Do you know how much you need to save for retirement, college, or a home?

This handy savings calculator from Lifetuner.org helps you answer that question.  Just plug in a yearly savings amount (like $200/month = $2400/year), the ages you start and stop investing, your desired retirement age, and an interest rate.  For this last assumption, I would use 6.8% (or 7% if decimals are too much too handle) to match the historical, real (inflation-adjusted) stock market return.  That way you won’t fool yourself into thinking you’ll have more purchasing power (which is what matters) than you really will have.

You can run up to three side-by-side simulations.  Compare starting ages, amounts you save, or the difference due to small interest rate changes.  This is a great calculator for estimating the return from regular investing, or the difference in gain from, say, a 0.5-1% increase in return due to switching to low-fee index funds, which beat the returns from (higher-fee) actively-managed mutual funds 70 – 80% of the time.

You can use this to calculate ANY regular investment, not just one for retirement.  For example, if you want to have a house downpayment in 3 years, assume a bond fund return of 3-5% (rates are low today) and then see how much you’d need to invest yearly to achieve your goal.  The longer you can wait, the more you’ll have.

Or, to calculate savings for your kid’s college (new parents, pay attention!), enter your kid’s current age as the ’start saving’ age and 18 as the ’stop saving’ & “retirement” ages.  (“Retirement” in this calculator just means the date when you want to know how much you’re investment will be worth.)  Use the historical, real, stock market return of 6.8% if you have a long time (>5 years) to invest, since that’s where your college savings should be.

How to improve the health care system and what I learned from Michael Moore’s “Sicko”

I recently watched Michael Moore’s ‘Sicko,’ a “documentary” (and propaganda piece) on the health care system in the United States.  Moore also contrast our system with various government-run programs around the world.  While Mr. Moore’s opinions and footage are clearly biased in favor of a government-run system, I believe he does raise some valid points.  I’ll enumerate some of them below, adding my own thoughts.   Please remember that I am certainly not an expert in this area, and that these are merely my moderately-informed opinions.  Feel free to dissent, agree and argue by posting comments.

(Note to readers: I do feel a little uncomfortable posting politicized articles on this blog next to objective financial advice.  However, I do think there’s some value in asking readers of this blog to consider some of these very important issues from time to time, even if they disagree with every word I say below.  I’ve tried to keep my opinion pieces 1) separate by clearly labeling them as political, 2) as even-handed as possible, given my personal feelings and biases, and 3) without financial advice that relies on my political opinions.  Let me know in the comments if you like seeing a political article like this every once in a while, or if you think it’s inappropriate given the other content on my site.)

1) Doctors under a government-run insurance plan do not have to worry about getting paid by private insurers and can focus solely on providing health care. One could argue that a government-run plan would be more complicated than a private one.  That may be true, but I would think even one highly complicated government insurance option would be much less complicated that the combined thousands of private plans.

2) The profit motive of private insurance and health care companies (including for-profit hospitals and drug companies) is not necessarily in the best interests of patients. Moore interviews people whose job it is to find loopholes that allow insurance companies to avoid paying claims to those who become sick.  Also, there have been studies that show doctors are much more likely to prescribe particular drugs to patients when lobbied by drug salespeople regardless of whether the patient needs the drug or not:  “[r]esearch clearly shows that doctors who report relying more on promotion tend to prescribe less appropriately, prescribe more often and adopt new drugs more quickly.”

I’m not saying that the profit motive is always bad in the health care industry (in fact, I think it’s often a wonderful way to align the incentives of many different people and businesses), but it has some undesirable effects.  Without the large profits that drug companies enjoy, there would be smaller incentives to pursue groundbreaking drugs that can work wonders for people ranging from cancer sufferers to those with high cholesterol.  I think many people make the faulty argument that because drugs are so cheap to manufacture, they shouldn’t be priced so high.  However, development of these drugs requires an enormous amount of research and development (R&D) expenditures, and most drugs developed never see the light of day.   Economist Gary Becker has suggested that countries that regulate the prices of drugs to low levels are able to ‘free ride’ off the American system.  What he means is that drugs that are developed in the US, where their makers can enjoy large profits, still benefit other nations that might have stifled similar drug development in their own country with price caps.

