Money Blue Book

A few years ago I had the misfortune of living in the ghetto inner city of Baltimore. I had no choice – that was where the geniuses at the state of Maryland chose to locate their state run graduate schools. Why they chose to place the school building in a dangerous area surrounded by homeless people and drug hangouts still baffles me. The city is saturated with a population comprised of drug addicts, violent thugs, and opportunistic car thieves.

Along with two other roommates, I lived in a quaint row house near the law school in an area primarily occupied by students. Here, I thought my roommates and I would be safely shielded from the neighboring slums and criminal activity. I was wrong. Within the span of two years, a classmate friend of mine was robbed in person and a neighbor who lived across from our row house had her home burglarized (canned food was stolen, of all things). Furthermore, both of my roommates’ street parked cars were broken into. My old red Toyota Corolla survived the criminal onslaught valiantly for while, but it too finally succumbed to the inevitable break in.

I usually parked my car along the street where our row house was located. One day I came home from class only to discover that the small rear side window panel on the passenger end had been smashed to pieces. Auto glass shards were strewn across the back seat, but nothing was taken. Everyone in Baltimore City knows that you must never leave any personal property visibly sitting in your parked car that may attract thieves. Even a pack of coke or a few pencils become priority targets for the passing drug addict. I thought I had been abiding by the rule pretty well until then. I had even adopted the practice of emptying out my glove compartment and leaving it wide open to advertise the fact that it was empty. Of course this didn’t deter Baltimore City’s finest. As an older Toyota model, my car wasn’t equipped with an audible car alarm, making it an attractive break in-target – and now my car had just become another city statistic. After grumbling and sighing out loud at my misfortune, I filed a pointless police report and then set out to get the auto window glass pane fixed. Since my Geico auto insurance didn’t cover glass breakage, I’d have to find my own way to fix it cheaply.

Save Money By Repairing Your Car With Pried-Off Used Car Parts Found At Your Local Auto Junkyard

Since my car was an old hand-me-down from my parents, I had little incentive to spend a lot of money on parts or labor to get the window fixed. I tried patching it up temporarily with clear packaging tape, but that just made it look even worse. It certainly didn’t impress the girl I was dating at the time. Finally I decided the busted window had to be replaced. But rather than going to an auto parts or auto glass store and paying $200 to get the small glass pane repaired, I decided to pursue the frugal route – by visiting a local auto junkyard to locate the parts myself.

A friend recommended a local junkyard in the Baltimore, Maryland region so I decided to give it a try. Interestingly enough, the name of the auto landfill was called “Crazy Ray’s“. Calling itself an auto parts garden rather than a junkyard didn’t make the place any prettier. The place was a huge outdoor dirt and gravel lot filled with stacks and rows of beat up vehicles. I guess this is where old and abandoned cars came to die. Many of the cars and trucks were old and rusted, while others were relatively new but dented and wrecked due to obvious involvement in traffic accidents and fender benders. It was kind of eerie to see some brand new vehicles in the stockpile all mangled up, and knowing that someone used to drive that car.

If you drive an old vehicle and want to be cheap or frugal like me, an auto junkyard is the perfect place to get your used auto parts because you can usually find what you need for much less. These auto junkyards are essentially do-it-yourself lots where you salvage whatever components you want from the wreckages and later pay for whatever items you take. The cars are only lightly categorized and sorted by model into basic domestic or foreign piles. Because wrecked vehicles are not always efficiently logged as they are towed in, they usually can’t really tell you where to find your vehicle model – only a general direction of where they may be. They don’t have a steady stock of inventory as it is constantly rotating depending on what vehicle selections they haul in. Returns and refunds for used parts are usually not allowed.

So after I paid my $1 entrance fee, I walked into the huge outdoor scrap yard to begin my auto part hunting adventure. A large sign at the front entrance humorously reminded me that all removed nuts and bolts must be paid for upon exit – “No jacking allowed!”

For those of you thinking of taking the junkyard approach, I recommend that you wear clothing and shoes you wouldn’t mind getting dirty in. You are likely to get some mud and grease on your hands and clothing. You should also bring along hand tools like a hammer, screwdriver, and crowbar, since you’ll need them to pry your desired part off your target vehicle. Walking around, I noticed I wasn’t alone as there were plenty of other people walking around, pulling old engines and metal plates from vehicles. After walking and searching, I finally came upon a Toyota Corolla that matched my model series. I examined the window glass. While a few glass panes were cracked, the one I wanted was still in excellent condition. I immediately went to work – using my crowbar and screwdriver to pry the glass plate and rubber frame from the car window. I’m not sure how I managed to do that without breaking or scratching the glass, but I managed to get it off in one piece. After much sweat and manual effort, I trekked back to the front entrance and paid the fee for the used auto part.

