by $50.  Aside from this $50 increase, other limits for HSA remain the same.

For calendar year 2017, the annual limitation on deductions for an individual under a high deductible health plan is $3,400. The annual limitation on deductions for a family is $6,750. The additional catch-up contribution for 55 years old or older is still $1,000.

HSA Guidelines for 2017

HSA Contribution Limit HDHP Minimum Deductible
Single $3,400 $1,300
Family $6,750 $2,600

[Read more…]

Cops Show Up at Bank of America to Seize Assets After BoA Forecloses on Wrong House

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After Bank of America forecloses on wrong house, homeowner, lawyer, moving crew, and police officers arrive at bank to seize assets and settle debt. This is a sweet justice for a family that endures the foreclosure nightmare.

Homeowners Warren and Maureen Nyerges paid cash for a home owned by Bank of American in the Golden Gate Estates. From the start they never had a mortgage, but the bank keeps insisting they still owe them money. Bank of America even tried to foreclose on the Nyerges’ property.

The couple brought their case to a Collier County judge. After a year and a half nightmare fighting against the bank, they won the case but Bank of America refused to pay the couple’s legal fees for trying to foreclose on the wrong house.

What happens next is hard to believe. Police officers escorted the couples and their lawyer to Bank of America so they can foreclose on the bank!

The couples’ attorney Todd Allen explained: “I instructed the deputy to go in and take desks, computers, copiers, filing cabinets, including cash in the drawers.” Several deputies stood outside with moving crews on stand by to seize the bank’s assets.

As for the bank manager, he was visibly shaken. “Having two Sheriff’s deputies sitting across your desk, and a lawyer standing behind them, demanding whatever assets are in the bank can be intimidating. But, so is having your home foreclosed on when it wasn’t right.”

As this story unfolds, this is a good lesson for banking institutions to treat their customers properly and respectfully.

How to Protect Yourself from Ransomware

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Cybercriminals recently released virulent ransomware that infected 100,000 organizations in 150 countries. Ransonware can spread rapidly from targeted computer to other units on the same network by exploiting a networking vulnerability. The ransomware, called WannaCry, encrypts the victim’s computer and changes the desktop background with an extortion message providing instructions on how to pay to decrypt the data on the computer.

The fraudsters often demand the victims to pay in bitcoin. So far they have made more than USD $26,000 from the worst ransomware outbreak ever. After being infected by ransomware, victims would see a message on the lock computer screen that included a “Contact Us” feature to let victims communicate and pay the fraudsters.

Victims of the WannaCry ransomware would see this desktop background with an extortion message demanding a $300 ransom to unlock the encrypted files.

Not only it costs you time and headache when infected, it also costs you money directly and indirectly. Ransom demanded by fraudsters can be as much as $300 to $600, and there’s no guarantee that you will securely get your data. So how can you protect yourself? [Read more…]

Unemployment Claims at Lowest Level Since 1988

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According to the Department of Labor, the number of Americans drawing unemployment insurance benefits dropped to its lowest level in 28 years in April, 2017. The unemployment rate also fell to 4.4 percent as more people are now finding jobs. That’s a great personal finance news for many families. The Washington Examiner reported:

The end of April saw the fewer workers getting unemployment benefits than anytime in the last 28 years, the Department of Labor reported Thursday in a sign of the labor market’s increasing health.

Just 1.9 million people received unemployment insurance benefits at the end of the month, the fewest since 1988. Benefits are available for up to 26 weeks in most states.

Even more engouraging: Averaging over the past four weeks, total unemployment benefit claims are running at the lowest rate since 1974, despite the workforce being 75 percent bigger.

Thursday’s report also showed new jobless claims dropping to 236,000 in the first week of May, an extremely low level.

Snapchat Founders Just Lost Over $1 Billion

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Snapchat Founders Evan Spiegel and Bobby Murphy lost more than $1 billion each after the company reported earnings for the first time in May, 2017. After the social media company reported first-quarter revenue with fewer users than projected, shares fell as much as 25 percent to a low of $17.12 before recover slightly.

