Money Blue Book

Oh great - well I hope this article doesn’t foretell or signify a trend that’s going to be widely picked up by the gas industry in the coming future. While they’ve been one of the most credit card friendly industries in the past, some gas station chains are apparently starting to scale back their payment options in favor of cash due to diminishing profit margins caused by higher gas prices and rising credit card interchange fees. The credit card interchange fee, a percentage of the total sales price paid to credit card companies by the merchant on every transaction, is usually fixed at somewhere just under 2% - but the dollar amount of the fee rises with the price of the goods or services. As gas prices have risen dramatically, so have the credit card acceptance fees that gas pump merchants pay, drastically cutting into their profitability.

I Always Use My Credit Card To Pay For Gas And Don’t Intend To Change This Payment Practice Anytime Soon

While I understand why some gas station owners and advocates are pushing for the move back to cash payment only for gas purchases, I hope this is not an emerging or widely adopted trend. Paying cash at the pump may work for some, but it’s not going to fly for me.

I take frequent road trips and one of the most appreciated benefits of fueling at the gas pump is the ability to easily slide into a gas station off the freeway, punch in my prepayment, fuel up, and get out quickly. With a gas credit card, I can do that easily. With just a quick swipe and the press of a few buttons on the automated gas pump, my car is instantly refueled without hassle. With cash payment, not only is the practice comparatively more time consuming, but it’s a major inconvenience for those of us who have grown dependent on using our credit cards to pay for everything. I rarely carry more than $50 worth of emergency cash in my wallet and dislike the annoyance of walking around with dollar bills and loose coins jiggling around in my pockets. My efficient credit card usage habit also stems from my view that handling paper money is inherently dirty and unsanitary. I’m by no means a germa-phobe, but I feel that money is one of those heavily transacted items that you never truly know where it’s been before. For all I know, the bills were last taken out and manhandled by some hairy, sweaty dude while he was sitting in a bathroom stall doing his business somewhere. Hey, you never know. With my personal credit cards, at least I know where they’ve been and while I’ve never actually cleaned them before, they are at least washable.

I don’t know what I would do if gas stations suddenly and uniformly stopped accepting credit card payments due to their displeasure at having to pay spiraling credit card interchange fees. While I sort of vaguely sympathize with their declining profit margin plight (not really), as an oil consumer, I’m bound to take my gas business elsewhere to a place that does accept credit cards. The convenience of using my trusty gas rebate credit card to pay for gas and earn cash back rewards at the same time is not something I’m willing to give up anytime soon. I’ve been known to stop at a low priced gas station only to drive off immediately after finding out the place only accepted cash payment.

In the Washington D.C. region, there is a chain of el-cheapo gas stations called Free State that is known for offering greatly discounted gas at prices that’s frequently much lower than that offered by more recognized competitors. However, the biggest downside is that they only accept cash payment. Obviously this is to keep prices low and avoid having to pay merchant fees to credit card companies for each credit card transaction. But for heavy credit card users like myself, this is a complete deal breaker. While I see them everywhere along my driving route, I always avoid Free State gas stations because of their cash only payment policy. I would rather drive across the street to a slightly more expensive gas pump than deal with the inconvenience and hassle of paying by cash. It’s just one of those expected perks in life that I’ve come to insist on and demand. Other local gas station chains sometimes offer discounts for cash payments, but I would still rather pay the slightly higher fuel rate just to have the benefit of paying by plastic. Besides, any potential cash payment discount offered by the pump owner will be unlikely to offset the nice gas credit card rewards that I earn using my usual method of payment. I don’t expect or intend to give that perk up anytime soon as long as they are around.

I Have Also Come To Rely On The Budget Tracking Benefits That Credit Card Usage Affords Me

It’s not just the convenience and speed at which credit card payment at the gas pump affords me, it’s also the record keeping benefits as well. I pay by credit card at gas stations, restaurants, and everywhere else because it affords me convenient and reliable expense tracking. Payment by cash requires me to retain all of my paper receipts to keep track of total monthly spending. Credit card payments on the other hand allow me to permanently record and retain transaction dates and pricing information on my credit card statement to access at a later time of my choosing. I can easily log onto my online account from home to review the frequency of gasoline fill ups and the amount of money spent per visit with a just few key strokes.

