patrick.net

I just filled up my truck this morning. $3.08 a gallon! I am VERY glad that back when I bought this truck in 1996, I opted for the compact, 30MPG 4 banger model. It still costs $30 to fill er' up. I cannot even begin to imagine what the guy next to me in a Ford F250 was having to shell out.
If gas goes much higher, this is going to start having some serious consequences in middle America

Garth,

Non-wacko doomsday MRI ideas.

disclaimer: may still be considered wacko by others, also not to be construed as advice for anyone, do your homework...and don't blame me when your radish crop fails.

Nomadtoons2 actually have a good start. He knows how to repair mechanical things. I can see that as a very useful skill when American purchasing power does down.

If you have a sunny spot in your yard, consider building a vegetable garden.

Rest of the yard, consider paving lawn over with rocks or something, to save on water.

Learn to cook with rice and beans. They help 3rd world peasants survive on virtually nothing at all.

As always, keep your overhead costs low and flexible. In case of real trouble, it's almost always better to run than to stay.

Owneroccupier,

I'm not sure I follow totally on the whole ETF tax issue. Yeah, dividends are dividends and if they are paid out to you well then we have a taxable event. However; your cost basis is YOUR cost basis. If you bought an ETF at $10 a share and at the end of the year it was trading at $15 the only way you should have a taxable event is if you sold on or before December 31st. Randy, Peter P?

newsfreak,

The Okies ran west, the Mexicans ran northward, the Germans ran west and the Jews ran into Switzerland. In case of anything short of global nuclear war, there's usually somewhere slightly better to run to.

disclaimer: I could be paranoid, though I don't stock MRIs, because they're gross

DinOR,

Tax deferrals are great for ongoing businesses and in high inflation environments, and they're kind of nice for estate planning. But for the average homeowner, what's so bad about locking up $500K of appreciation to today's high prices and paying LTCG on the rest?

Newsfreak,

Your family's approach was certainly not wacko, they did what they had to do and survived. So they did it right.

I've heard pilots say that a good landing is one you walk away from.

As to the wacko idea, I was thinking of my facetious post about hoarding liquor and guns. I also suggested teaching your wife and kids to shoot. Afterward someone sent me a web site called "Whiskey & Gunpowder." I'm not saying that site is wacko -- I didn't read it. But that's what I'm getting at. Militia trolls need not apply.

newsfreak,

You're already doing a very smart thing by buying a wood burning heater and living in a relatively small house. This winter, folks in DC have been hit with $600 natural gas bills for 1800 sq ft homes.

I also don't think it's wacko to realize that banks could take a holiday.

I'm not a taxpert by any measure. I think DinOR is right about ETFs just being standard dividend and gain tax accounting.

What Peter P and I were talking about was derivatives tax accounting, which gets more complex, especially if you're using derivatives to offset risk (hedging).

I'm not sure what happens when an ETF uses derivatives as part of its strategy. Don't some mutual funds do this but the taxes aren't passed on to the investor, instead spread out among the fund as fees? We need a taxpert to chime in.

Garth,

Hording guns are plausible where law enforcement broke down but the system of government hasn't. But generally, it's better to run in those situations than to stay and stick it out.

Astrid,

Since I was born in Idaho, they might let me back. I love my cousins, aunts and uncles and it's God's Own beautiful there. But I'm not sure I could handle it, even as a moderate/liberal R myself. I'd bet that if Roe v. Wade ever gets reversed the ID legislature will move quickly, or even beforehand.

newsfreak,

I better clarify too, that was $600 for one month. And we had an extremely mild winter here.

It's the end of the world as we know it.

It's the end of the world as we know it.

And I feel fine.

I feel fine.

Garth,

But worst case scenario probably won't happen. :P

So I'm sticking to: living close to work, keep my fixed costs low, learn a useful trade, and defer having kids for a few years to see how it all pans out

newsfreak,

My family usually keeps the house at 50F. So my mom and dad has $150 or so gas bills. I think my parents would go even lower if not for the water pipes.