Snap stock was falling to an all-time low of $17.59. Snap launched its initial public offering at $24 per share and jumped as high as $29.44 in the early days of trading. But Snap share hasn’t closed above $24 since early March.

Before the release of Snap Inc’s first-quarter revenue, Evan Spiegel and Bobby Murphy each had more than $5 billion in net worth. After the bad earning report, Spiegel and Murphy lost more than $1 billion each. However, both Spiegel and Murphy still retain their billionaire status with their fortunes drop to $3.8 billion.

As for millennial investors that rushed in to by the company’s shares when the stock debuted in early March, 2017, they are not doing too well and their enthusiasm in Snap Inc is waning. Investing in any IPO is a risky bet. It makes more sense to design a long-term investment plan based on index mutual funds.

How to Get Free Wendy’s Chicken Nuggets for a Year

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In April, a teen named Carter Wilkerson asked Wendy’s how many retweets he would need to get in exchange for a year of free chicken nuggets. The fast-food chain replied that it would take 18 million retweets.

The 16-year-old set out on a wild mission to get free Wendy’s chicken nuggets for a year by asking the internet to help his challenging quest. Carter took a screenshot of the conversation and asked the internet to help him because, as he tweeted, “a man needs his nuggs.” Soon Twitter’s most retweeted tweet was born as his post quickly went viral.

The tweet from Carter Wilkerson for a year of free chicken nuggets from Wendy’s is now the most retweeted post of all time. [Read more…]

Interns at Apple, Facebook and Google Out-Earn the Average American

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The average full-time working American makes $51,350 a year. According to jobs website Glassdoor, interns at Apple, Facebook and Google out-earn the average American. The list of 25 companies who are paying interns more than what the average American is dominated by technology and finance companies.

Facebook interns, the top-earning summer interns in the country, make an average of $8,000 per month. The monthly salary is way ahead of the average $4,300 per month for the average American.

Microsoft interns come in a close second, making an average of $7,100 per month. Apple and Google interns earn $6,400 and $6,000 per month, respectively. In general, people in tech and finance jobs make more than the rest of the country.

Highest paid internships and monthly income

Facebook $8,000
Microsoft $7,100
ExxonMobil $6,507
Salesforce $6,450
Amazon $6,400
Apple $6,400
Bloomberg $6,400
Yelp $6,400
Yahoo $6,080
Vmware $6,080
Google $6,000

 

This Multi-Millionaire CEO Chooses to Live in a Trailer Park

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Multi-millionaire Zappos CEO Tony Hsieh chooses simplicity as he prioritizes spending on experiences over things. Tony Hsieh has a net worth of $840 million so he can afford any mansion that he wants to. Instead the multi-millionaire CEO of Zappos lives in a $950-a-month trailer home.

When asked about his lifestyle in a 240-square-foot Airstream trailer, Hsieh told ABC: “I love it at night here. There’s campfires going. All these lights … sometimes musicians playing music, just jamming together, people cooking. I really like the unpredictability and randomness of it.”

Despite being a nearly billionaire, Tony Hsieh prefers a simple life. He’s happy to downsize and live frugally. “Sometimes people ask me what my definition of success is, and for me it’s getting to the point where you’re truly okay with losing everything you have.”

Interview Questions That Job Seekers Fear Most

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Many people get nervous when it comes to job interviews. But if you get scared during the interview, rest assured you’re really not alone. However, there’re some interview questions that people are more scared than others.

A survey conducted by recruitment website Totaljobs questioned 6,000 people looking for work. There are three questions that job seekers fear most. Here are the most feared questions:

  1. “Why should I hire you?”
  2. “Tell me about yourself”
  3. “What is your biggest weakness?”

Preparation is the key. Here’s how to answer “why should we hire your” in job interviews. With time on your side, you can research and rehearse your answers.

