Wells Fargo loves sending Debit cards

I opened an account with Wachovia few years ago. Wachovia is now Wells Fargo so I am a customer of Wells Fargo.

Earlier in 2011, I walked into a Wells Fargo branch. As I was talking to a representative there, he was offering me some services. During our conversation, I mentioned that I am interested in opening a PMA account within a couple months. It was my understanding that PMA package came with a $30 monthly service fees if eligible balance is less than $25,000. At that time I needed a couple of months to have $25,000 and I did not want to pay $30 monthly service fees. I told banker that because of this reason I am going to open PMA account after a couple of months.

To my surprise banker told me that my understanding was not correct. You don’t need to maintain a balance of $25,000 for first three months in order to avoid $30 monthly service fees. He told me that I can open the account now and I won’t be charged $30 monthly service fees for first three months. I was pleasantly surprised and I asked him to open the account.

In the process of opening PMA account, he asked me to open a Debit Card. I said don’t need Debit Card. He told me that I need to open PIN for security reasons and in order to have a PIN I need to have a Debit Card. So I said okay.

So he went ahead and opened accounts. After he was done opening accounts through his system, he gave me papers to sign to confirm account opening process. To my surprise he opened two accounts: PMA account and High Yield Savings account.  I told him that I did not ask you to open a High Yield Savings account. Why did you open that account? He mentioned that because it pays higher interest with the balance of $25,000 or more and since I am going to come up with $25,000, I should have High Yield Savings. At this point I was tired of sitting with him for long time and I did not want to argue with him and wanted to leave bank as soon as possible, so I did not say much. So I agreed to open High Yield Savings account and I left bank.

A couple of weeks after this, I received Debit card in the mail. There were 4 Debit cards! I had two checking accounts and I am joint owner on these accounts with my spouse. He opened a card per checking account per account owner and that is how we got four Debit cards in the mail. That made me angry. I did some research and I came to know that customer does not need to have PIN for security reasons, but banker told me so. #1. I also found out that PIN that I opened at bank was different than PIN that we have for our Debit cards. #2. I got 4 Debit cards when I asked for one. #3.

I called customer service # and expressed my frustration. Phone representative told me that she wrote my incident down and I should go talk to bank manager about this. So I went to bank to meet manager to talk about this. As I am sitting with manager and explaining everything that I experienced, she told me that PMA account does not have three months grace period. The reason I am not going to be charged $30 monthly service fees is because banker that helped me was second to the bank manager (herself) in authority and he made a note on my account mentioning that my accounts needs to be checked every month for first three months and $30 monthly service fees should be removed if it was charged for having balance of less than $25,000. I was not given this information before. #4.

When I was talking to bank manager about PIN and Debit card experience I had, she told me that it is good to have one Debit Card per each account per each owner. She told me that she takes care of her mother and put the money into separate checking account and gives a Debit card to her mother so that she can manage her mother’s finances. She mentioned that banker might have thought about it and issued four Debit cards for my benefit! #5. I told her that I did not come to her or banker for getting personal finance advice and I would appreciate if I should not given products that I don’t ask for. This conversation with bank manager was very disappointing as I felt that I was not being heard and I just wasted time by going to bank manager. I asked her to close all Debits cards and High Saving account. And I asked her to put a note on my profile clearly stating that I should not receive any product that I did not ask for. This was my last visit to this particular branch and I decided not to go to this branch again.