Falun gong = Scientology

newsfreak,

Chicken butchering may also be a useful skill :P

Have you considering chickens for your home? They're good with bugs and true free range ones taste much better than store bought ones.

Garth,

We love to go up to Priest Lake ID in the summer! You're so far north that it seems like it's still light at 10:00pm. On our first trip we were suprised at how nice everyone was and that the sterotypical militia type is really more hype than anything. Makes for great movie scripts though.

When I was growing up, my dad got a deal on a Vermont Casting wood stove. These are usually at least $3500, but this one was forest green, which in the early 80's was unpopular. Anyhow, it was small, but it had a complex draft, oxygen control system that allowed you to crank down the oxygen enough so the fire would barely burn all day on only 1-2 logs. Once the stove got hot, it would heat the entire downstairs. But dad cut out vents to the upstairs and installed some fans that basically pushed the warm air upstairs. We would use about 3 pickup trucks full of wood, which we got for free anyway. As a result, it didn't cost hardly anything to heat the house even when it got very cold.
Here in Alameda, I don't bother to turn on the heat, but my wife gets cold easily, which is funny since she's from PA, so I crank it on from time to time if it gets below 45 degrees. I could go on and on about penny pinching. My grandad taught me all about it, so I bet I've probably got most of you all in here beat!

Nomad,

You had more practice.

However, my grandma would have you beat. We used to have 8 watt bulbs in Shanghai. And she used to use water to wash vegetables, then cloth, then use it to flush the toilet. Back in the early 60s, my dad's family raised rabbits and chicken in their urban home, for meat. They also made noodles by hand to save on the processing charge.

astrid,

What I feel is wrong about the 500K cap gain exclusion could fill a book so I'll try to keep this brief.

1. It instantly created an uneven playing field amongst asset classes.
2. De-stabilized neighborhoods
3. Left everyone with the impression all is well with the economy
4. Created more "greater fools" than you can shake a stick at
5. Fosters an environment where innovation is not rewarded

Other than that, nothing really. It's Friday so I'm better with everything!

newsfreak,

We'll have to check that area out! I've heard a great deal about it over the years (particularly from fisherman). In so far as the stars they look like they are lower on the horizon (optical illusion?) as if you could reach out and touch them. On Priest Lake it would have been nice to have built a place there years back but they started to put up mansions right up to the lake so you can go to one of the many islands to get away from them.

DinOR,

I totally agree. Which is why I think it's better to lock it in now, because it'll be an easy target for repeal in a couple years.

newsfreak,

The last thing I want to labeled as is the "I like Capital Gains Guy". The reason I bang on this drum is that as written the original IRS ruling had it right.

We were allowed to be exempt ONE TIME as we downsize toward retirement, and it was good.

This was never intended to BE the retirement! We have people right here in town that have lived in I lost track of how many different states over the last 9 years that have built and sold mansions and pocketed tax free money ALL ALONG THE WAY! We just can't have a viable economy if all we do is go around selling mansions by the beach, the lake, the mountains to each other.

DinOR,

I'll be more extreme and say that this country's tax policy is quite horrible, in that it taxes work much more than it taxes capital. Housing deductions and exemptions are the extreme manifestation of that unfairness, where the most unproductive capital received the most advantageous tax treatment of all.

newsfreak,

I'm a huge fan of the "night sky"! It always kind of ticks me off when our neighbors in the country would have have these "beacons" on all night and ruin the night sky! They would say it's for "security" purposes. Really? If your wheel barrow is that expensive maybe you should put in the barn! We've seen things like Hale Bopp and other celestial events like the space station pass by that get "washed out" in major metro areas. Have you ever seen a satelite photo of the U.S at night?

However, the $500K exemption is pretty sweet for anyone who cashed out in a boom area. I just can't believe people can stare at $1M tax free and not make run for it, prop 13 or not.

hmm, fuzzy thinking again.