Change Might Be A Good Catch Phrase For Politics, But It’s Bad When It Comes To How I Pay For Gas

Knowing the pervasive and established nature of credit card payment at the pump, I think most major gas stations like Exxon Mobil, Shell, BP, and Sunoco are unlikely to go cash only no matter how high gas prices may go, and no matter how badly their financial bottom lines will be hurt by having to pay higher transaction fees. Such brand name gas stations are likely to find other ways to cut costs than deprive consumers of this important convenience. Besides, switching to cash only would probably hurt their revenue stream more detrimentally than any potential cost saving benefits from going all cash due to loss of business volume. They’d lose the patronage of gas guzzling, dinosaur liquid loving, weekend road warriors like myself.

When you think of Ed McMahon, you don’t exactly associate or lump him with big time wasteful spenders like MC Hammer and some of the other well known celebrities of the past who rose to fame and fortune quickly but ultimately frittered away their money into bankruptcy on trivial pursuits. No, when you think of Ed McMahon, you think of the aging but charismatic late night show announcer, the TV personality, and the face and voice of the American Family Publishing sweepstakes team (not to be confused with the more popular Publisher’s Clearing House sweepstakes) that arrives unannounced at the homes of winners to present them their grand prize. You certainly don’t see or hear about him throwing his money away on fast cars, fast women, or holding lavish sleaze parties to great excess.

So I was quite surprised when I learned that someone like the now 80 plus year old Ed McMahon has now found himself in difficult financial straits and faced with the prospect of mortgage foreclosure on his multi million dollar home. This housing bubble and credit crisis seems to be quite merciless and universally brutal, even to those who simply lived their lives with the best intentions, but still succumbed to hard times. With little regard to feelings or reason, the mortgage credit crisis and the powerful forces of housing supply and demand have devastated many good families.

Ed McMahon and His Wife Pam Speak Out About Home Foreclosure and The Possibility Of Losing Their House

Ed McMahon recently appeared on the CNN Larry King Live show (CNN video clip) with his wife to discuss their difficult foreclosure nightmare and explain how a former multi-millionaire such as himself could fall from financial grace after all these years and have his house foreclosed on. During the conversational interview with Larry King, many of Ed’s words about how it all happened rang true:

“If you spend more money than you make, you know what happens. A couple of divorces flown in - a few things happened. You want everything to be perfect, but that combination - the economy, a little injury, breaking my neck - you just can’t work with this thing around your neck.”

“In some sense, I want to speak for the million people who now have foreclosure signs on their houses. I just want to give them hope, give them optimism and some guidance. Get the best corrective people you need around you, keep working at it, don’t stop. There’s a lot of people who are hard workers, did everything right, didn’t do anything wrong, and all of a sudden they are in this boat, and I speak for all of them as far as I’m concerned.”

“For everyone out there who’s going through this, we really sympathize with you. Be optimistic. It can be done. All kinds of things can happen. Let it work out great for you.”

When asked by Larry King to comment on the public assumption that the McMahons are multi millionaires and asked how they could have fallen behind $644,000 on their house mortgage payments, McMahon’s current wife Pam chimed in (tearfully at times):

“People do assume that you have hundreds of millions of dollars, and I think over the years it’s a combination of Ed working so hard and not looking at proper management which happens a lot. Because you’re a celebrity, people think you have a lot more than you have. And you always want to take great care of all your friends and family in all you do. We didn’t keep our eye on the ball and we made mistakes.”

“But you have to not give up. Whether we keep our house or we don’t keep our house. The whole financial issue might be the thing that ruins marriages, ruins relationships - but our marriage is strong.”

“You have got to realize that you can get through it. You never know what good things can happen for you tomorrow. Keep the faith.”

My Thoughts On Upper Class Celebrities, Ordinary Middle-Class Americans, and How To Protect Oneself From The Realities Of The Recessive Economy and Housing Market

After listening to the interview, I have to say I really started to sympathize with the plight of those in foreclosure. I know Ed McMahon and his wife Pam aren’t exactly representative of the classic foreclosure case, but at least they can relate to the pains of someone who can no longer afford his or her home mortgage loan payment and compelled to face the reality of home foreclosure. It’s an embarrassing and even humiliating experience that no one wants to be forced into. Home ownership is the American dream and when you can’t afford your pride and joy any longer, it’s a tough pill to take.

As I am currently still a happy renter and have not yet become a home owner, it is in my own personal and financial interest to see that there is no housing bailout whatsoever instituted by the government. This would obviously be the most self centered and self motivated route to take as opposition to any housing foreclosure bailout or assistance would help to ensure a growth in the glut and oversupply of available homes on the market, thereby substantially driving down real estate prices for the next 2-3 years until I decide to finally enter the housing market as a buyer.

