The foresight of market strategists is shaky, but their hindsight is always impressive.
FILE FOR COLLEGE FINANCIAL AID. Hoping for grants and loans for the 2018–19 academic year? You can file the Free Application for Federal Student Aid starting Oct. 1. Income is based on your 2016 tax return. Even so, before filling out the FAFSA, you could increase aid eligibility by using taxable account money to pay down debt or fund retirement accounts.
WE MAKE ALL KINDS of financial mistakes: spend too much, borrow too much, buy expensive investment products, try to beat the market. To be sure, there are some folks who simply don’t know better. But others give the issue serious thought—and still act foolishly, justifying their behavior with cockamamie arguments. Here are five such justifications that I’ve heard in recent months:
1. “It’s okay to spend money if it cheers me up.” This is the crack cocaine school of budgeting.
WHEN TALKING WITH HOME SELLERS, I’ve long ceased being surprised by how many routinely overlook or fail to take maximum advantage of a valuable tax break: the exclusion when unloading their principal residence.
The exclusion—meaning you pay no taxes—is capped at $500,000 for married couples filing jointly and $250,000 for singles and married couples filing separate returns. I frequently need to remind sellers that these exclusions apply to profits, not sales prices.
WE ARE WORTH SO MUCH MORE than the value of our homes and our financial accounts. But how much more? Forget your car and household possessions. Unless you have a Chagall hanging in the living room, it’s safe to assume all this stuff will depreciate and eventually be worth little or nothing.
Instead, our three assets with potentially significant value are our regular paycheck, our Social Security retirement benefit and any traditional employer pension we’re entitled to.
IF WE HAVE DINNER with half-a-dozen others, we might all share the same meal and yet each of us will have a different experience—sometimes radically different. Even as we talk politics, crack jokes and swap gossip, we’ll each have our own thoughts whirling in the background: errands we can’t forget, work issues we need to resolve, incidents from the day we keep replaying, worries we can’t put behind us.
For me, those whirling background thoughts often concern financial notions I want to write about.
Jonathan Clements is the founder and editor of HumbleDollar. He spent almost two decades at The Wall Street Journal, where he was the personal finance columnist. His latest book: How to Think About Money.