Ruminations on finance from a rank amateur

When I was working a day job, consulting, speaking, and writing for professional publications, I didn’t have a lot of time to think about personal finances. Paid my bills, kept my credit card balance low, and contributed to my retirement savings on a regular basis was about as involved as I got.

In retirement I now have what may be too much time to think about personal finances. Added to discretionary time, social media advertisers bombard me with click bait headlines like “7 steps you need to take for a successful retirement” or “BIg changes coming to Social Security: are you prepared?” You get the drift.

So when it comes to economics and finance I am very much a rank amatuer. That, combined with being a certified curmudgeon means you, dear reader, should take the following ruminations with a very large grain for salt….

County property taxes - a great deal for the money

I read 71 books so far in 2021. I bought only 23 of them - slightly less than a third. The rest I borrowed as e-books from the county library system using Libby.  I estimate my savings to be about $750 ($250 higher than I had predicted in May.) The county’s share of my property taxes this year was $215.62. I received about $500 more in value from my taxes than I paid in - and this does not count the savings I had for magazines I read or county parks I used without paying for a permit. Heck of a deal, Dakota County!

How does moving to Florida make economic sense?

I tried to explain the above observation to a gentleman sharing a table with me at Starbucks in a local Target store last week. I was having a cup of coffee while my client to whom I was giving a ride as a volunteer driver was shopping. My tablemate was explaining why he had a house in both Florida and Minnesota and why he spent six months plus one day there. By being a Florida resident, he bragged, he avoided Minnesota’s onerous tax burden.

Yeah, we in Minnesota pay taxes on not just our salaries, but on our pensions, our social security checks, and of course on any withdrawals from our pre-tax retirement savings. But even given that, my MN tax bill was less than $4800 for 2020.

I can’t quite work out how I would be saving any money by owning a second home in Florida. Could I even get a used mobile home on a leased lot for $400 a month? There are many good reasons to spend the winter in a warmer climate. But I can’t make the numbers work that having two homes is cheaper than having a single residence, even if one is in a low tax state.

Tax avoidance DNA

Tax avoidance seems to be part of the genetic make up of human beings. Stories of tax avoidance I’ve heard during my travels include:

• The reason old houses are so narrow in Amsterdam is that owners' property taxes were based on their building’s width facing the street. So the Anne Frank house, as many others, is narrow, but deep and tall.
• In Cairo, many multi-story homes have an unfinished top floor or two. Bare concrete and rebar instead of a finished roof is a common sight. A guide told us that the reason for this is that homeowners do not have to pay property taxes until a home is completely built. No rush to finish up, right?
• Many 19th century large homes here in the Midwest have bedrooms without closets. People at that time used wardrobes instead for storing clothing. Why? Closets were counted as rooms in houses and taxes were based on the number of rooms a house contained. I used an old wardrobe inherited from a relative for many years.

Should I ever decide to do research for a non-fiction book, it would be how and why people are wired to avoid taxes. If such a book has already been written, please send me the title.

Politics and the stock market

For 67 years, I paid no attention to the stock market. During crashes, etc., I read the headlines and shrugged, and focused on financial matters which impacted me directly as an educator (Minnesota government’s financial status primarily).

But my financial well-being in retirement is now rather more dependent on the economic well-being of the nation, if not the world. My IRA is heavily invested in mutual funds. My state retirement pension’s health is determined by how well the plan invests in opportunities in the bigger world.

So I suspect that many of us old-left-of-center types might be shifting how we view economic policy. How will this action impact the stock market? How will businesses in which I am invested be helped or harmed through regulation? How might an increase in the minimum wage affect the profits of publicly traded businesses? Would we be better off as a society if everyone (and I mean everyone) had a stake in the world economy through partial ownership of it?

Or am I just turning into a conservative, selfish old WASP?

One final piece of advice

Don’t take any wooden bitcoins.

Comments

[Pat Hensley]

When my parents died in 2019, it was more feasible for us to buy the house from the estate than to sink tons of money into it just to get it up to code in order to sell it. We are now spending the winter months here (this is our first full winter here) because hubby can't take the cold of SC winters anymore and I can't take the heat in FL in the summer. We looked at the tax situation and we believe that even though taxes may be less here in FL, the insurance rates for are outrageous! The state is going to get their money one way or another. We prefer to stay residents in SC where our taxes are lower and just be snowbirds!

[Doug Johnson]

Hi Pat,

Still chuckling about the "cold" SC winters! Come visit us in MInnesota some January.

Everyone's financial circumstances are a little different. Glad having two residences is working for you.

Doug