Past, Present, and Future

I’ve never liked click-bait titles. You know, those kind of titles that end with, “… and you won’t believe what happened!” I am almost always disappointed because the “unbelievable thing”, wasn’t so unbelievable.

So today, I’m going to do the opposite and start with the most boring title I can think of. By setting the expectation low, I can’t help but surpass it, right?

We’ll start with:

The Past

It’s Memorial Day in the United States. For many it is a time to reflect on the people who gave their lives for our country. For some it is an excuse to drink beer and eat burgers. If you are in the later group, I hope you spend some time reflecting on why we have the holiday. Having an appreciation might make your beer and burger taste a little better.

It’s tempting to write a whole blog post about Memorial Day, but this site is about personal finance. There are some great military blogs and news sites that will do a far better job than I will

The Present

Long weekends are great for my dog sitting business. It was looking bleak for most of the month, but in the last week, we booked up completely. I even had to turn away a couple of dogs. (That’s always a heart-breaker.)

We’ve had a lot of rain this weekend, so I haven’t gotten out much. I’m a long ways away from The Shining territory, but I am starting to feel a little trapped. My 4-year old suggested that we play memory for Memorial Day. I liked his logic. The four of us played and my wife cheated by using her photographic memory. She got twice the matches I did. I got twice the matches my 4-year old did. And the 4-year old got twice the matches my 3-year old did. Sounds like an SAT problem.

The rainy Memorial Day weekend is significant for our local economy. We get a ton of tourism and Memorial Day is the unofficial start of summer. (Shop owners can in some ways say, “Happy Memorial Day!” and not have it sound weird. This is when they make most of their money.) With the rain, people didn’t come and didn’t spend money. I’ve seen restaurants gut their staff after such a hit.

The Future

Today is also 5/29. For personal finance blogs like this one, it is a significant date. It’s an annual reminder to those of us who have kids that we might want to contribute to their 529 Plan.

If you are new to 529 Plans they are tax-advantaged way to save for college. They almost work like Roth IRAs where the money grows and comes out tax-free. That’s a decent tax perk. In my state, Rhode Island, we can also deduct up to $1000 from our taxes per year. Since we are saving for our kids college anyway, it makes sense to do it this way.

It seems that Rhode Island has another tax perk that could prove very interesting. It seems that a couple is allowed unlimited carry over of this deduction. I understand this to mean that if we put in $40,000 today we could deduct $1000 off our taxes for the next 40 years. I need to consult my tax advisor on this to make sure I understand it correctly.

If that’s true, it is not too shabby to have that tax deduction hanging around. Of course, who knows if we’ll live in Rhode Island or be alive in 40 years. The only downside is that a $1000 state tax deduction may only amount to a $40-60 savings each year at Rhode Island’s correct tax rates. Hmmm, that’s not too exciting after all.

It is a little dated now, but 10 years ago, I wrote a brief guide to choosing a 529 plan. The main ideas are still helpful, but the specific numbers for the states probably have changed.

I found that if your state offers one with some tax deduction (like Rhode Island), usually that’s the way to go. If your state doesn’t (California didn’t when I lived there), it may be best to explore another state’s plan. Back in 2007, I decided that Ohio’s was the best fit for us. I still have a couple of accounts with them today.

However, you choose to spend today, I hope it is meaningful to you.