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11 Ways to Beat ‘Streamflation’

What is Streamflation

4 min read

What is StreamflationThe cost of streaming subscriptions is on the rise, and you have to ask: Are they really worth it? Especially when it’s summer, and you’re taking advantage of the beautiful weather. Here are some ways to entertain yourself, friends and the fam that are either no- or low-cost – and might be better than binging on yet another series.

Have ‘Zero Dollar’ days. Set aside one or two days a week where you don’t spend a cent. Make your lunch the day before. Cook dinner at home, and then end the day with a walk at a nearby park.

Plant a garden. All you need is a few seeds (or plants), a place to dig and you’re good to go. Best of all, it will keep you busy all summer long. It’s something, too, that you can do with friends and family. Can you say togetherness?

Practice plogging. What, what, what? Yes, plogging is a real word and a mash-up of a Swedish word, plocka, meaning “to pick,” and jogging. As you’re jogging, or even walking, pick up trash along the way. You’re not only helping your body but also bettering your community and the environment.

Visit free museums. If it’s just too hot to be outside, get some A/C and some culture – without parting with your moolah. Just Google “museums near me,” and you’ll be all set.

Play board games. Scrabble or Monopoly, anyone? What about Gin Rummy or Hearts? Make a light summer salad for dinner, gather with your buds and/or progeny, and have some fun.

Make your own popsicles. What a great money-saving hack. Buy a cheap popsicle mold at Walmart, your neighborhood home goods store, or online. Fill it up with yogurt, fruit, or anything else that sounds delish, freeze, and dig in. Here’s a list of recipes you can experiment with!

Start a book club. Books, remember those? Turn off the Netflix, go to the library or browse online, pick a book that looks good, and gather with friends and family. And bing bang boom, it’s a book club! Sometimes, theater of the mind is so much better than what’s on the idiot box.

Join a Buy Nothing group. This is a collection of people who believe in giving and sharing products instead of engaging in consumerism. With this, you will save money and meet new people. Check out the movement here.

Run through the sprinklers. If you don’t want to go to a pool or one’s not nearby, turn on the sprinklers, suit yourself and your kiddos up in swimsuits, and take off! It’s a quick way to cool down.

Go thrifting. This is something all the cool kids are doing – and have been for some time. Find out where your local second-hand shops are and dive in. You could find some designer gems for very little cash. And usually the stores have A/C, so this is yet another activity to beat the heat.

Stargaze. Wait until after sunset, grab a cool beverage and find a place where you can just sit and be amazed at the universe. If you look long enough, you’ll see shooting stars. After all, nature is one of the best free playgrounds we have.

These are just a few of the many things you can do to lower costs this summer. We’re not saying don’t watch TV, but just that there are so many other things to do that will bring you happiness – and on a budget.

Sources

67 Free & Fun Things to Do This Summer | Apartment Therapy

Small Financial Habits to Set You Up for a Successful 2026

Tips for Early Retirement Planning

Tips for Early Retirement Planning

5 min read

Tips for Early Retirement PlanningRetirement planning starts with retirement spending. Ideally, retirees are mortgage-free and relatively debt-free before they leave the working life behind. In retirement, a key strategy is to maintain low monthly staple expenses.

Therefore, if you want to devise a financial plan that will allow you to retire early, consider cutting back your basic household expenses a year or more before your target retirement date. Some retirees choose to downsize their home, which also tends to reduce property taxes, homeowner’s insurance and maintenance costs.

Also, use that time to shop for cable, internet, or cell phone plans that may be cheaper and suit your needs in retirement. Be aware that seniors often get additional discounts they may not be aware of, so be sure to explore those options. By reducing your pre-retirement cost of living, you can reduce the amount of income you’ll need after you retire.

Build up Coffers

Another way to plan for retirement is to increase your savings while still earning income. You should have more than the typical emergency fund when you retire – so you won’t deplete it before you die. You also don’t want to have to take large, unscheduled withdrawals from retirement accounts because that would deplete your principal and potentially reduce the ongoing income you receive from those sources.

Social Security

Remember that if you start taking benefits before your official retirement age, you will lock into a lower payout level for the rest of your life. So even if you can afford to retire early, it’s generally a good idea to hold off tapping Social Security until full retirement age or even up until age 70, when you earn additional income credits. Factors to consider in making this decision include your health and life expectancy, needs for income, and other retirement assets. Remember, Social Security will last the rest of your life with cost-of-living increases and no investment market risk, so it is one income source you should wait to maximize as long as you can.