But I do sympathize with most of the owners of the more than 1 million American homes (CNN news article) that are now shockingly finding themselves in foreclosure jeopardy. Sometimes in life, you do everything right with good intentions and yet bad things still happen when you least expect it. In Ed McMahon’s case, he may have lived an early life of entertainment and celebrity success and held to great esteem in his work, earning millions of dollars through the process, but apparently he failed to adequately plan for the future and prepare himself for inevitable financial emergencies.

The reality of home ownership life is that even those with good Fico credit scores who are able to qualify for and obtain prime fixed rate loans on their houses, bad things still may happen. Sometimes through no intentional fault of their own, people lose jobs, divorces happen, child custody battles rage on, or injuries and illnesses come up making one unable to afford one’s house anymore. With a stagnating economy in recession and plummeting real estate market prices eliminating much of the home equity built up in homes, such drastic and hard financial times can hit the best of folks. Without a proper emergency fund or savings set aside to handle such occurrences, even millionaires and celebrities, let alone ordinary people like you and I, can get hit by troublesome cash flow crunches.

The solution I think is to know and realize early on that life is inherently unpredictable and fraught with financial peril. Like the stock market, no one can accurately predict the good and the bad that will happen in the future. We can only anticipate and plan for the worst but hope for the best. While there are basic financial planning steps to take, such as investing for retirement through tax deferred vehicles like a Roth IRA account, one of the most important decisions is to save and build up an emergency fund. The amount that you will need to set aside for emergencies will vary from person to person, but it’s important to plan for emergencies. For example, my car recently broke down and I had to face a sudden and emergency $1,200 auto service repair bill to replace my vehicle’s alternator and battery to get it working again. Fortunately, I had saved enough on the side to handle such an emergency occurrence and expense.

The other important thing that we should glean from the Larry King - Ed McMahon interview is to stay optimistic and keep fighting. Never give up in despair. For those who are mired in housing foreclosure, credit card debt, or even perpetual unemployment, there is light at the end of the tunnel. Don’t forget, there are many similarly situated people out there trying to stay financially afloat just like you. Just keep plugging through and maintain the faith.

Most investors are familiar with superstar investment guru and easy going philanthropist Warren Buffett. How could you not? After all, he’s the single richest billionaire in the entire world and one of the most influential value focused investors. While the wealth snapshot order has swapped places a few times, at least on this recent Forbes ranking of the world’s richest billionaires, Warren Buffett is seated at the very tip of the money stacked totem pole, surpassing even Microsoft uber-geek and fellow billionaire, Bill Gates. But to label him a mere superstar investor would seem to dilute the sophistication of a man who spent a life devoted to a uniquely patient and value minded, get rich slowly type approach to building long term wealth. Warren Buffet is not your typical get rich quick financial motivator, but one who regularly preaches patience, with a keen eye for the undervalued potential of possible long term investments. The Oracle of Omaha, as Buffett is often fondly referred to today, is also the chairman and CEO of Berkshire Hathaway, the corporate manifestation of his immense and massive self made wealth, despite otherwise living and practicing a life of true humility and frugality.

Despite his tremendous wealth, Warren Buffett is also one of the most generous financial figures in the world in terms of how much he has contributed and donated back to society through charitable causes. A few years ago, he gathered up the bulk of his $40 something billion fortune (at the time), and made the decision to donate his money to the Bill Gates and Melinda Foundation as well as to a few other notable charities dedicated to the improvement of health and education in the United States and around the world. How’s that for enlightened and compassionate capitalism? Rather than spend his vast wealth on fancy cars, $2 billion dollar homes, or on over-the-top accessories that even hip-hop rappers would envy, Warren Buffett chose to live a relatively frugal life comprised of smart financial planning and wise long term investments that rely heavily on value choices. As a staunch supporter of wealth redistribution and progressive tax policies that favor the poor, he is also one of the most down to earth CEO business men out there - and yes, that’s him playing his quirky but famous ukulele in the picture.

So How Did Warren Buffett Become So Rich, And What Is His Single Most Valuable Piece Of Investment Advice For New Investors?

I’ve read Warren Buffett’s works and listened to him speak on Youtube, and I’ve come to greatly admire the man. For those that want to emulate his approach to investing and replicate the secret of his success to long term investment growth, his method can easily be summed up in a few short sentences. It is a concept all long term value investors have known all of their lives, but sometimes it takes a great role model to sum it up through a few inspiring words:

“Occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics is equally unpredictable, both as to duration and degree. Therefore we never try to anticipate the arrival or departure of either. We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

- Warren Buffett, 2001.

