Why Cut Taxes Right Now?

Everyone hates taxes, right?  I know I certainly do.  You may not think so based on the title of this post, but I get it.  As every American probably knows, the big move right now is to reform taxes.  The President wants to cut taxes.  The Republican House and Senate seem to be moving forward.  I guess I’m just not sure: Why cut taxes?  At least right now.

Does Anything Get Fixed With The New Proposals?

My biggest concern with what I’m reading is that things don’t seem to get fixed.  When I look at taxes, the problem I have is how arbitrary things are.  You have, as an example, a $3,000 limit if you lose money on stocks.  That’s the most you can write off in a year.  This is completely arbitrary.

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Remember When Federal Budget Deficits Mattered?

It’s so interesting watching the latest talk from Washington come through.  It’s all about potential tax cuts and what they mean.  President Trump is touting a plan that would lower taxes for many businesses and people.  He claims it will help the middle class.  Pundits argue it mostly helps the rich.  Either way, it’s interesting that very little attention is given to the budget deficits and the impact that the plan would have.

Budget Deficits

For as long as I can remember, the federal government has run a budget deficit.  There were a couple of years under President Clinton when there was a surplus.  However, that seems to have been a blip on the radar, and very much an anomaly.

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Do You Believe These Money Myths?

There are a lot of different things you’ll read when it comes to your money.  The personal finance world has lots of people with many opinions.  I’m one of them!  But with so much out there, it can often get confusing.  What do you believe?  What’s true and what’s a suggestion?  I don’t have all the answers.  But there are a few money myths that I’ve seen come up more than a few times.

#1: Always Pay The Higher Interest Loan First

The higher the interest rate means that less of your payment goes to your principal.  This is true.  So, you should always pay the highest interest loan first, right?

Not always.

I think you have some flexibility here.  If you have a loan with a low balance, maybe consider paying that off first.  It will free up some cash flow.  Plus, paying off a loan will give you a ‘win’ on your scorecard.  Those can be very important and might be worth a few bucks in higher interest in the short term.

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Going All In On Itemized Deductions

Since being married, my wife and I have always been able to itemize our deductions.  Between mortgage interest, property taxes, and state taxes, our itemized deductions have always exceeded the standard deduction amount.  This has been great come tax time.  But, it looks like the ability for us to itemize is coming to an end.

As such we’re going all in this year.

Why Itemized Deductions May Not Happen After This Year

Over the past couple of years, I’ve noticed that the gap between our itemized deductions and the standard deduction has gotten smaller. The main culprit is our mortgage interest.  We are just over five years into our fifteen year mortgage.  Each month a bigger chunk goes toward principal and less toward interest.  In the grand scheme of mb-201403stacksthings, this is fantastic, but it definitely changes strategy when it comes to itemizing.

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Does Being Too Close To Money Make People Turn Evil?

The latest scandal in the banking industry has my shaking my head.  For those who haven’t heard, Wells Fargo is in it deep because they basically set quotas for the number of add on services that employees were required to sell.  This was pushing people to go above and beyond normal circumstances, opening accounts without permission, forging signatures, pressuring family and all sorts of fun stuff.  So I have a simple question: Does money make people evil?

Still In The Cycle Of Corruption

Basically, more awful behaviors in an industry that has the stench of a lot of awful behaviors.  I mean, nobody has forgotten the subprime mortgage crisis, right?

It just got me to wondering why this stuff keeps happening.  I’ve heard that we should break up the banks to make them smaller, or taking certain functions (like investing) away from banks.  All sorts of things, but I’m not sure any of that would work.

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Should You Buy A Franchise?

When people think of franchises, they often think of fast food chains that could cost more than a million dollars to start. A McDonald’s franchise, for example, requires a minimum of $750,000 in liquid assets. While signup costs include the cost of construction and equipment, they can range from $1 million to $2 million depending on location. The good news is that once the business is operating smoothly, revenues average around $2.5 million a year.  Is franchise ownership something to consider?

While the idea of opening up a fast food restaurant can be profitable, the cost of entry is what prevents most people from making the leap to having their own business. Unless they are already established business people, it’s difficult to get a bank loan large enough to cover initial costs.

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