Tomorrow evening is the semiannual town meeting where I live, North Reading, Massachusetts.  Everyone gathers in the high school auditorium to vote on matters of local governance.

In preparation for the budget discussions, I thought I’d take a look at the local property tax rates.  The Massachusetts Department of Revenue keeps an online historical record of the rates for every municipality in the state.  It took a little massaging in Excel, but here is a list of property tax rates from 2003-2009. Continue Reading »

Ever been stuck at a cocktail party with a blowhard who’s leaning in a little too close? Just launch into a monologue on the relative merits of title insurance and even the most booze-fogged windbag will go running for cover.

Title insurance.  How boring.

How boring, indeed, until two days before closing on the purchase of your first home, and your attorney calls saying that your mortgage has been approved, the former tenants were removed by the sheriff, the radon’s been remediated, and oh, by the way, do you want title insurance?  “Huh?”, you say.  “What tenants?  I thought those were the owners?  And what was that about insurance?”

What is Title Insurance? Continue Reading »

Didja’ ever notice that how you measure something sometimes changes the outcome?

In the 1980′s CEO’s compensation changed from a salary-and-bonus plan to being directly tied to the stock price, and voila, stock prices rose.  The companies weren’t necessarily managed any better, but since stock price was suddenly the important metric, it improved.

A similar effect can be seen in Massachusetts schools which are ranked by statewide tests (MCAS).  An increase in the scores, doesn’t necessarily mean that the students are any smarter, but they are doing better at passing the exams, leading to much discussion about “teaching-to-the-test.”

Likewise, many financial advisors are paid by a percentage of assets under management.  The rate is typically 0.5-2.0% per year, where the low end of that range is for account values north of $1M.  If you have $200,000 in an advised account that charges 1.5%, you pay $3,000 per year for that advice.

Not only do I think that’s an awful lot of money, it isn’t judging the right metric.  Sure, I want my investments to grow, but what I really want is my net worth to grow.  Designing the advisory fee around just one aspect of your net worth focuses their activity around just your investment — typically brokerage — accounts. Continue Reading »

Today the Senate approved a tax credit of 10 %, up to $15,000, towards the purchase of a home.  This is an increase over current law which was written up in a previous post on first-time homebuyers credit, which covers up to $7,500.  The new credit would be available to all home-buyers (not just first-time buyers).  It’s an amendment to the overall stimulus package.  We’ll see if it makes it on through the House.

If you’re thinking of buying your first house, this new credit might help.  It’s a credit of up to $7,500 that is repaid (interest-free) over 15 years.  After you receive the credit, you pay 1/15th of it back each year when you file your taxes (e.g. $500/year).

The fine print:  To be eligible, you must buy the house between 8 April 2008 and 1 July 2009.   Individuals filing single and married couples filing jointly are eligible for $7,500; married persons filing separately are eligible for $3,750.  The house must be in the US.  The house must be your primary residence, not a vacation or rental home.   The credit phases out for incomes of $75,000 – 95,000 for individuals filing singly and $150,000 – 170,000 for married couples filing jointly.

IRS Form 5405 and news item of 23 December 2008.