Fast forward to today (mid 2012). We got 4 Debit Cards in the mail. One per each checking account per each account owner! This time I did not get angry, but I smiled as I know it was Debit Card and Wells Fargo! I called phone representative to ask about these cards. I asked him to verify why did I get these cards and who opened them. He said he is not able to find any trace. He also mentioned that only a representative from a physical bank can opened Debit cards. I did not care much and I asked him to close all my Debits cards. He closed mine and said my spouse needs to call them back in order to close her cards. A week after that I went to bank as I had to deposit a check. (I always go to bank to deposit checks and don’t do it via ATM because I think that it gives teller to do something and may be few tellers would loose their job if more people start doing the same.) While depositing my check, I asked teller about Debit cards that I got recently. He was not able to answer my question so he grabbed someone quickly. Other representative told me that I should have Debit card for security reason and I told him that I had unpleasant experience with Wells Fargo regarding Debit card in the past and I don’t want to have Debit card for now. The representative asked me if I went to other branch. I told him that this is the only branch that I go to for last year or so. He told me that for sure no one from his branch opened Debit cards and it must be phone banker. #6. I asked him to make a note on my profile saying I should not be given any product if I did not ask for. He said he can make a note, but there is no guarantee that a banker would read it before sending me Debit cards again in future. I smiled and said okay make the note anyway!

A lot of students graduate with lots student loans and it is not that easy for everyone to find a job and it might take ever to pay back these student loans. I think that we are in educational bubble. I got surprised to know amount of student debt do some people have in their 50s and 60s after reading this article: http://www.cnbc.com//id/48148304

These are some interesting notes from this article:

Government used $431 billion in TARP and outstanding federal student loan is $583 billion.

Delinquency rates on student loans are 14%.

% of outstanding student loans held by borrowers 50 years and old is 15.5%!

It is amazing that personal finance is mainly about managing debts for a lot of us these days.

One can start talking student loans in teen ages and amount can be up to a quarter million! This might take years to pay it back.

Same is true for credit cards. Once can start getting credit cards debts and we can keep doing this forever!

Some of us want to be a home owners as soon as we can and want to buy the biggest house we possible can which will take years for a lot of us to pay off.

A few of us won’t mind taking debt for cars and other consumer products.

There are so many ways to keep taking debts. Things might be fine as far as we are working and able to make payments on our debts. But there is going to time when we would stop working. What are we planning to do after that?

Filing federal tax return saga ends finally!

As told by representative, I got back fees that I paid for filing free federal tax return.

I have prepared my tax return as much as I could have done in the month of March, but it was not fully prepared as I was expecting a couple of schedule K-1s. Finally I received schedule K-1 and I was excited to complete preparing my tax return.  By the way, I learned that one can get schedule K-1 online before he/she receives paper one. Anyways back to the theme, as I received schedule K-1, I logged into my account to complete tax return.  When I logged in, all data was wiped out!

So I called the company and found out the reason. I had already had a username with them which I used to file my tax return in the past, but for whatever reason I created new username to file tax return for this year. And when I received schedule K-1 I logged in using my old user name. Because of this, system wiped out all the information that I entered for filing tax return using my other username.

Now representative told me to use to old username. Representative asked me to pay fees again and mentioned that I will get refund after 2-4 weeks. So I did that and I entered everything I thought it was necessary to enter. Now I was feeling very good thinking I am done preparing my return. Somehow I like to things on deadline and I decided not to file my tax return before second week of April.

Second week of April came and I was ready to file my income tax return finally. Before I do so, I decided to check my prepared tax return again to make sure I did not make any mistake on it. While doing so, I found out that I did not fill form 6781. So I looked for that form, but could not find it on the version of software that I was using for filing my tax return. I tried calling them, but it was not working hours and I had to wait for next day to do so. It was a couple of days before filing deadline and I did not want to wait for next day. So I googgled it and read somewhere that this form is available if I use premium version of software. I thought I had no choice but to pay for this premium version now. So I did. I paid for premium version. And guess what? I still could not find form 6781. Now it was late at night and I was tired so I decided to call it a night thinking I will call next day and they will tell me where to find the form and I will fill it and will file my tax return.

So next day I called and representative told me that they don’t support form 6781!

Now deadline for filing tax return was next day and I had to find an alternative. So I thought I would use turbotax. So I looked it up and I found out that due to deadline they increased their prices. Basic version was for fifty bucks for filing federal tax return. I had to file federal and state tax return and I also knew that I might need to go with higher version as I had to file form 6781. So me being frugal, I did not even bother to check prices for state filing and higher version. Since I like to understand tax forms, I knew about every form I had to file. So I filed my federal tax return using https://www.freefilefillableforms.com and I filed my state return for free using https://www.ftb.ca.gov/online/calfile/index.asp

This time it is Health Insurance Company

My health insurance company charges me a couple of days before 1st of every month. E.g. for the month of February, I would be charged around 29^th January.