Buffett Says Money Spent on Plumbers Better Than on Hedge Funds

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At the annual meeting of Berkshire Hathaway, Warren Buffett advised about the danger of using hedge-fund managers for investment. According to Buffett, money spent on plumbers or dentists adds more value than on hedge-fund managers. In aggregate, investment professionals aren’t worth their fees. Investors would be better off sticking their money in a low-cost index fund.

“If you go to a dentist, if you hire a plumber, in all the professions, there is value added by the professionals as a group compared to doing it yourself or just randomly picking laymen,” Buffett, 86, said. “In the investment world it isn’t true. The active group, the people that are professionals in aggregate, are not, cannot, do better than the aggregate of the people who just sit tight.”

Vice Chairman Charles Munger, 93, said “it’s even worse than that” because some hedge fund managers with a long career in the industry — known for charging 2 percent management fees and taking 20 percent of profits — do well, attract money and then lose it.

“The investing world is just a morass of wrong incentives, crazy reporting and, I’d say, a fair amount of delusion,” Munger said.

Buffett also challenged, as he has in previous shareholder meetings, the 2-and-20 compensation model for hedge fund managers.

“If you even have a billion dollar fund and get two percent of it, for terrible performance, that’s $20 million,” Buffett said. “In any other field, it would just blow your mind.”

How to Save Money Under the Trump Tax Plan

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President Trump has announced the new tax plan that would replace the existing 7 tax brackets to 3 tax brackets and reduce the business tax rate to 15%. Under the Trump tax plan, we might all want to become corporations to save a lot of money.

With the proposed corporate tax rate of 15%, high income earners can start their own corporations to avoid being taxed at ordinary income tax levels and to benefit from the 15% tax rate from small business pass-through income. That means any individual making more than $37,950 can use the small business pass-through income to realize a 10% – 24.6% tax break!

Neil Irwin explains on The New York Times:

In the future a whole lot of people may just become corporations. That’s because of a huge loophole implied by the broad tax ideas the administration recently released. Unless revised in actual legislation, the plan would give millions of Americans the opportunity to cut their taxes by essentially turning themselves into small business entities…

The opportunity to game the system arises from the huge gap between the tax rate paid on individual income — up to 39.6 percent now, or 35 percent under the Trump plan — and the low rate on business income the president proposes, of 15 percent. He seeks to apply that rate to all businesses, including “pass-through” organizations such as limited liability companies and S corporations, and that is where the opportunity for games arises.

For example, I am currently an employee of The New York Times, paid a salary every two weeks to write articles about economics. My earnings are labor income; I happen to be in the 28 percent tax bracket.

Suppose I instead formed Irwin Scribblings L.L.C., a “company” dedicated to providing economics writing services. Irwin Scribblings could then contract with The Times to provide articles about economics for a rate equivalent to the value of my current salary and benefits.

Under current law, I would pay the same taxes on that business income that I do on personal income. In important ways I would be worse off, as I would need to pay more of my own payroll taxes, wouldn’t have unemployment insurance, and would need to get health insurance through some channel other than my employer.

But under the Trump tax plan, my tax rate would fall to 15 percent from 28 percent, saving thousands of dollars a year — enough to justify those annoyances.

In summary, Trump’s tax proposal would reduce the corporate tax rate from 35 percent to 15 percent. Individuals who own a business can take advantage of the low pass-through tax rate.

Apple to Let iPhone Owners Send Money Digitally to Other iPhone Owners

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Apple plans to launch its own Venmo, a money-transfer service that let users conveniently send money digitally to other iPhone Owners. Could the money-transfer service be called Apple Cash? Recode reported:

The company has recently held discussions with payments industry partners about introducing its own Venmo competitor, according to multiple sources familiar with the talks. The service would allow iPhone owners to send money digitally to other iPhone owners, these people said.

One source familiar with the plans told Recode they expect the company to announce the new service later this year. Another cautioned that an announcement and launch date may not yet be set …

The new Apple product would compete with offerings from big U.S. banks as well as PayPal, its millennial-popular subsidiary Venmo, as well as Square Cash in the increasingly competitive world of digital money-transfers.