Examining How Much I Saved By Using Junkyard Parts

A brand new glass pane component for my car window would have cost me $100-$150. At the junkyard I only paid $18 for the used car window pane. Some car enthusiasts know how to install the glass pane themselves. Since I’m no car expert, I chose to pay another car repair shop $30 for installation labor. All in all I spent $48 to fix the window. If I had gone to an auto glass repair shop, parts and labor would have cost me $200 or more. Of course, the cost savings adds up even more if you’re talking about replacing multiple components such as a light covers or hubcaps. At the end of the day, I went home quite pleased at my cost savings. Not a bad frugal solution to patch up an old beat-up wreck.

I used to sell products on eBay as a money making hobby and even once attempted to make a side business out of it. It wasn’t easy trying to make profit while at the same time avoiding all the internet fraud and scams out there. While I eventually decided to pursue other ventures, I had a friend who continued to dabble in eBay auctions. Soon enough, he had successfully turned what started out as a one room operation to an impressive one man eBay business machine that engulfed his entire basement. Everytime I stopped by his house I was always startled at the sheer number of brand new Dell laptop and ThinkPad boxes stacked in piles throughout his basement that overflowed into his unoccupied garage.

Through his closely guarded network of online connections (he never disclosed them to me), he was able to secure excellent wholesale deals on hot electronics like laptops, desktop computers, and handheld PDA’s for sale on eBay. His racket continued for several years to my continued amazement as I wondered how he managed to stay so consistently profitable despite rising eBay fees and heavy online competition. One day I finally turned to him and asked him if he was reporting his eBay earnings as taxable income on his federal income tax. He simply smiled and changed the subject. Obviously, the answer was no, thus exposing the secret to his profitable eBay success – tax evasion!

Frankly I don’t really blame him for withholding his eBay profits from the Internal Revenue Service (IRS), although I wouldn’t have done that myself. The subject of eBay tax enforcement has been murky for years, mostly due to the lack of proper paper trails and the undeveloped legal area of online auction income. However, the IRS has been recently making moves to crack down on eBay powersellers and auction proprietors to compel the reporting of all business profits. The IRS has also set its taxation efforts on other popular online auction sites like Amazon and UBid, as well as other online hobby market networks like Etsy. I suppose it was about time the almighty IRS dealt with the issue of online auctions.

The IRS Struggles To Compel eBay Sellers To Divulge Their Taxable Earnings

When it comes to reporting their sales income to the IRS, eBay sellers currently operate on the honor system. However, this honor system has resulted in a significant shortfall of under-reported and untaxed auction earnings. Currently, eBay does not report seller stats or submit sales records to the IRS unless it is honoring a subpoena request for information. Many amateur and aspiring eBay entrepreneurs have been able to work the eBay tax loophole for some time and avoid having to pay tax on their profits. It’s a risky game of tax evasion roulette, but the lax enforcement has allowed it to persist for some time.

Recently, the federal government and the IRS has begun to put pressure on major online auction retailers like eBay to cough up user information and sales records, and has even introduced legislation to require market hubs to report personalized sales activity. Of particular taxation concern are the millions of auction sellers who consider eBay as their primary or secondary source of income but fail to accurately report their earnings. Obviously this effort is going to encounter much resistance from sellers and even the auction sites themselves since new tracking policies will undoubtedly result in higher tracking and record keeping costs. The prospect of requiring sites like eBay to track user information based on individual Social Security Number will obviously have the usual online privacy advocates up in arms.

While this taxation crackdown may bug a few eBay sellers, the requirement to report auction income and taxable business earnings is nothing new and has always been around. It’s just only until recently that the IRS finally decided to work harder at plugging up the tax gap to stem tax evasion activities. Mandating the implementation of tools to enforce tax compliance already exists in most employment sectors and the IRS believes the new frontier of online auctions should be no exception.

When Do Proceeds From An eBay Auction Sale Have To Be Reported As Taxable Income?