In mid April, I changed my health plan. My old premium was $135. Due to change in coverage my new premium would be $109.

At the end of April I was going to be charged for month of May. Since I changed my plan in the middle of April, I was expecting that my total charge would be $109(premium for new plan) minus credit from April. As I was charged end of March for April coverage and I changed my plan id mid April, I was expecting credit.

But I was charged $135. So I called them and explain issue to representative. Representative kept me on the hold for few times while she was researching my account. But she was not able to resolve the issue and she asked me to call me back. She called me back within an hour as I asked her to do so and she said system made a mistake and I would get credit when I would be charged at the end of May. I hope things would work out and I won’t have to call them again.

It is frustrating that companies keep making these kinds of mistakes and we have to keep looking at our bills in detail every time we make some changes to plan. Issues are being resolved after calling them, but is annoying to do so. I wish companies would not make these kinds of mistakes in the first place so we don’t need to waste our time and energy.

Here is an interesting fact. I came across these kinds of scenarios few times, but I never came across scenario when I was charged less by mistake. Would companies doing these kinds of things on purpose hoping people won’t notice and they would able to charge more than what they are suppose to?

Thoughts on article ‘Corporate Bond Funds Draw Record Amount of Investor Cash’

Here is the link of article - http://www.cnbc.com//id/46430171

I was looking at my short term bond allocation. I prefer to keep more money in treasury compare to corporate bond because it my understanding that treasury is more stable and liquid than corporate bonds. It is also my understanding that I will lose less than I would have otherwise (by keeping money in corporate bonds). And this will best sever my purpose to keep money in some place from where I can take money out whenever I want it and I won’t need to worry about losing a lot of real money ( if we don’t consider inflation). When I was looking at the performance of these two funds, return on corporate bond is going up and up. On the other hand, return on treasury is going down and down. Somehow I was trying to convince myself into changing my allocation. I was thinking about having more corporate bonds and keeping less money in treasury. After all return on corporate bond is higher than return of treasury and who wouldn’t like to get more return.

While thinking all these, I forgot my rules for a while. One of them says don’t chase returns and I was thinking about doing the same. One of my rules, says don’t buy into something that everyone is getting into because that’s how bubbles are created. More and more money is being invested into something that is going up. We keep pouring money into hottest thing in the market and somehow make it bubble.  We don’t realize that it is getting more and more expensive because everyone is chasing and my rule is to buy when it is cheap in my opinion.

Of course, when things are going up, people are going to talk about all positive things. Isn’t that how it works? During bubbles everything looks good and someone who is not putting his money into hottest thing is stupid because everyone is making money by getting in to hottest things.

Good thing that I read this article. It’s so hard not to get excited and get into when things are good. I need to work keeping my emotions out of it.

How does contributing to 401k reduce current tax burden?

Let’s say your federal tax bracket is 25% and your state bracket is 6%. Which means your total tax bracket is 31%.

You contribute $10,000 to your 401k.

So you will save $3,100 in your total tax this year. (31% of $10,000 is $3,100)

A couple of points on working on corp-to-corp vs W2

A couple of points on working on corp-to-corp vs W2 (with no benefits)

We are talking about scenario where no benefits are being paid by working on W2.

What are equivalent rates on W2 vs corp-to-corp?

$100k a year on W2 (with no benefits) is almost equals to $109k a year on corp-to-corp (S-corporation)

Lets understand the difference of this $9,000.

Even though we mentioned that you don’t get any benefits on W2, your employer still pays FICA (which is around 7.65% of your salary upto $110k a year) and unemployment insurance tax (http://www.workforcesecurity.doleta.gov/unemploy/uitaxtopic.asp ). So when you ask to be paid corp-to-corp compare W2, you will have to ask for amount which will cover FICA and unemployment insurance tax as you are responsible to pay them when you work on corp-to-corp by starting an s-corporation. These are basic taxes that you pay anywhere in country. Apart from this, there might be other taxes. You should research about them based on the location where you are when negotiating W2 and corp-to-corp rates.