These services have typically been money losers for the new entrants in the space, but are seen as the gateway to the next generation of payment and personal finance services that could upend traditional consumer banking relationships. They are used for everything from splitting dinner bills to paying rent.

Apple has also recently held discussions with Visa about creating its own pre-paid cards that would run on the Visa debit network and which would be tied to the new peer-to-peer service, sources told Recode. People would be able to use the Apple cards to spend money sent to them through the new service, without having to wait for it to clear to their bank account.

Net Worth Report for April 2017

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This is the second month that our net worth stays over $1 million. Unlike the previous month, our net worth didn’t fluctuate below the 7-figure mark.

Net worth is the value of all assets, minus the total of all liabilities. As we have no debts, in our case net worth is simply the sum of our cash, retirement accounts, houses, cars and college funds. For the month of April, our net worth came out to be $1,031,243. Here is the breakdown.

Net Worth Report for April 2017: $1,031,243

Most of the increase in net worth this month came from the retirement accounts. As mentioned in March, I intentionally increased my 401(k) contribution to accelerate the saving rate. At the moment the contribution rate is at 30%.

Future Game Plan

I intend to keep around six months’ worth of living expenses in the emergency fund. As long as my cash holding continues building up, I will keep on increasing the contribution rate to retirement accounts up to 50%. [Read more…]

The Most Common Reason People Quit Their $200,000 Tech Jobs

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In Silicon Valley, talented engineers are earning around $200,000 a year, and receive some amounts of equity that can turn into valuable nest eggs later in their careers. Still, for many high-income earners, they are quitting their $200,000 tech jobs and the most common reason is unfair treatment. San Francisco Chronicle reported:

The study, by the Oakland, California-based non-profit Kapor Center for Social Impact and Harris Poll, asked a nationally-representative sample of 2,000 adults who had voluntarily left a tech job in the last three years why they chose to abandon their cushy workplaces. Were they enticed by a better opportunity? Did they decide to take time off to care for children? Did they desire a shorter commute?

The answers the “tech leavers” gave were eyebrow-raising in that they suggest the extent to which feelings of mistreatment drive people to leave even the most elite jobs. They also show the way the same workplace can be a vastly different experience depending on a person’s background.

Overwhelmingly, workers of all backgrounds cited “unfairness or mistreatment” within the work environment as the most common reason for leaving. Thirty-seven percent said it was as “major factor” in their decision to quit. Unfair treatment was cited twice as often as being recruited elsewhere.

How Your Bank Balance Buys Happiness: The Importance of “Cash on Hand” to Life Satisfaction

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Could liquid wealth, or “cash on hand”—the balance of one’s checking and savings accounts—be a better predictor of life satisfaction than income? In a field study using 585 U.K. bank customers, Ruberton, Gladstone, and Lyubomirsky analyzed the relationship between their bank accounts and life satisfaction. Individuals with higher liquid wealth were found to have more positive perceptions of their financial well-being, which, in turn, predicted higher life satisfaction, suggesting that liquid wealth is indirectly associated with life satisfaction. This effect persisted after accounting for multiple controls, including investments, total spending, and indebtedness and demographics.

The paper noted that: “Our results suggest that having a buffer of money available in checking and savings accounts confers a sense of financial security, which in turn is associated with greater life satisfaction. The strength of this association was comparable to the effect of investments—which may themselves be liquid assets (e.g., money market accounts)—and slightly greater than the effect of debt status. By contrast, higher income and spending—the amounts going into or out of a person’s bank account—were not associated with increased financial well-being after liquid wealth was included in the model. This finding suggests that people with low liquid account balances may feel more economically distressed—and thus less satisfied with their lives—than their peers with higher balances, even if their incomes and spending, considered separately from their account balances, would predict high financial security.”

In summary, the researchers find that liquid wealth has a stronger relationship to happiness than those of income, spending, investments, or indebtedness. In other words, the study found that having cash on hand was positively associated with life satisfaction and well-being, regardless of how much the individual has in income or investments.