From the amateur seller who considers eBay to be nothing more than a hobby, to the heavy traffic Powerseller who runs his or her operation as a profit generating business, no one really wants to spent the time to report earnings as income if he or she can help it. However, the IRS instructions make it clear that all sources of income can be taxed, which includes everything from online auction profits, and income from gambling activity, to even illegal “business operations” such as drug dealing and prostitution.

Even if the eBay seller makes a few sales here and there as a hobby, the IRS requires all income to be reported – this includes wages, salaries, tips, gambling winnings, money found on the floor, sweepstakes earnings, business income, and yes, eBay earnings (both hobby and business). The hobby or business nature of your eBay income only becomes an important factor when determining whether your eBay losses and operation costs may be used to offset your eBay income as a business deduction.

The correct question to ask regarding taxability is not necessarily the frequency or dollar amount of the transactions – but rather – did the eBay auction activity result in a net profit? For those who use eBay or other internet auction sites to sell old stuff that’s been piling up in your garage, you probably don’t have to worry about paying income taxes on the proceeds since the cost (the basis) usually exceeds the selling price. Under current tax law, an individual who sells an item online and collects more money than its original purchased value is expected to report that money as income on his or her tax return. Items whose original purchase basis value cannot be determined is typically valued at $0 under current tax law. Thus, it’s advisable for all eBay sellers to get in the proper habit now of retaining their purchase and sales records. You never know when the IRS will flip the switch and go nuts with the eBay seller tax audits. It’s only a matter of time.

Why Does It Matter If Your eBay Selling Is A Hobby Or A Business?

All eBay online auction sellers have a duty to report their earnings and to comply with tax law obligations to avoid an IRS audit. For most casual eBay hobby sellers who occasionally run the online equivalent of the garage or yard sale, they usually are not obligated to report their sales. That’s because for most online garage or yard type sales, the items sold are usually personal household items purchased over the years and used. As such, the resulting selling prices are almost always lower than the original purchase basis price. The exception occurs when the item for sale has appreciated in value. Even if the transaction was intended to be a simple online yard sale, if the item being sold was something like a set of rare baseball cards that had appreciated in value in excess of the original purchase price, the resulting earnings must be reported as taxable income.

The hobby vs. business debate matters when it comes to self employment tax obligations and tax deduction benefits. If the eBay operation is properly regarded as a business, the taxpayer may be entitled to business deductions to write off operating costs. Whether the eBay seller will be treated as running a business will depend on his or her intent to generate profit. Activities such as visiting pawn shops for resale bargains like my friend used to do will likely be seen as demonstrating business intent. Furthermore, when the individual is running a business operation that results in regular profit sales, he or she may also be obligated to pay self assessed quarterly estimated tax payments through Form 1040-ES.

If you lose money pursuing a hobby, you cannot deduct your hobby loss from other income, but you can deduct your expenses up to the amount of your hobby income on your tax return. A hobby loss is a miscellaneous itemized tax deduction, and as such, only the total that exceeds 2% of the adjusted gross income may be deducted.

For more information regarding the differing IRS treatment of hobby and business related activity, check out the IRS explanation. The IRS also provides a good tax information resource for online auction sellers.

Updated List Of The Best Supermarket and Grocery Credit Cards To Save Money On Groceries (And Offset Higher Food Prices)

With rising gas energy prices and increased food demand from developing countries comes an unfortunate result – higher food prices. Common grocery staples like milk, eggs, and wheat products have seen a noticeable rise in prices lately. Higher prices at the supermarket is leading to an increase in grocery spending for many. Those with large families and children are finding their food budgets being stretched to the limit. However, there are alternative and supplemental ways to save money on groceries beyond the usual reliance on price comparison shopping and clipping grocery store coupons. There’s nothing wrong with relying on coupons and price comparison, however, the regularity of those money saving deals are often unpredictable. They are not dependent on what you or your family need at the time, but rather on the supply and demand assessments of supermarket chains.

Benefits Of Using Grocery Store Credit Card Rewards To Save Money On Supermarket Food Prices

If you are a responsible credit user, have you considered the usage of dedicated grocery credit cards to save money at the supermarket? Most major credit card issuers have tagged grocery stores as a major promotional focus of their credit card reward programs. To encourage consumers to use grocery store credit cards, card issuers are offering a wide array of high cash back rewards and rebates for supermarket related purchases. In fact, along with gas stations and drug stores, grocery stores are often included in a select list of categories that offer extra high purchase rebates and rewards. Grocery credit card rewards can easily and regularly net consumers a high 5% cash back on all grocery store purchases.