S-corporation is basically a bypass. Company pays to your s-corp and this s-corp pays you. But by doing this, you can get some tax related advantages. Let’s understand a couple of these benefits.

Health and medical and dental expense

In W2 (with no benefits) you pay for your health insurance and you don’t get any tax deduction on it in calculating itemized deduction till your total medical and dental expenses are more than 7.5% of your total gross pay.

e.g. if you are making $100k, you won’t get any health and medical and dental expense related tax deductions till your total expenses in this category is less than $7,500 for that year. For a healthy person, it is unlikely that you are going to spend $7,500 in this category.

Let’s say your health insurance is $150 a month. $150 a month equals to $1800 a year. You don’t get any deduction on this amount when working on W2.

Now if you had established s-corp, you can take this deduction. So your taxable income will be lowered by $1080.

Unreimbursed employee expenses

One does not get full Job expense and certain miscellaneous expense deduction under itemized deduction while working on W2.  You will get deduction only on the amount which is higher than 2% of your adjusted gross income.

Let’s say your Job expense and certain miscellaneous expense is $5,000 and your adjusted gross income is $100k. The amount you will include for Job expense and certain miscellaneous expense deduction will be $5,000 - 2% of $100k = $5,000-$2,000 = $3000

How would this work when you are married?

Let’s say you are married, filing jointly and your spouse is working and your adjustable gross income is $150k. The amount you will include for Job expense and certain miscellaneous expense deduction will be $5,000 - 2% of $150k = $5,000-$3,000 = $2000

Retirement accounts

In the case of W2 (with no benefits), you can contribute maximum of $5,000 to your regular IRA. You deduct this amount from your income to calculate adjusted gross income. i.e. you can take the deduction of $5,000 by contributing it to regular IRA.

In the case of corp-to-corp, you can open SEP-IRA http://www.irs.gov/retirement/article/0,,id=111419,00.html#contributions and can contribute up to $5k. It is maximum of 25% of your compensation or $50k.

So if you are making $100k, you can contribute $25k to retirement account and it will be deducted from your income while calculating your adjusted gross income.

Salary Deferral Contribution

What if you want to contribute more than allowed maximum of 25% of your compensation?

Let say you are the only member of your s-corp. you can elect salary deferral contribution. You can choose not to pay this salary to yourself in cash. Instead, you can elect to pay this into your retirement plan upto $16,500. 

and filing free tax return saga continues..

After I wrote another email asking for allowing me to file tax return for free, I got an email saying a supervisor will contact me.

Surly after that I got a phone call. Representative confirmed offer with me by making sure that I did not fill tax return with them last year. He mentioned that I am eligible for offer, but somehow system was not allowing it. The day this conversation happened was the last day of offer. Representative told me that I can pay tax return fees for free and they will refund that fees in 10-14 days. I asked him to email me saying the same thing so that I will have something in written. He did so and I paid tax return fees. Now I am waiting for that refund.

Is filing your return for free via tax filing companies a scam?

I got an email with subject line: Submit Your FREE Federal Return!

Main content of the email was: Enter postcard code FEDERAL12 by January 25th 

to receive a FREE Federal tax return**!

Where  **File a State return for only $4.95. Free Federal Return valid for TaxSlayer.com accounts not e-filed in 2011. Not valid with any other discount or promotion. Discount not to exceed $9.95 regardless of version.

I received the similar postcard in the mail.

So I registered before January 25th, but I did not see the option to enter postcard code. So I emailed customer support asking the same. Following is the response that I got from them.

“Thank you for your email request.

That postcard was sent in error. Please ignore. We are sorry for the inconvenience.

Thank you,”

I am not satisfied with this and asked them to allow me to file return for free. Lets see what happens next…