Andy Hough

October Expenses – $2198.16

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Here is a breakdown of my expenses for October.

Household

$124.84
Entertainment

$48.77

Transportation

 $503.68

Food

$96.81
Van Payment $1275
Debt $5.00
Phone

$26.81
Health

$117.25

Total

 $2198.16

My expenses were up a bit in October.  A big chunk of the increase was from paying off my van.  I won’t have a van payment this month which should result in much lower overall expenses.  If I do end up buying a new car then that could change.

My other big expenses was transportation. I spent just over $500 on gas in October, which is about what  I thought I’d spend after I took the law job.  I’m hoping to reduce that expense this month.  If I buy a more fuel-efficient vehicle that will help.  If not the lower gas prices should help a little.

All of my other expenses should be about the same.  My entertainment expense will probably go up a little.  My food expense might go down a little.  It is already pretty low but since I’m staying at my mom’s and have been doing a few fast-food mystery shops it could be even lower.

I’d like to shoot for my expenses being under $1000, not counting any vehicle purchase expenses.  At that level of spending I should be able to save a fair bit of money.

 

 

The Importance of an Emergency Fund Giveaway

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A frequent piece of advice from personal finance bloggers is to establish an emergency fund. If you have an emergency fund it keeps you from going into debt due to small emergencies and helps stabilize your finances. I don’t keep a separate emergency fund myself. I just try to keep enough in savings that I can pay for small emergencies. This works as long as you don’t continually rob your savings for emergencies. Knowing that I have money in the bank to pay for small emergencies lowers my stress. Having a small emergency, such as an unanticipated car repair, is a minor annoyance rather than a major disaster.

To help you start your own emergency fund I am participating in a giveaway with other bloggers to give away $100 in PayPal cash. Click on the widget below to see all the ways you can enter.

a Rafflecopter giveaway

If you would like to be a part of the next giveaway go to Snowflake Giveaway Project to get the details.

Is MoviePass a Good Deal?

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MoviePass is a new service that aims to be the Netflix for going to the movies. You pay $29.99 a month and you can see up to one movie a day. The pass is only good for 2d movies. It doesn’t work at all movie theaters, but I checked the theaters in Kansas City and it seemed MoviePass would work at most of them. This could be a good deal if you watch a lot of movies in the theater.

Even though I watch more movies than the average person, it wouldn’t be a good deal for me. I usually watch about 4 movies in the theater a month. Admission is only $5 at the theater I usually attend which makes my monthly spend only $20 compared to the MoviePass $29.99. The other major drawback is that you have to buy an annual subscription. If something changes during the year and you are no longer able to attend movies frequently then your remaining subscription is basically money down the drain. Another thing to consider is that if I am going to the movies more often then I’ll be tempted to buy concessions more often, leading to more money being spent.

This could be a good deal for a movie fanatic, but for now I think one movie a week in the theater is plenty. If I want to watch more movies I’ll just stay home and watch them on Netflix.

Taxes Paid by the 47%

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You have probably heard the statistic that 47% of households paid no federal income tax last year.  Sometime this statistic is disingenuously stated as 47% of households paid no tax.   There are probably very few, if any, households that pay no tax, since in addition to the federal income tax, there are payroll taxes. state and city income taxes, property taxes, sales taxes and more taxes.

Roughly two-thirds of the households that didn’t pay federal income tax did pay payroll taxes.  Of the remaining third that didn’t pay payroll taxes over half are elderly.  Only about 5% of those who paid no federal income tax are non-elderly with income over $20,000.  From these statistics it is fair to conclude that if you didn’t pay any federal income tax you were likely either elderly or had a very small income.

It is estimated that about 80% of households owe federal income tax before taking special tax breaks.   That leaves about 27% that paid no federal income tax due to taking tax breaks.  Although those with a lower income are able to use tax breaks to eliminate their federal tax liability those with higher incomes benefit even more from tax breaks.  “Tax breaks like the mortgage interest deduction, state and local tax deductions, deduction for charitable contributions and exclusion of contributions to pensions, 401(k) plans and employer-sponsored health insurance are much, much bigger and disproportionately flow to those with higher incomes. ”  Tax breaks are worth about 7-8% of income for low and middle income households.  For households in the top 20% tax breaks are worth about 11% of income.

Eliminating all these tax breaks would mean that a lot of the 47% would pay federal income tax.  It would also mean that most of the 53% would pay more federal income taxes.  That is probably not the result that those who complain about the 47% want.

I don’t think it is bad policy for the old and/or poor to not have to pay federal income tax.  The elderly have presumably already paid their fair share of taxes. Both Republican and Democrat Presidents have passed or expanded measures such as the EITC to help keep the poor off the tax rolls.  Only a small minority of those who don’t pay federal income taxes are the “welfare queen” type.

If you’re still concerned about such a large percentage of households having no federal income tax liability, there is good news.  It is estimated that only about 40% of households will have no federal tax liability for the 2012 tax year.

Van Paid Off

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van I went ahead and paid off my van today.  Paying it off left me with very little money in my checking account.  That won’t last long though because I have a paycheck to pick up tomorrow and another one to pick up next Monday.  My part-time job and full-time job pay on different weeks so I will have a check every week.

After paying off the van I spent the day putting the seats and TV/VCR unit back in the van.  This shouldn’t have been too big a job but it ended up taking me several hours.  After I installed the bucket seats I realized they were in the wrong spots and needed to be switch.  Luckily, these seats have a quick release lever on them and I was able to switch them in just a few minutes.

The big time waste was looking for an attachment for the seat belt shoulder harness.  I spent about an hour looking through the storage shed for them.  I finally gave up and decided to see if I could still make the seat belts work without the attachment. I then realized that I had never actually removed the attachments.  It just looked like one of the attachments was gone because it was missing its plastic cover. I then remembered that the plastic cover was missing when I bought the van.  I wish I would  have remembered that an hour earlier.

Now I need to look for a car.  The car search process will have to be done during my lunch and after work which could make it take a while.  Having my van paid off should make the process easier.  I can either trade it towards a vehicle or sell it separately, depending on which works best.  I’m hoping I can find a car for about the price of my van because I don’t want to go back into debt.  If I do have to spend a little more money I will.  If I were to replace my van with a car getting 30 MPG I would save about $180 a month on gas based on a gas price of $3.25 a gallon. *  Part of that savings could go towards a loan payment for a short time.

*Gas is currently $3.41 a gallon where I live, $3.29 a gallon in KC, and just $3.07 a gallon in Harrisonville, MO.  I fill up my tank in Harrisonville on my way to KC and on my way back south.  I’m not sure why their gas is so much cheaper than everywhere else but I like that it is saving me money.