Debt reduction proponents frequently advise against the use of credit cards for common household expenses such as groceries and gas, but I disagree with their blanket rejection. I think the responsible use of grocery credit card rewards can help a credit responsible family save a significant amount of money on their groceries and supermarket food needs over time. Furthermore, it also helps save time at the grocery checkout counter. Many major supermarket chains like Giant, Safeway, and Kroger now offer and sometimes force the use of self checkout stations. The use of grocery reward credit cards helps speed the consumer along the checkout process rather than having to fumble around and spend time locating dollar bills and loose change.

Grocery shopping using supermarket credit cards also helps the savvy consumer keep better track of their spending habits since all transactions are logged and recorded on their credit card billing statements. The amount of money spent on groceries per month can then be more easily itemized and statistically analyzed. This organization feature goes a long way in helping cardholders better plan and tweak their grocery shopping budgets.

Other than using special grocery store credit cards to save money on food and grocery store purchases through credit rewards, they can also be used to earn high rewards at other retailers as well. All it takes is the purchase of a non-grocery related retail gift card from a qualifying supermarket. This has the added advantage of earning the higher grocery related rewards (frequently as high as 5%) but being able to spend the money on non-grocery-related purchase categories like department stores, electronic discounters, and even restaurants.

After reviewing the variety of grocery credit card reward offers available, here are the card offers that I think offer the best cash back value.

List of the Best Grocery Credit Card Offers:

1. American Express Blue Cash® – Earn up to a tiered 5% cash back on eligible purchases. Earn a tiered 1.5% cash back reward on everything else. For more reward program details, check out my Blue Cash review.
2. Chase Freedom(SM) – Earn 5% cash back offers in popular categories like gas, home improvement and department stores. Get a full 1% Cash Back on everything else – no spending tiers or caps on how much you can earn.
3. Capital One® No Hassle Cash(SM) Rewards -  (Excellent Credit) – Earn up to 3% cash back on gas and groceries, and unlimited 1% cashback on all other purchases. There is no limit to the cash back rewards you can earn and your cash earnings never expire as they are applied to your account automatically. You can also save money with the 0% APR purchase rate offer until February 2011. There is no annual fee.
4. Capital One® No Hassle Cash(SM) Rewards – (Average Credit) – Earn 2% cash back on purchases at grocery stores and gas stations, and unlimited 1% cashback on all other purchases. There is no limit to the cash back rewards you can earn and your cash earnings never expire as they are applied to your account automatically. You can also save money with the 0% APR purchase rate offer until February 2011. There is no annual fee.
5. Capital One® No Hassle Points(SM) Rewards – (Excellent Credit) – Earn unlimited 2% back (2 points per dollar) in point rebates for purchases at grocery stores, supermarkets, gas stations, and drug stores, as well as 1% back for all other purchases. Get a 0% introductory interest rate on purchases until January 2010. There is no annual fee
6. Capital One® No Hassle Points(SM) Rewards – (Average Credit) – Earn unlimited 5% back (5 points per dollar) for all purchases made at grocery stores, gas stations, and drug stores, and get 1% back for every dollar spent on all other purchases. Your rewards have no expiration date for the life of your account. Cardholders also receive an introductory 0% APR offer on purchases until June 2009. There is no annual fee.
7. American Express Business Blue Cash® – Earn up to a tiered 5% cash back on grocery purchases, drugs, and gas. Earn up to a tiered 1.5% cash back on everything else.

When I bought my new 2004 Honda Accord a few years ago, I was pleasantly surprised to learn that it came with a free 3 month trial subscription to XM Satellite Radio. Back then, the premium service was considered quite a must-have premium car feature. At the time there was nothing quite like having more than a hundred radio stations at my listening disposal whenever I drove my car. The great benefit and advantage that satellite radio had over conventional radio was that no matter where you were in the country, so long as your receiver-equipped vehicle had an unobstructed view of the sky, you were ensured a guaranteed selection of listening stations at all times. Not only did I have access to the usual radio music choices, but I could also listen to a wide variety of talk radio and television news programs such as CNN and CNBC. One of the best technical features with on board satellite radio was also the ability to know the names of artists and songs currently being played. All of the song information was digitally displayed on the XM radio player dashboard. This function was great because it complimented my hobby of downloading MP3 music from the internet. Every time I heard a song I liked, I could look to see the name of the song and download it later when I got home.