By establishing an account at the Social Security website, you can check your benefit amount at various ages based on current earnings; these projections are updated every year. If you are married, consider both spouses’ benefits as it might be better to start one early while allowing the other benefit to accrue.

Pension

If you expect a pension from your employer, you can request projected payouts to help devise your early retirement plan. If you have the option to receive either annuity payments or a lump-sum distribution, you might want to consult with a financial advisor to determine your best option within the context of your entire portfolio of assets.

Investment Accounts

If you have a 401(k), 403(b), or traditional IRA, remember that once you turn 73, you must begin required minimum distributions if you haven’t already. As a general rule, the common strategy for drawing down invested assets in retirement is to use taxable accounts first, tax-deferred accounts second, and tax-free accounts (e.g., Roth IRA) last. Roth IRAs do not require distributions at any age and can continue to grow throughout retirement.

Rule of 55

There is a legal strategy for tapping 401(k) or 403(b) retirement funds before the age of 59½ without incurring a penalty. The Rule of 55 enables you to make a series of substantially equal periodic payments from a former employer’s retirement plan (not a rollover account) between the ages of 55 (50 for a government defined-benefit plan) and 59½. While this strategy waives the 10 percent early withdrawal penalty, distributions are still subject to income taxes.

Health Insurance

If you wish to retire before age 65, consider your health insurance options.

  • Employer-sponsored coverage through COBRA
  • Health insurance marketplace plans at HealthCare.gov
  • Joining your spouse’s health insurance plan
  • Potential discounted coverage through membership organizations (e.g., AARP)

When you become eligible for Medicare, you must apply during the seven-month period that begins three months before you turn 65 and three months after your 65th birthday. If you do not apply during this enrollment period, you may face penalties.

Long-Term Care

If you’re thinking about early retirement, you may not be thinking much about nursing home expenses. However, long-term care can be quite expensive, so it’s important to plan for it early so you don’t run out of money when you need it most. Help from family can reduce the need for paid long-term care in your later years, so you may want to consider moving closer to them before or after you retire. Note that Medicare generally does not cover ongoing long-term care, although it may provide limited coverage for skilled nursing and rehabilitation services.  As a result, you’ll either need to self-fund, purchase some form of long-term care insurance, or spend down your assets in order to qualify for Medicaid long-term care assistance.

An early retirement plan usually involves a number of moving parts, so carefully consider withdrawal strategies and your specific tax situation in order to develop a plan that works best for your circumstances.

Understanding Depreciation Recapture

What is Depreciation Recapture

3 min read

What is Depreciation RecaptureThis accounting and tax method refers to a treatment used by the Internal Revenue Service (IRS) to obtain tax remittances on sales of depreciated property. Understanding how it works is essential for filers to make the most of it.

Required Conditions

As property depreciates, its value declines. When depreciated assets are sold, it’s able to be filed as ordinary income as long as the transaction’s price is above the property’s adjusted cost basis. The gap between the sales price and its adjusted cost basis must be filed as a component of the individual’s ordinary income.

Defining Adjusted Cost Basis

Adjusted Cost Basis = Asset’s Purchase Price + Improvements – Depreciation Deductions

Per Internal Revenue Code Section 1016, this calculation factors in both lower depreciation rates and improvement additions, resulting in the asset’s net cost.

Illustrating Adjusted Cost Basis

If an asset purchase price is $75,000, and it’s depreciated annually over six years, its adjusted cost basis is as follows: $75,000 – ($3,000 x 6) = $57,000.

If, however, the asset is sold for less compared to its adjusted cost basis, the transaction’s gain should be filed as a capital gain and not ordinary income. When it comes to calculating depreciation recapture, the adjusted cost basis is incorporated into the calculation as follows:  

Property Acquisition Cost: $750,000

Six annual deductions for depreciation: $7,000

Amount the assets are sold for in year 7: $740,000

Tax Rate of 25 percent for depreciation recapture

20 percent tax rate of capital gains

Therefore, adjusted cost basis equals = $750,000 – ($7,000 x 6) = $708,000

When calculating the gain on the sale, the resulting amount is calculated as follows:

= $740,000 – $708,000 = $32,000

Based on the owner(s) of the assets, the $32,000 will be reported as ordinary income. The depreciation recapture tax of 25 percent on the $32,000 will be $8,000 ($32,000 x 25 percent).