3) Moore’s ‘Sicko’ also states that we in the US suffer from poorer health as measured by infant mortality and longevity when compared to other industrialized nations. It is certainly true that we are an unhealthy nation, but others like Becker point out that this is mostly due to our terrible lifestyle, and not to the quality of our technical skill in healthcare.  Becker shows that survival rates for diseases like cancer are higher in the US, suggesting that our healthcare system is in fact very good (although very expensive.)  While it’s true that our poor health is often due to factors like overeating and smoking, I think it’s incorrect to think that our health care system can’t help fix these lifestyle factors.  When an ‘ounce of prevention is worth a pound of cure’, why should we be so focused on the quality of the cure and not prevention?

One potential benefit of a government-run health insurance option is that it would be a perfect place for an incentive system to be set up to promote healthier lifestyles.  One could penalize people who smoke or are at an unhealthy weight through higher premiums, or reward seniors who join a gym or excercise program.  This gets into dicey territory of how to determine what’s ‘bad’ and what’s ‘good’ for people.  One might point out that obese people and smokers actually costs less to treat during their lifetime because they die sooner.  Despite this, I personally feel that we as a country have a responsibility to encourage people to live healthy lives.  Libertarians would find this paternalistic, but I believe people are generally happier if they are healthier, and I would support the government taking modest measures to raise the health of its population.  Simple things like providing information (warning labels on cigarrettes, forcing restaurant chains to display calories) shouldn’t be too objectionable.  Penalties for drunk driving are another example (which should be increased; the penalties, I mean.)*  On a larger scale, we could eliminate farm subsidies for crops that make up too much of our diet, like the corn used to make corn syrup.

4) There is a general lack of information on the part of consumers. I’m a fairly sophisticated consumer when it comes to most items.  I have a mental price list for pretty much everything I buy, and am constantly weighing benefits of one product versus savings on a substitute.  Despite the fact that I pay much more attention to prices and value than most people, I am completely clueless as to what is reasonable to spend on a night in a hospital, a routine doctor’s office visit, x-rays, or a hip surgery.  Prices are not posted for all to see and compare between hospitals as they are for other products.   Insurance options are generally not set up to encourage patients to shop cost effectively.  Combine this with the many varieties of health insurance, all with pages of descriptions on what they do and don’t cover, copays, coinsurance rates, deductibles and lifetime maximums.  These factors make it very hard to know if what you’re paying for care is reasonable or outrageous.  A government insurance option or regulation that standardizes the way policies are displayed, or a rule forcing healthcare suppliers to clearly delineate their service prices in a fashion that’s easy to compare, would go a long way towards helping patients make better decisions for themselves.

5)  I also perceive a lack of competition between health care providers and insurers within localized areas. This could be partially fixed if the government would equalize the tax benefits of health care between individuals and businesses.  Currently, a business gets to deduct its health insurance premiums whereas a wage-earner with an individual plan generally cannot.  This provides a huge incentive for people to be insured through their employer, which creates problems of choice, since companies typically don’t offer many insurance options from competing providers.  Transportability, by which I mean the ability for a person to keep their insurance when switching (or losing) jobs, is also an issue when insurance is tied to employment.  Individuals do have some options to avoid paying taxes on their out-of-pocket health expenses, like Health Savings Accounts, but usually not their insurance premiums.

In addition, I would guess that businesses get to write off health benefits at the corporate tax level of 35%, whereas even if individuals could write off thier insurance premiums it would be at their federal income tax level, which would be much lower for the vast majority of people.  Because of this last issue, I would suspect it would be easiest for the government to eliminate the tax breaks that businesses get on health care, and simply let individuals deduct their personal insurance costs.**  I think that if the onus were put on individuals to buy their own health insurance, and if policy terms were more standardized, it could lead to a situation more like car insurance, where it’s very easy to compare policies and switch to get the best deals.

