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Brian Mudd

The actual cost of traffic citations, IRS rules on bitcoin, The value of the stock market & more:

 
The actual cost of traffic citations, IRS rules on bitcoin, The value of the stock market & more:

You might be surprised just how much the smallest traffic citations will cost you - in the long run:

 

Bottom Line:  If you are the unfortunate recipient of a traffic citation you’ll generally be frustrated by the expense of the ticket.  That’s likely the least of it.  Upon insurance renewal the average cost increase of traffic citations are rising.  Here’s what you should know about the real cost of citations…

 

According to research by insurancequotes.com here are some of the average cost increases for these traffic citations:

 

  • Not wearing a seatbelt 5% increase
  • Failure to yield 19% increase
  • Speeding ticket of 15 miles over the limit 21% increase
  • Reckless driving 82% increase
  • DUI 93% increase

 

So more likely than not, a traffic citation will cost you far more in increased insurance expense (compared to the fine itself).

 

Audio Report:

 

 

 

The value of the stock market after the recent selloff & what the taper means:

 

Bottom Line:  Every so often I’ll compare the current value of the stock market to its historical averages so we have perspective about relative values of stocks and the risks that may be associated short term.  The Dow, NASDAQ & S&P 500 are lower than their recent highs by about 5%. 

 

With that in mind how do we currently stand?

 

  • The S&P 500 P\E ratio:  19.59
  • The average S&P 500: P\E ration:  15.51

So in English the S&P 500 is trading at a valuation that’s 20-26% average its historic average.  The bigger concern could be the Federal Reserve.  There is no question that the stock market has been propped up the last several years by QE (aka money printing).  As the Federal Reserve continues to taper, or reduce the monthly amount of artificial stimulus, the more important fundamentals will become for stocks.  In October the QE should end completely.  I would not be at all surprised to see a correction (or decline of at least 10%) prior to that time as stock values come into focus.  That being said I’m not adjusting my long term investment strategy. 

 

Audio Report:

 

 

Reverse mortgage nightmares continue: 

 

Bottom Line:  Here’s an update on reverse mortgage outcomes: 

 

  • Reverse mortgage default rates continue to be the highest of any mortgage product at just over 9%

 

  • 12% of existing reverse mortgages are underwater

I’ve never been a fan of a reverse mortgage for several reasons.  First and foremost it violates my first ruling of retirement planning…  A mortgage isn’t a retirement plan. It also treats the roof over your head like an ATM which also isn’t the way we should look at our home in my view but those are concepts.  Many people have ended up homeless because of reverse mortgages.  How?  Two common reasons:

 

  • The reverse mortgage is only in the name of one occupant of the home who passes away first

 

  • The occupants can’t afford increasing insurance cost and property taxes

In both of those situations a foreclosure can and will ensue.  Both of those outcomes can be devastating to the living who are out of money and without a home. 

 

While reverse mortgages do work out for many who obtain them, they aren’t without a great deal of risk and they all should be taken very seriously prior to obtaining this type of product. 

 

Audio Report:

 

 


IRS rules on Bitcoin:

 

Bottom Line:  Finally the Federal Government has issued a judgment on Bitcoin.  Not surprisingly they’ve determined that Bitcoin isn’t currency.  As I’ve previously identified there are three tenants of currency and Bitcoin only has one of them (a medium of exchange).  Instead the IRS has ruled that bitcoin is property.  So what does that mean?

 

  • Bitcoin will retain property rights from a legal standpoint

 

  • Bitcoin will be taxed as property

If bitcoin is stolen you now have a clear path for recourse which is helpful but the taxable consideration could be complicated. 

 

Taxes on property when using it like currency could be complicated.  If you’re using bitcoin as a medium of exchange you may need to seek a professional opinion on the taxable implications to your tax situation as a result of using bitcoin.

 

Audio Report:

 

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