Be mindful if the $32,000 is more than the full depreciation deductions filed for by the taxpayer, the depreciation recapture will match how much depreciation is deducted and must be taxed as ordinary income. The balance will be taxed as a capital gain.

Assume everything from the first calculation is the same, but now the same asset is sold for $940,000.

Property Acquisition Cost: $750,000

Six annual deductions for depreciation: $7,000

Amount the asset is sold for in year 7: $940,000

Tax Rate of 25 percent for depreciation recapture

20 percent tax rate of capital gains

The adjusted cost basis will remain $708,000

In this example, since the asset owner’s gain is $190,000 ($940,000 – $750,000), only the depreciation deduction of $42,000 ($7,000 x 6 years of depreciation) will be reported as ordinary income since it’s the complete sum of the depreciation deductions. The balance of $148,000 ($190,000 – $42,000) will be taxed at the capital gains rate. The calculations for taxes are calculated as follows:

Depreciation recapture: $42,000 x 25 percent = $10,500

Capital gains calculation: $148,000 x 20 percent = $29,600

Additional Considerations

It’s important to consider that if an asset has been held for fewer than 12 months, gains from property sales are taxed as ordinary income. Depending on the circumstances, if an asset is sold for a loss, depreciation recapture isn’t applicable; however, Internal Revenue Code Section 1231 may provide exceptions to treat it as an ordinary loss tax treatment.

While each business’ transactions are different, when the entity is eligible, it can provide another way to navigate their federal taxes efficiently. As always, contact a professional for more personalized guidance.

Supreme Court Will Decide What Homeowners Are Owed When Tax Sale Erases Equity

Supreme Court Will Decide What Homeowners Are Owed When Tax Sale Erases Equity

4 min read

Supreme Court Will Decide What Homeowners Are Owed When Tax Sale Erases EquityA county in Michigan was owed about $2,200 in back taxes. To collect it, the government took a home worth close to $200,000, auctioned it for a fraction of that, and called the matter settled. The family is now putting a simple question to the Supreme Court: when the state sells your house over a small debt, does it owe you the real worth of what it took or only whatever the auction happened to fetch?

The Rule that is Already on the Books

Three years ago, the court drew a clear line. Geraldine Tyler, then in her 90s, had let a $2,311 levy on a Minneapolis condo balloon to about $15,000 once penalties and interest stacked up. Hennepin County took the unit, found a buyer at $40,000, and held onto all of it. By any fair reckoning, the $25,000 above her debt was Tyler’s money – even though the county walked away with it. Minnesota law blessed that, as did 11 other states and the District of Columbia, plus nine more states under narrower terms.

A unanimous court ended the practice. Chief Justice Roberts wrote that a government can sell property to satisfy a tax debt but cannot help itself to more than the debt is worth. Leftover equity belongs to the owner, and a state cannot dodge that by defining the property interest away.

The Question Tyler Left Hanging

Tyler was tidy because the surplus was undeniable. Subtract a debt near $15,000 from a $40,000 sale, and the leftover is beyond dispute. The justices never had to confront the messier case where the sale price itself is artificially low. If a forced auction brings in far less than a home would fetch on the open market, is that depressed number really the measure of what the owner lost?

That is the gap, and tax auctions are where it opens. Unlike an ordinary listing, these sales draw a thin crowd of investors and speculators, and the government has little reason to chase top dollar. A county could therefore obey Tyler to the letter, hand back every cent of the auction surplus, and still watch most of a family’s equity vanish.

How the Pung Family Got Here

Three-and-a-half decades ago, Timothy Scott Pung paid $125,000 for a roughly 3,000-square-foot house in Isabella County, and for years it carried Michigan’s Principal Residence Exemption. Scott died in 2004, and his wife in 2008. Their son Marc stayed on, assuming the exemption rolled forward without any new filing. The assessor saw it otherwise and stripped the break retroactively. Marc fought back, and a state tax tribunal agreed no further paperwork had ever been required.