Cost and Lack Of Use Are The Reasons Why I Don’ t Think Paid Satellite Radio Service Is Worth It

Back when I had the complimentary trial period, XM radio’s monthly subscription fee was only $9.95. However over the years the price has steadily increased to its present $12.95. When my free trial period ended, I continued paying the monthly fee. But after a while, I realized it was just a money drain. I was a student at the time, used the car infrequently, and drove for only short stints in mostly local areas when I did. The service was much too underused to justify the monthly subscription. It’s not that I was overly frugal about paying for monthly services – in fact I had a whole slew of monthly subscription services like cable and internet. However, one simply cannot compare the necessity of home cable or satellite television service to a radio feature that is only used when driving. While over the years, XM has adapted and ported its service into portable hand head Ipod-like players, I still fail to see the necessity for the paid service when viable free alternatives are available.

Satellite Radio Doesn’t Currently Offer Enough Locally Based Radio Programming Selections

When I drive, I have a narrow selection of music that I like to listen to, which is why I usually prefer to burn my own music mix CD’s. If XM radio offered the premium ability to create my own customizable radio station comprised of specific music artists I like without the fillers, the service might be worth it. However, after listening to hours of premium satellite radio, I realized that much of the premium music selections were the same played to death re-runs churned out by free local radio stations, fillers and all. Despite having so many channels and stations, the majority of the programming choices were ones I had no interest in such as country, rock, and weird selections that played bluegrass and elevator music.

Another major disadvantage of satellite radio is that it doesn’t offer the same comparable local commentary and local presence provided by traditional regional radio stations. I think I’ve grown too accustomed to the localized nature of traditional free radio. When there is some significant local breaking news, winter weather report, or major traffic accident, regular radio stations will interrupt the music programming to issue an up to date report. However, satellite radio stations, due to their national presence, tend to stick to national rather than local news. Even though XM Radio is based in Washington D.C., it is no exception. They do offer a wide channel selection of regional traffic and weather news categorized by locale, but you have to actually remain tuned to the appropriate city’s satellite station to receive continuous local traffic and weather news updates, which is an inconvenience.

I think both Sirius and XM Radio are paid options better suited for truck drivers or those who frequently travel across state lines for business or leisure. If you primarily intend to use the service in-state and within the same local area, there is really no need or benefit gained with having the service. Of course, if you simply have a lot of money on your hands, then by all means go right on ahead and pay for the premium service as it’s an occasionally nifty option to have.

The Novelty Of Satellite Radio Will Wear Off And Will Ultimately Be Replaced By Improved Free Radio Options

The concept of paid radio will continue to lose popularity with the adoption of car radio technology such as HD radio, as well as Wi-Fi and WiMax streaming audio. HD radio currently offers high quality radio feeds that can provide many of the text display functionalities offered by existing satellite radio but with the added local touch. It has the bigger potential to open up a huge range of new radio features and stations for consumers. HD radio is free but its adoption will take time since it requires the purchase and installation of new HD radio players. In time I predict most new cars will come pre-equipped with HD radio receivers.

Wi-Fi and WiMax radio are similar in that they both entail the function of listening to streaming radio through the internet, except you are doing it in your car. As Wi-Fi hotspots become more broadly available and WiMax technology is improved, the day will come when most major highways and cities will be equipped with wireless signal repeaters that can enable persons with a wireless internet receiver in their car to access millions of customizable online radio stations.

However in the meantime, other than regular radio, XM and Sirius Radio is all we have currently in the way of alternative options. The U.S. Department of Justice finally cleared the antitrust hurdles and approved the long awaited merger of XM Radio and Sirius. I think the deal is very bad for competition but due to the prevalence of a wide number of competing technologies, the merger was likely necessary for the survival of the satellite radio medium. Personally, I think the appeal and convenience of paid radio will fade with the popularity of cost-free technologies. Until premium radio options become free though, I plan to save my money and be content with the 10 or so complimentary stations that XM seems to have left running on my otherwise deactivated XM radio account. I think XM left those few stations running as a complimentary sampler, however interestingly, many of the sampler stations are ones I would have wanted anyway had I remained a paid XM subscriber.