6) Lastly, I think the importance of personal security and risk aversion is overlooked by opponents of government health insurance. As Moore’s film shows, experiencing a traumatic health event without proper insurance (or finding out you didn’t have what you thought was proper insurance) can be catastrophic to individuals and families.  (You’ve probably heard the oft-quoted statistic that about half of the bankruptcies in the US are related to illness or health care expenses.)  People gladly pay more to avoid unsustainable losses; that’s what insurance is all about.  I think that covering the majority of the 40-50 million Americans without health insurance with at least catastrophic care, and forcing insurance companies to not drop patients when they get sick would help alleviate the hardship individuals would feel in the event of a serious illness.  Plus, catastrophic care combined with preventative visits could save money through early prevention and by lowering emergency room visits by those without insurance.

Conclusions

I think its important for both sides of the health care debate to realize the successes AND defects of our current system.  (For extra reading, Becker does some of this in his analysis of the Swiss health care system.)  My point here is not to illustrate that government-run insurance is better than private insurance (I think we should have both, assuming the government option can be done right.)  Rather, I want to stress the importance of improving the current system, which is not working for many Americans, notably those in the bottom income percentiles.  Standardization and flexibility in individual choice in policies can help consumers navigate the system and make better choices.   Making sure that all Americans, especially children, since they have no choice in the matter, have affordable health coverage is also important.  I believe we should take things a step further and find ways for our health care system to alter our lifestyles for the healthier.  I’m frankly dismayed that a nation as wealthy and resourceful as ours has continued to allow many of its citizens to exist in a condition so inferior to that of the rest of us.  Because I believe that the individual happiness gained from increased wealth diminishes rapidly at a certain point, it is shameful and stupid for us not to a have a more egalitarian society, especially with respect to basic services like health insurance.  It is my hope that Americans will one day view basic health care in the same way most view education or protection from violence today, as a benefit that should be extended to all, regardless of race, sexual orientation, gender, or income.

* There is an important distinction that economically-minded people like myself make when discussing government-imposed penalties and incentives.  1) Incentives designed to compensate for the damages a person or company does to bystanders.  These are known as ‘negative externalities’.  A common example is pollution which affects those who are not the cause of the problem.  2) Incentives designed to modify behavior towards some kind of (subjectively) preferable alternative, despite the fact that this behavior is only harming the individual that persists in it.  Strict Libertarians would argue that government should never step in under these situations, since that would be infringing on individual liberty.

The problem with this position is that it assumes people are always rationally doing what they want to, and that no one outside of that person has a better idea of what would make the self-inflicter better off.  This may make economic calculations easy, but it’s difficult to apply in real life.  Few people question that a child should be forced to do certain things that will make them better off in the long run, like attending school or avoiding sharp objects.  Yet once a person is an adult in the eyes of the law, this idea that others can sometimes look out for a person better than the person themself is thrown out the window by those who hold “liberty” as the ideal that trumps all others.  For example, an economist would say a drug addict shooting heroin into his veins and living in a dumpster is doing what’s ‘best’ for himself, given his desires and position.

However, I doubt that few people, including the addict himself, in his more-lucid moments, truly believe such a person wouldn’t be better off if he were able to kick the habit.  Moreover, we frequently hear people saying they don’t want to do something, and yet they do it anyway.  While this makes me react cynically and irritably toward such people, I still think we as a society have a responsibility to take their words at face value and try to help them.  This might be on the ‘local’ level of a family member forcing someone into rehab, or it might be on the government level of subsidizing rehab centers or criminalizing (to a reasonable extent) the use, or at least the sale, of drugs.

** Labor unions dislike this idea because it jeopardizes the benefits they can offer people.  However, it’s important to remember that health insurance is just one part of employees overall compensation package, so less benefits would be theoretically made up in higher salaries (minus the difference in tax subsidies that the business was enjoying.)  Plus, instead of subsidizing health insurance premiums at the corporate level, government could provide additional subsidies to individuals to make up any differences.