The assessor would not let it go. Over a shortfall of $2,241.93, on a place the county itself pegged at $194,400, the family was thrown out, and the home went under the hammer for $76,000. Nobody disputes that the estate is owed the surplus. The quarrel is how to measure it. Isabella County treats the surplus as the hammer price minus the debt, leaving about $74,000. The estate says the yardstick should be the home’s true market value minus the debt, pushing the number toward $194,400. The spread tops $100,000.

Bigger Than One House

The stakes reach far past Michigan. Minnesota alone moved more than 4,300 properties through these sales between 2014 and 2020. Across the 1,200-plus that were family homes, the typical owner lost some 92 percent of the equity above the debt, averaging around $207,000 against bills averaging just $17,000. In the nation’s capital, a veteran with dementia lost a $200,000 home over $133.88.

There is a second front, too. The estate contends the foreclosure worked as an excessive fine barred by the Eighth Amendment, a theory the lower court waved off as ordinary tax collection but one that Justices Gorsuch and Jackson have flagged for review.

Argument wrapped on Feb. 25 with a ruling likely any day now. The court has already said the government cannot keep more than it is owed. Now it must decide whether that shield covers only the cash left after the gavel, or the equity that vanished before.

Personal Versus Enterprise Goodwill: What You’re Really Selling

Personal Versus Enterprise Goodwill

4 min read

Personal Versus Enterprise GoodwillPicture two heating-and-cooling companies at opposite ends of the same town. Same revenue, same trucks, same crew. The first one runs on its owner, a guy who spent 20 years building a name, and people call the office because they want him on the roof. The second runs on a brand, a dispatch system, and a phone number folks have had memorized since the ’90s. On paper, the two look like twins. But put them up for sale, and they fetch very different prices – and the reason is goodwill, the chunk of value that has nothing to do with the trucks and everything to do with why the phone keeps ringing.

The Value That Stays

That second company has what valuators call enterprise goodwill. It lives in the business itself: the location people drive past, the name they already trust, the systems that keep running through the two weeks when the founder goes to Cabo. Whoever buys the place inherits all of it, and that is what a buyer pays up for. They are not wagering on one person’s stamina. They are buying an operation that keeps producing after the seller is a memory.

The Value That Walks Out the Door

The first company has personal goodwill, where owners talk themselves into a number the market will not pay. When the clients are loyal to the owner, the referrals come because of the owner, and the day he retires, half the revenue walks out behind him; you cannot deed that over the way you hand across the keys to a van. A business built on one person almost always sells for less, because the buyer is left guessing how much of it actually survives the handoff.

It can be salvaged. A tight employment agreement and a non-compete can keep the seller out of the market long enough for relationships to take root with the new owner. In a lot of these deals, choreographing that single transfer is the whole negotiation.

It Comes Up in Divorce, Too

The same split shows up in divorce, usually not the way people expect. State law varies, but courts tend to treat enterprise goodwill as a divisible marital asset while setting personal goodwill aside, on the logic that it is really the spouse’s future earning power rather than property to carve up. Arizona is one of the states that has swept professional goodwill into the marital estate anyway, in the right case. Wherever it gets heard, someone has to draw that boundary, and a lot of money rides on where the line lands.

Putting a Dollar On It

So how do you put a dollar figure on something this slippery? One of the cleaner tools is the With and Without Method. You build two futures for the company and discount each one back to today. In the first, the key owner stays. In the second, he walks and starts competing down the street. The cash flow that bleeds out of that second version is the value the first one was quietly protecting.

Go back to our first owner and say his presence is worth a formal non-compete. With him locked in, free cash flow runs $10 million a year. With him loose and competing, it slips to $7.5 million. Discount each stream at 7.5 percent over eight years, and the protected version is worth about $58.6 million in today’s dollars against roughly $43.9 million without. That gap, near $14.6 million, is the price tag on the non-compete.

A real engagement would not leave it that clean. I would model how fast the business rebuilds the revenue it lost and weigh the result for how likely the owner is to actually go compete. But the bones of it are exactly that.

What to Take Away

Here is the part worth holding onto. Get this distinction wrong, and you can leave seven figures on the table at a closing or in front of a judge. The line between personal and enterprise goodwill does not draw itself. If you are eyeing an exit, weighing an offer, or fighting over a number in a dispute, get someone to mark it before the other side marks it for you.