AskDong

Yesterday, I hosted a Boston Marathon party for one of my co-workers who was running the Marathon. My apartment is on the route. The company was kind enough to pick up the tab. As a result we had the party catered with BBQ. The total catering bill was for a little over $500. There was more than enough food to serve 30 people so it was less than $20/head. We ended up feeding a little over 20, and having massive leftovers. While I supplemented my own personal holiday party wtih some catering, this was the first time I’ve hosted something that was completely catered. Besides in this case I had catering that I would be unable to do myself. I do not have the facilities to make BBQ ribs….

I have to say, it was money well spent. It’s a lot of easier for me to say that since I’m not actually footing the tab, but even if I were I might still be inclined to agree. Hosting is expensive even when you make all the preparations yourself. In this situation, there was no way I had time to make actual preparations given the party took place in the late morning and early afternoon. Had I actually tried to cook as much food as I got catered, I’m sure it would’ve cost me close to $200. Basically I paid $300 for labor, but sometimes paying that premium is well worth it. After having this last event completely catered, I realize how much more enjoyable hosting could be. Often times when I host something, I’m usually making last minute preparations. This time I had none to make. It was great. Still caterting is expensive, and I’m not sure I would do if the bill were left to me.

Watching movies such as Cast Away or the latest Bond flick, the product placements are obvious enough. Cast Away was a movie length advertisement for FedEx.

Now NBC is ready to take it to the next level, and embed the marketing message as central premises of the show. Currently product placements is supposed to be just that, the use of the product in a movie or TV show.  The visibility of product placement has become less and less subtle, and it’s unclear to me that movies and TV shows aren’t really just marketing products.  After watching the Italian Job, I sure wanted to get a BMW mini.

While I have no problem with the actual use of real products on TV or in the movies, much of me is nostalgic for the days when Alex Keaton drank from a soda can that was neither Coke or Pepsi.  Today, Alex would be drinking from the highest bidder.  As the line between entertainment and advertising becomes furthered blurred, it becomes more difficult to distinguish between what we actually want and what we are told to want.

I feel like that guy at the craps table who’s betting on the No Pass Line. For those who’ve never played craps, simplistcally there are two ways to bet, pass or no pass. Most players bet on the Pass Line.  A few bet on the the No Pass Line.  The latter are usually grumpy old men with grimaces on their faces.  They frown when the crowd cheers. It’s generally speaking not fun being that guy. When I do play craps which I tend to do at Bachelor Parties, I want to be with the crowd not against the crowd - It’s a lot more fun to cheer when everyone else is cheering.
Currently because I have fairly substantial put option positions on both the Dow and the Nasdaq as hedges and I feel like that grumpy crumudgeon at the craps table. When the market rallies, I feel nothing but contempt for it. I’m not even short overall. I would say I’m effectively long with 20% of my portfolio. However, I would say the puts I purchased represent the largest stock market “bets” that I’ve made. Those positions are ones that I know I need to close out at some point. Everything else I own, I’ve purchased for the long haul. I may tweak here and there, and sell if there’s real cause for concern as I did with Washington Mutual (WM) and American Home Mortgage (AHM).

So when the market rallied yesterday, I was a bit depressed as I have been with every rally.  I don’t enjoy rooting against the crowd or watching my positions.  In the end I just don’t really like being an active investor just like I don’t like playing the no pass line.

With the housing market in a bit of a slump and interest rates low, I thought it would be a good time to buy my first home. I am planning on buying a condo in the next few months.

My question is this — I know the IRS allows you to take out up to $10,000 from an IRA or a Roth IRA to finance a first-time home purchase. Do you have any thoughts on whether it would be better to take the money out of my Roth versus my Traditional IRA?

-s

Hmm, I would say it’s best to do neither. The IRS allows individuals to withdraw funds from the IRA penalty free, and in the case of the Roth IRA tax free (assuming the withdrawal is after 5 years). The withdrawal is considered a qualified distribution - not much different from taking distributions at retirement. Of course if you’re gains in the traditional non-deductible IRA are limited or non-existent, paying taxes may not come into play at all. Sound great, right? The fundamental problem with taking a distribution early even if it’s penalty and tax free is that you can’t put the money back in.

IRAs, and 401k are tax shelters.  By holding money in these vehicles, investors avoid the annual drag of taxes or in the case of the Roth IRA taxes on gains period.  Every year we only get a certain amount dollars we can shelter, and it’s use it or lose it proposition.  It’s not like we can not contribute one year, and contribute twice as much the next year.  For this reason, I think it’s critical especially when you’re young to get those dollars in, and maximize the amount of money you’re sheltering from taxes for the longest time possible.

I would say if you can look to other sources of funding. I would even suggest borrowing from your 401K.  At least in the case of your 401k, you’re actually putting the money back in.  As long as you’re comfortable with job security and or your ability to pay back the loan if you were to switch or lose your job, I think borrowing from the 401k can a good option especially if the payback period is over a short period.  Yes, you lose some period of tax sheltering, but if the loan period is short it shouldn’t be a big deal.  The criticism of paying taxes twice because you’re paying with after tax dollars is generally overstated since the initial loan is tax free and it’s the only the interest (that you pay to yourself) that is actually taxed twice.

My timing has never been the best. I purchased the apartment that I’ve lived in for the last year and half three months ago. Today I learned I might be in a border war. Yesterday, there were a number of trucks from a realty company parked in the back of my building, blocking my parking space. After calling the phone number listed on the truck to have them move the trucks, I learned that the owner of the neighboring building is looking to build a fence. This fence if built would effectively block off access to my parking spot

As can be seen in the image above the fence would block off the route to my parking spot (marked 1). The owner of the neighboring building who is a rental property owner is looking to build the fence to effectively turn what is currently one parking space into two tandem spots for his property. Of course that fence would effectively deprive of me of my parking space. I was not in a good mood yesterday when I learned of this turn of events.  I would say a good 30k of the value of my condo is the parking space.  Losing the parking space would be huge loss personally and financially.

However, I’m not about to go down without a fight. While I still need to consult with the other condo owners in my building, I believe none of us would want this fence built. The fence would also restrict access the parking space next to mine (marked 2). In addition, I need to do further research to determine if the property that my neighbor wishes to build a fence is truly his and not part of the common right of way. Even if it is his property, I still have a few legal weapons at my disposal, an Easment, andAdverse Possesion. I’m no lawyer, but I will be consulting one shortly.