Buying a home for the first time (guest post)

Guest post from Greg Uratsu, a dashing 26-year-old man-about-town who recently bought a townhouse in Seattle, his first home purchase:

I recently closed on a townhouse, and Ward asked me to write a guest post about my experiences on his blog.  This is the first blog I have ever made so Ward, you have my blog virginity [Editor’s note: Uh, thanks?].  I am blogging about the process of buying and closing on a townhouse.  Remember: this is a townhouse.  I don’t know if the process is different for a condo or house.  Thank you for taking the time to read about my experiences.

When this all started I knew close to nothing about buying real estate.  My parents didn’t really help me because they wanted me to learn the process on my own.  This has benefited me greatly because I know a lot more now.  First, I went to a bank to find a loan.  The person giving out the loan is called a lender.  When talking to my lender I needed to figure out how much I could afford so I didn’t waste time looking at townhouses that were out of my price range.  When talking to lenders, they all basically ask you the same questions:

1. What kind of loan do you want?
   1. 15 year fixed
   2. 30 year fixed
   3. Interest only
   4. There are others but I can’t remember [Editor: like Adjustable Rate Mortgages (ARMs) where your interest rate fluctuates.  I recommend getting the plain vanilla ’30 year fixed’ like Greg did.]

2.  How much do you want to put down?

If you put down less than 20% you have to pay monthly mortgage insurance.  The cost of this insurance varies depending on your loan amount.  A $300,000 loan will have you paying about $100-$125 per month in mortgage insurance on top of your mortgage payment.

There are a few ways to get out of mortgage insurance even if you put down less than 20%. Number 1 is to pay off 20% of the principle over time.  So if you put 10% down, you just need to pay 10% more of the principle over time and BOOM, no more mortgage insurance.  The other way to do this is as follows: say you have a $100,000 loan and you put down 10%, which is $10,000.  Over time the property value goes up to $110,000.  Since you have $10,000 in and $10,000 profit on the place, you add up the two values and have 20% into the $100,000 loan, and therefore the mortgage insurance goes away.

3.  Information from you (be sure to have answers to all these questions)

a.  How much do you make per year?

b.  What are your assets: car, debt, every single bank account, 401 K, IRA, Roth IRA?

c.  How long have you been working at your job and address?

d.  Social security number so the lender can run a credit check.

e.  Eventually the lender will need W2’s from the last 2 years, your past 2 pay stubs, and your residence history (to answer this, it helps a lot if you rented.)

4.  Interest Rates

a.  I didn’t realize what a big difference 1% can be on a mortgage payment.  I put down 20% on a $339,000 dollar place, and 1% can change my mortgage payment $168 dollars per month! The first time I talked to my lender the interest rate was 4.875%, after 1 month the rates went up to 5.875%, a difference of 1% in 1 month, damn…  I didn’t think it was that big of a deal until I did the math: $168 dollars for 360 months (30 year loan) is a lot of money, over $60,000! After gambling and letting the market change, I was able to get a final interest rate for a 30 year fixed rate of 5%.  Whew… I got lucky that the interest rates went back down.  Just for some comparison of interest rates, 5% is pretty damn low, I know people in 2006 that locked in at 8-8.5% which is a lot higher.  My parents in the 80’s locked in at like 12%, or something silly like that.

[Editor: Greg illustrates the importance of getting a low interest rate.  The higher your credit score, the lower your interest rate.  Read this to check your credit score and learn more about the importance of good credit.]

b.  It is important to know what you can and cannot do with each lender because they have different rules.  Once I found a place and had an address to give a lender I was able to lock in an interest rate for free on that day.  This is how it works everywhere.  However, this is where things change.  Some places charge up to $1500 or even more to unlock an interest rate and re-lock yourself.  Luckily, the lender I went with (Bank of America) let me unlock my interest rate after X number of days (I forget how many but at least 1 month) for free.  The catch is I can only do this once and I HAVE to use it within 30 days or else I get charged a large fee in the thousands.  The lender can waive this if your closing date is late and it’s not your fault, but it’s best to close on time.

c.  It’s wise to shop around at multiple lenders to get the best interest rate.  I also had 2 lenders try and beat out the other lender.  If you tell one lender that another lender is giving you say 5%, the lender talking to you may crunch some numbers and give you 4.875%.  It’s just like negotiating for a car, let people bid against each other.  In the world of interest and real estate, this can equate to thousands in savings over time.