The Oracle of Omaha’s way of creating wealth has always been making value centered financial decisions based on principles of frugality and longevity. His ability to continue investing until his 70’s (and hopefully much longer into the future) have enabled him to practice his long term strategy to its full potential. But his tremendous financial success has always been his ability to channel and harness the eternal capitalistic concepts and emotions of human fear and greed. By playing on and understanding the counter correlation between fear and greed, Buffett has been able to shape his outlook to better determine when a presented opportunity represents one that’s worth taking and when it merely represents a potentially risky financial bait that must not be succumbed to. Thus when the stock, financial, and real estate markets are dropping and everyone is hastily running into the hills for their financial lives, Buffett sees an opportunity. But when prices are soaring and flying high - encouraged by euphoria and near unanimous over-optimism and exuberance about future prospects, Buffett clenches down and exercises extra caution.

Learn To Invest Like Warren Buffett By Understanding The Interplay Between Investment Fear and Greed

For capitalism and democratic concepts of wealth creation to thrive, there has to be an ultimate driving force - and that is greed. Greed is good, and as one well known movie put it - greed captures the essence of the evolutionary spirit and it works. There is nothing inherently wrong with greed as long as it can be properly channeled into a powerful motivating factor to achieve success. But greed has its place - and so does fear. There is a proper time and place when both greed and fear should be acted upon. Upsetting the proper dynamic between the two capitalistic emotions has the potential to lead to disastrous financial results.

Warren Buffett truly understood human nature and the inherent lemming pack mentality that curses most individual stock market investors. When we see a particular financial investment take off and expand two or threefold in a short period of time, we immediately become enraptured over the financial potential, and our greed induced instincts cause us to blindly pursue the investment bandwagon. It is in our very nature to do so. That is how stock market bubbles and even real estate bubbles are formed - through the unwavering lemming effect whereby greedy investors join the rapidly expanding investment pyramid until the base comprised of new entrants can no longer sustain the prices and valuations at the top.

So to succeed financially in the spirit of Buffett’s approach, one has to obtain a more prudent, long term, value-based opportunity outlook. When stock prices are low and dropping, fear causes the majority of people to want to escape and pull their money out of the market in instinctive response. When the markets are seeing red and valuations are dropping, the tendency is to pull your money out of fear. But Warren Buffett sees this moment of fear as the ultimate chance for greed to triumph in the long term. It is not about timing the market, but about looking for the potential upside. When the market has tanked or is tanking, there is much higher potential upside. For undervalued investments, Warren Buffet would see this as the perfect opportunity to take on new positions for the long haul - particularly when the stock or fund fundamentals are sound.

On the flip side, when the entire market is in consensus that a particular investment ought to keep soaring and continue on its upward trajectory, in Buffett’s eyes, that is when cooler heads must prevail and caution ought to be taken. When everyone is in near unanimous agreement that stock prices should keep going higher, the potential for a massive reversal of potential is much greater. When others are greedy, that is when you must exercise fear as a counter intuitive response to the masses. The potential downside at that point is much greater and it’s likely the time to exercise greater restraint. Steps to protect oneself could be to purchase options to hedge against downside risk or to limit one’s investments to less volatile positions.

Thus, if you want to invest like Warren Buffett, heed his most important advice - invest and seek out opportunities when there’s blood on the streets, but hold your cards closely and guard yourself when everyone else seems to be ebullient about financial prospects. It’s counter intuitive to human nature, but it’s the perfect balance and manipulation of fear and greed. Learn to invest in long term value sectors using low expense broad market Exchange Traded Funds (ETF) and low cost mutual funds. Pick out a general low cost online discount broker or open a Roth IRA, and buy and hold investment positions that you believe will grow in the long term, and finally, resist the urge to constantly check your stock prices and bail at the first bump or trouble. Think long term, not short term.

Invest In Value For The Long Term and Understand That Stock and Real Estate Markets Will Naturally Rise and Fall Over Time

Inevitably and invariably, markets ebb and flow, and stock prices never maintain their upward trajectory forever, but at the same time, they also never head downward forever. So long as one maintains a long term investment outlook based on the understanding of fear and greed, we can all learn to profit like Warren Buffett has over the years. Buffett was able to make smart value based investment decisions because he had a long term opportunistic approach to investing. When he acquired control of a simple textile company called Berkshire Hathaway in 1965, he used that company as his primary investment vehicle to acquire and invest in companies that he understood, and retained management services of those he trusted. The key was that he held on. He did not attempt to outplay the market or try to time the market, or guess when he should exit or enter the market. He simply remained patient and sought out opportunities when others were fearful and exercised extra caution when others were greedy.

