Here’s a story that’s near and dear to my heart. It comes from the Wall Street Journal by way of Yahoo! finance: Millionaires Go Missing
No, it’s not near and dear to me because I’m a millionaire (I wish!). It’s because my home state of New York is considering doing just what Maryland did, and just like the middle class in Maryland, people like me will likely take the hit.
“Here’s a two-minute drill in soak-the-rich economics:
Maryland couldn’t balance its budget last year, so the state tried to close the shortfall by fleecing the wealthy. “
The problem, of course, is that the wealthy decided to leave Maryland. This only exacerbates the initial deficit, and leaves the middle class (who are less likely to be able to pick up and move) to pick up the tab.
“One-third of the millionaires have disappeared from Maryland tax rolls. In 2008 roughly 3,000 million-dollar income tax returns were filed by the end of April. This year there were 2,000, which the state comptroller’s office concedes is a “substantial decline.” On those missing returns, the government collects 6.25% of nothing. Instead of the state coffers gaining the extra $106 million the politicians predicted, millionaires paid $100 million less in taxes than they did last year — even at higher rates.“
I’m sure the “tax the rich” mantra played well politically in Maryland when the tax hike was passed, but at the end of the day they’re left with the reality that penalizing the wealthy doesn’t address the underlying cause of the deficit – namely, over spending on the part of the government.
This is the same sort of thinking being espoused in Washington, but it would have the same effect on a national level if the federal government pursues such policies. Sure it will be more difficult for the wealthy to leave the country than it is to leave a state, but those who don’t flee will likely not work as hard or produce as much, since they will have to forfeit more to a government that can’t manage its money.
You may wonder why we should care about the rich, or what they produce since they aren’t in the trenches like the “working class”. The short answer is jobs. And any hope of a real economic recovery and a decrease in unemployment is on hold until the wealthy entrepreneurs of this country start producing jobs. For that to happen, they need incentive to do so, not a penalty.
Credit cards get a lot of bad press, but if you can control your spending and fit into one of these categories, it can be quite beneficial when using credit cards with rewards.
Best for balance transfers.
State Farm Bank Good Neighbor Visa. The Good Neighbor Visa card offers 0% interest on credit card balance transfers for the 1st 9 months – with no fee for transfer within 90 days of opening - and 9.99% to 14.24% after. It also includes no annual fee and a host of other features:
Cash advance privileges via ATMs and convenience checks
Best for big spenders.
Blue Cash from American Express. As you can guess from the name, Blue Cash is a rewards credit card that offers a higher reward rate for higher purchases. The interest rate is 7.99% plus prime, and the cash back reward rate is 1% for purchases up to $6,500, and 5% on purchases at gas stations, supermarkets and drugstores after that. But wait, there’s more:
Unlimited cash rewards.
No Annual Fee.
0.00% Introductory APR for up to 12 months on purchases.
Flexibility to pay over time.
Earn cash back faster with fee-free Additional Card
Best for small spenders.
Schwab Bank Invest First Visa Credit Card. This card carries a 13.99% interest rate but gives back 2% of all purchases you make. The only downside is that you must have a Schwab investment account, but there are no fees to open or maintain one and you don’t have to invest to use the card of get the cashback.
There’s no limit on the cash back you can earn.
No minimum monthly purchase amount.
And no annual fee or foreign exchange transaction fees.1
Best for the gas guzzler.
Pentagon Federal Visa Platinum Rewards card. This card has a 13.99% fixed APR , and offers cash back of 5% on gas purchases, 2% on supermarket purchases and 1.25% on everything else.
Up to $50,000 limit
No Annual Fee
Cash Rewards credited each month
No special restrictions to earn your cash rewards
Limited Time- Balance Transfer of 2.99% APR for the life of the transferred balance
Limited Time- 5.00% cash back on your first $4000 of airfare purchases per month.
Best for the traveler.
Escape by Discover Card. 0% Purchase APR for the first 6 months, and then as low as 10.99% variable APR thereafter based on your credit history. I’m not a fan of variable rates, but If you travel a lot and don’t carry a balance, who cares?
Earn 2 miles for every dollar spent.
1,000 Miles each month you make a purchase in the first year.
Suze explains why Debt Consolidation is a scam, and provides detailed steps to consolidate credit card debt on your own – without paying a 3rd party. She also details how to cover your bases and make sure your credit score benefits from the consolidation.
The striking part to me is how much sense it makes from a purely common sense approach! For example, the credit card company will settle with you if your situation is bad enough because some money is better than no money, and the credit card company knows they can’t get the full amount from you.
I just went grocery sopping to pick up a few odds and ends. Here’s what the list looked like:
2 packages of hot dogs
2 boxes of frozen meatballs
3 muffins
1 bag of cat food
3 hard rolls
1 loaf of Italian bread
The total came to $56.
Wow! Those were some expensive hot dogs and meatballs, I thought. Then I thought about it again. The hot dogs and meatballs were buy 1, get 1 free. The cat food was less than $6.
When I examined the receipt more closely, I saw that I was charged $9.46 for each hard roll!
Obviously this was an error. In fact, the cashier entered the register code (946) for the price instead of the lookup code when ringing the groceries up.
It was a simple error, but it would have been costly if I just swiped my credit card and went along my way – the cashier never noticed it!
The moral here is clear: never assume what your being asked to pay is what you really owe. Also, don’t assume the other party is looking out for you. The other party may be a corrupt financial advisor, or just a over worked check out girl with other things on her mind.
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