After the lender collects information from you they take about 1-2 business days to process your information.  Once they process your information they pre-approve you for some amount.  In my case, I knew I wanted to find a place in the $300,000 dollar range at 20% down, so I applied for a $240,000 dollar loan and I got it.  Now I could go shopping!

One last tidbit before I talk about shopping.  How does money change hands from buyer to seller?  Well there is a middle man called escrow.  Escrow takes care of all the money changing hands.  So at closing, my lender will wire the money to escrow and then escrow will give them money to the seller.  I didn’t know this and this is important information for later on in this blog.

I had no idea where to look for real estate, I also needed an agent.  I will talk about finding an agent later.  First, let’s look at the places online to shop for a home.

1.  Craigslist.com

2. http://www.residentialseattle.com/

3. http://www.realestate.com

4. Ziprealty.com

My favorite choice was craigslist.com.  I looked up the places for sale and found one I liked.  But what to do?  There was an agent’s number but I didn’t know what to do.  Do I need an agent to talk to this agent?  Do I tell him/her I want to look at the place but I have no agent.  Well I learned that you do not need an agent at the time, and when you call the agent listed for a piece of property you tell them you’re interested in looking at the property and they schedule a time for you.  I looked at about 20-25 places before finding the one.  I found my agent that I wanted after the 3^rd place I looked at.  She seemed really nice and very flexible on meeting times so I decided to use her as my contact.  When I found a piece of property I was interested in seeing I would call her up and tell her I wanted to see that.  You do not have to use the agent listed with the property to see the place because all property agents have access to keys.

When looking at the different places I learned that it’s nice to go with someone.  Luckily I have a girlfriend who didn’t mind going with me and she was a big help.  It not only helps to get the eye of a women, but also to keep you focused.  All my focus was on was the living room and how I could setup an L shaped couch and my TV to watch sports.  There were many places I saw that had a great setup but the bedrooms weren’t as nice, the kitchen was not nice; she really helped in reminding me to look at the other things.  She also brought in a different view point by asking questions like:

1.  What schools are close to here (when you sell you want to be able to appeal to all kinds of people and that includes families with kids)

2.  What is the neighborhood like?

3.  Is there a lot of easy parking for friends

4.  Is there easy access for the freeways?

5.  Is there a lot of crime?

These questions are important and it was sometimes hard for me to focus because I was only concerned with the living room, the kitchen (because I like to eat), and the backyard (I didn’t want a big one or one I would have to work on).  She also looked at the bathrooms, bedrooms, storage space, closet space, layout of the dials, bells and whistles on the walls, ability to easily to move in furniture; a lot of stuff that helped with my decision.

During the many hours and trips spent in looking at a place I realized that the $300,000 price range was not going to cut it.  I had to contact my lender and ask them if I could qualify for $340,000 home with a 20% down payment for a loan of $271,200.  After processing, I was qualified and I had more wiggle room to find a place.  My goal was to live in Seattle but in an area that I felt would be stable and wouldn’t become run down with crime.  The places I said no to were Beacon Hill, Central Area, International District, and West Seattle.  (The latter is nice but it’s a hassle to get to the freeway for work).  I wanted either Greenlake, Fremont, Wallingford, Belltown, or Greenwood.  After looking at the price range of what I wanted I found out the Greenlake/Greenwood area was the best without sacrificing space and amenities.