-$1M tax free
+$1M after tax

newsfreak,

Most flippers pay normal capital gain on the profits. I believe California also has a state tax on sale of non-residences.

newsfreak,

Thanks for not taking that in the wrong light! We have a couple here in town that are salvaging a home that is under 900 sq. ft! All done "period perfect". We stop by on our walks and always make sure we give kudos for the fine work they are doing. They're from CA, the husband was a telecom exec. and they just enjoy what they do. If they make a buck I'm happy for them, and you're right, there are droves of people out there giving it a bad name! They can't finish fast enough to move on to their next debacle.

newsfreak,

What you and Linda in LA does is productive. Flippers are like day traders, except with SEC to watch over them.

goober,

Where do you live? And what kind of corn do you use? I heard people use waste corn (too poor quality for feed) for corn burning stoves.

Dinor,
I totally agree. All the houses that are anywhere close to anything with natural beauty is chopped up, sold, and bouht as vacation homes, etc. I can't tell you how many times I go home and see mountain homes in North Carolina and TN that are basically never lived in except once a year for a month. The other day I was on CL and there was a guy asking if he should invest in Memphis, and he had NEVER been there! It's like people don't even care about the neighborhoods anymore, just as long as they can buy cheap and sell high. This pattern, if it continues, will assure people like myself that we'll have to live in the middle of nowhere in suburban wastelands while the areas we cold've lived in will simply be rental homes owned by investors.

-with
+without

:oops:

astrid wrote about planting gardens and also wrote:

> Chicken butchering may also be a useful skill
> Have you considering chickens for your home?
> They’re good with bugs and true free range
> ones taste much better than store bought ones.

A few years back I was camping with some friends in the Desolation Wilderness area (we backpacked in for a few days of fly fishing away from the wives and girlfriends) and we were talking that there are not many Americans left who can kill something and serve it for dinner an hour later…

As bad as things may get it will probably not make sense for most people to have chickens and gardens if they have other skill to trade for food. I'm sure that plenty of people would trade food if I fixed their roof, plumbing or car (or helped them write a business plan)...

goober,

I agree. I am on the waiting list to be adopted by Angelina Jolie and Brad Pitt, but SFWoman would be an even cooler mom :)

If you bought an ETF at $10 a share and at the end of the year it was trading at $15 the only way you should have a taxable event is if you sold on or before December 31st. Randy, Peter P?

Depending on how the ETF is setup, you may have tax liability on income that is not distributed.

Speaking of taxes,
I think there is also an undocumented enormous percentage of people who basically "write off" everything. The kind of people who write off everything from their cars, gas, tolls,and on and on. Some of these people need such a cut, like artists, and small businessmen starting a business. But I know an uncomfortable number of people who actually make very good money and write off every damned thing they can think of. People ask today why our roads, schools, and public buildings lack the funds. Some of it has to do with tax loophole jumpers. I'm all about tightening up some of these laws.

nomadtoons2,

Right on! Vacant 11 1/2 months out of the year is the best use of this country's resources! My father used to say that we could run a mirror image of America just with what's wasted. I'll bet your dad still says it!

Now for my ultimate restoration project! (after I finish the boat)

A Checker Cab! What year? Doesn't matter, they never changed the body style! What could be more fun than that!

Peter P,

That is true. We should always inquire about the "tax efficiency" of our investment vehicles, this can sometimes be as important as management fees. I just tried to keep my answer simple b/c I believe that ETF's have been the right choice for many investors long before they were all the rage. I'd hate to see folks pass up on them b/c of intricate taxation issues on a few select issues. Btw, do you track the discounts/premiums? When I first came across this I thought it was like the ultimate "insider trading" secret. As you're aware some ETF's trade at a discount to the NAV of their underlying securities. Not an instant buy signal but great for value guys.

I remember when the cap gains tax came into play...I was unhappy because I could've used it in previous sales had it been in play. Bad timing. That's one of the reasons we sold last fall...I didn't want to miss that tax advantage again. This is a law that could easily go away because it is not fair, but boy is it advantageous to someone like me. It should be repealed.

Sorry...I'm talking about the 500K cap gains...if that wasn't clear.