When the entire world was enraptured with the dot com craze from 1999 to 2001, Warren Buffett was ridiculed for ignoring and failing to cash into the high flying technology stocks that seemed to triple in valuation overnight in leaps and bounds. During this high flying dot com era, Buffett continued to invest his company’s assets towards acquiring old fashioned but valuable investments such as carpet cleaning businesses, roofing enterprises, furniture rental stores, and boring paint making companies. When the stock market finally plummeted and self imploded due to gross over valuation, Buffett’s company was one of the ones that remained unscathed and has continued to prosper since then.

It’s that time of the year again and it’s looming large. April 15, tax day - the day we take our hard earned money and pay our annual emperor’s tribute to Uncle Sam and the United States government. For most working people, April 15 day is the deadline for filing our tax returns to claim the tax refunds that were withheld by the Internal Revenue Service (IRS) in excess for most of the year. This year is extra special since there’s an extra bonus and incentive twist waiting for us. This year we have the 2008 economic stimulus stimulus rebate qualification to contend with.

The IRS has already stated that taxpayers who wish to receive their tax rebate payment in timely accordance with the official tax rebate payment schedule must file by April 15, 2008. Currently, the economic stimulus rebate will be issued according to the last two digits of the primary tax filer’s Social Security Number. People who chose to receive their tax refunds via direct deposit will enjoy speedy priority and will be among the first to receive the payments starting May 2 and lasting until May 16. For those of you who chose the slower paper check option, your stimulus payment check won’t get to you until the direct deposit crowd have gotten theirs. Paper checks won’t be sent out until May 16, and lasting all the way into July 11.

How Do I Request An Extension To File My Federal Income Tax Return?

If for whatever reason you cannot file your 2007 return by the due date, you may be able to get an automatic 6 month extension of time to file. The official directions to filing for a tax return extension and information about related late filing penalties are located on the IRS website. Essentially, you must file Form 4868 Application For Automatic Extension Of Time To File U.S. Income Tax Return by the tax filing due date, usually April 15. A granted extension will allow you to file your income tax return by the later date of October 15, 2008. Note that special rules may apply if you are living outside the United States, or out of the country when the filing extension expires, or if you are serving in a combat zone such as Iraq or Afghanistan. Be sure to file on time or request a proper time extension. If you don’t, the IRS will slap interest and penalties on your unpaid tax liability.

However, you must be aware that any grant of extension of time to file your return does not grant you any extension of time to pay your tax liability. This means even if you are permitted to file past April 15, 2008, you must still pay your estimated tax liability by that date. Those who owe taxes must make reasonable payment when they file the extension either by mailing a check or by making an electronic money transfer. If you don’t make payment by April 15, beware the mighty wrath of the IRS. If you do not submit payment for at least 90% of your total tax bill, factoring all prior tax withholdings, estimated payments, and additional payments, the IRS will hit you with an interest and penalty stick - and it’s a big one. You will be charged late payment interest and late payment penalties for each month the unpaid tax liability remains outstanding, up to a whopping 25% penalty of the total unpaid tax liability!

For those of you who reasonably anticipate a tax refund, you don’t have to worry about penalties, although by dragging it out you are essentially giving the IRS an interest free loan.

When Will Those Who Request An Income Tax Filing Extension Receive Their Tax Rebate Checks?

Unlike most of the usual governmental knuckle and foot dragging we usually see, the IRS is actually under substantial pressure and governmental poking to get these tax rebate direct deposits and payment checks out as soon as possible. The whole point of the rebate is to get them into the hands of Americans so we can start pumping some fast cash into our battered economy that’s already showing sickly signs of a recession (yes I think we are already in one). As such, even if you were to request a filing extension, I don’t anticipate the IRS waiting too long to send you your economic stimulus payment.

However, as tax rebate checks will only be sent beginning in May to taxpayers who timely filed their income tax returns, filing for an extension will inevitably delay your rebate payment as the IRS will not issue rebate checks for a taxpayer unless and until a 2007 federal income tax return has been filed. The IRS has indicated that people who file income tax returns after April 15 and receive a refund can expect to receive their economic stimulus payments in about two weeks after receiving their tax refunds, but not before the date they would have received their payment if the return had been processed by April 15, 2008. Despite the IRS’ somewhat ambiguity on the timetable of tax rebates for extension filers, I think taking into consideration the urgency of these rebates, those who file their tax returns as post-April 15 extensions should expect to receive their tax rebates within a month after their returns have been filed.

Remember, if you want to receive your economic stimulus rebate payment before the end of the year, you must file your tax return by the 6 month extension deadline of Oct. 15, 2008 at the very latest. If you delay and file your tax return after the extension deadline, you may need to rely on the tax rebate amendment option when you file your 2008 income tax form on April 15, 2009.