My goal was to find a place that was about 3-4 years old so that I would have some history on the townhouse to see if it had any leaks or problems.  A 3-4 year old place is new enough that it won’t be run-down, I wouldn’t have to do maintenance to it (because I am NOT A HANDYMAN), and it would up to date.  The problem is 3-4 year old houses were built during peak real estate prices in Seattle.  Typically your first 5-7 years of mortgage payments go towards interest only so the homeowner’s paying the mortgage for 3-4 years are not paying off any principle.  Therefore they still owe a large amount on their mortgage and if they are selling the place they are selling it for prices that are either at or ABOVE a brand new upgraded townhouse in today’s market.  I was surprised with the number of 3-4 year old places that lack today’s standards.  A prime example is a kitchen without granite tabletops and stainless steel appliances.  If I go out and meet a girl I want to be able to tell them I have stainless steel appliances and granite table tops at my place.  That’s how I got my girlfriend.  [Editor: Coincidentally, that’s also why my wife married me.]

A brand new upgraded townhome SHOULD include:

1.  Granite tabletops

2.  Stainless steel appliances

3.  Hardwood floors

4.  A thermostat in every single room

5.  Motion detector for the garage

6.  Gas Fireplace

The luxuries are:

1.  Security System

2.  Radiant heat (I had no idea what this was: it’s a web of pipes that go through the floor or wall of every single room.  Since each room has a temperature control you can set the heat to whatever you want.  Therefore not only does heat come out of a vent, but if there are pipes through your floor, the water heater shoots out warm water and therefore heats your floor as well.)

3.  Marble tops for the bathrooms

4.  Anything else I am forgetting.  Maybe a balcony?

Luckily, I had all the upgrades and luxuries except for marble tops in my bathroom, I even have a balcony.  [Editor: Boss baller!] This was all for a price much less than for a 3-4 year old townhome of similar square footage and location with non-upgraded amenities.  I realized that I should buy a brand new place and I did.  The only risk I have is I don’t know how the place is going to hold up.  Another reason why I picked my place are personal attractions as well.  The sun hits the back side of my place and is blocked by the other buildings so my place stays cool, I don’t want to live in an oven.  I live near a turn-around so there’s no traffic and it’s quiet.  I live away from the main street so there’s little dust and noise.  It has little to no yard to maintain.  It has a balcony.  It has a lot of storage space.  All of these upgrades and luxuries for today’s homes make me realize what a time capsule my parents live in since they have upgraded nothing since 1979.  Radiant heat in the Uratsu household?  More like fire in a pit for warmth.  Ok maybe not that primitive, but it’s still outdated.

So after finding a place and telling your agent you need to make an offer,  ohmygosh there’s a lot of paperwork and legal mumbo jumbo you have to go through.  Luckily my girlfriend also came with me for this. It’s nice to have a second set of eyes for this.  Off the top of my head, this is the timeline after making an offer:

1.  Builder or Seller either agrees or disagrees on the closing date and price (of course there’s other stuff but the closing date and price are the most important things most people look at).  If the builder or seller do not agree then they send you something back.  A quick tip on the closing date:  You want to close as close to the end of the month as you can.  Once you close you have to pay property tax for that month and it’s nice to buy a place at the back end of a month so you don’t owe that much in property tax for that month at closing.  My big obstacle was the closing date, we agreed on a price fairly quickly, but it took 3 offers to agree on price and closing date.  One thing to do is also add into the contract things that can be added to the house.  I asked for a stainless steel fridge and washer dryer.  It was agreed upon that they buy me that and install it.  I also asked for blinds but I didn’t get it.

2.  Once there is a mutual agreement then a lot happens.  Here is the order of things. First you need to make a check called “earnest money” to the seller.  Since the person is taking the house off the market for you they don’t want the chance of you walking away.  Remember, each day the owner is paying property tax and utilities so it’s not free for them to have the house sit there unsold.  If you were to walk away under certain rules, then the seller gets to keep the earnest money.  Typically the earnest money is 1-2% of the total price of the place.  If you decide to buy the property then the earnest money goes towards the down payment.

3.  You need a house inspection.  It costs about $300-$500.   The inspector has an eye that the normal person does not have and recommends places within the property that need to be fixed, touched up, and makes sure all the appliances work and there are no leaks

4.   You must check with the city to see if there are any additions to the area that the community will be responsible for.  For example, you might buy a place and then 2 months later they re-pave the streets in your area.  The community might have to pay for those streets and you will be responsible for the bill.  You are making sure you aren’t surprised by any extra bills you may have.  If there is something you don’t want being done in the near future with respect to extra bills, you can walk away from the purchase and get back your earnest money.

5.  You need to schedule an appraisal from the lender.  The lender sends a property expert to look at your place.  They also survey surrounding properties and how much they sold for.  This is done because the lender wants to make sure they are letting you borrow money for a place that is indeed worth at least how much you’re buying it for.  This costs about $500.  If the appraisal comes out lower than the agreed price, you can walk away and get your earnest money back.  If it appraises for more then more power to you, good job.

6.  You must find someone to insure your home.  Usually there is a Home Owners Association (HOA) for townhouses and condos which charges you about $100-$200 a month.  The HOA protects the outside of your home from falling trees, fire, and other stuff.  Usually you need to buy extra insurance to insure anything INSIDE your place incase of theft.  The HOA also maintains the building you’re in.  Luckily, I do not have HOA dues, so I needed to get approved for not only the outside of my home but the inside as well.  I needed the insurance to be approved for the purposes of getting the mortgage loan as well.

7.  There is a title you must agree to.  The title states the land that you own (if what you are buying includes land), and states addendums that are in place for that area.  For example, maybe 40 years ago it was agreed that oil could be drilled under your land.  You will know about these agreements as far back as a title company can go to see if there were any agreements that were agreed upon in your area.  If you do not agree with the title because you are scared someone has the legal right to do certain things to your area you can walk away from the deal and get your earnest money back.

8.  You must have your mortgage loan officially approved by your lender by some arbitrary date that you and the seller agreed to on the contract.  Otherwise, the seller has a right to walk away.  They also have the right to take your earnest money since you wasted their time.

9.  For a brand new place , you have a walk-thru with the builder to make the last minute touch-ups to the place.  This is where the inspection comes into play because you list off anything the inspector said should be fixed or touched up.  I asked for the entire place to be dusted, cleaned, and vacuumed before I move in.  I also asked for touch-ups to the paint and anything I deemed not reasonably perfect for a brand new place.  If you notice something after you close,  it would be your responsibility.  You do not want to have to do something the builder forgot or didn’t do.  I also made sure to receive my keys and garage remote at closing.

10.  The last thing is the closing.  At this point, the money from my lender that was put in escrow was officially wired to the seller.  Once that was initiated the place was officially mine (under the 30 year slavery contract I have with my lender.)  Remember also that there are closing costs which typically amount to $6,000-$10,000 when you consider all of them.  You need that much more over the top of what you’re paying for the place.  Poop.  I got my keys, my garage door opener, and the responsibility of up keeping up my new home.  The last thing I did was transfer all utilities from the seller’s name to my own and that isn’t hard.  I was finally done!  Housewarming party!

- Greg Uratsu

Do average Americans benefit from lower capital gains tax rates?

The answer, according to some well-reasoned arguments voiced by Fairmark.com’s Kaye Thomas, is ‘not much.’  Here’s some interesting thoughts from Mr. Thomas’s article regarding taxable stock capital gains in the US.  (Bolding and italics mine):

“[I]t may be true that 100 million Americans own stock, but most stock held by middle class Americans is in IRA or 401k accounts, where the capital gains rate doesn’t apply. The tax rate matters for stock held outside these retirement accounts, and most of that stock is owned by extremely wealthy individuals. The bottom 60% of households own just 9%, while the top 10% of households own 70%. Over half of all capital gains go to households with income over $1 million. That’s roughly two-tenths of one percent of the population getting more than half the benefit of the cut in the tax rate.”

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“Advocates of lower capital gains rates (and lower corporate tax rates, and other tax benefits for business) often cite the statistic that 100 million Americans own stock, implying that the middle class will receive an ample share of the benefit. Yet ownership of stock is highly concentrated in the hands of wealthy individuals, a small fraction of the population. The vast majority receive little direct benefit, or none at all. To borrow an analogy from John Kenneth Galbraith, the “100 million” argument is like justifying the cost of feeding more oats to the horses by pointing out that some will fall to the ground and be eaten by sparrows.”