Categories
Personal Finance

Salary History

Part of most job interviews is where they ask you about your current salary or salary history.  This is obviously valuable information for the other side of the negotiation to know, as it tells them exactly what amount of money you were willing to work for.  At it’s core, while useful for them to know, I think it’s a highly inappropriate question.

I have a somewhat skewed view of employment compared to many people.  I have been an employee at a large number of venues (from McDonald’s to Nortel), a manager (with 4 people working for me), a sole-proprietor (from a paper boy through to running my own software company), a contract worker, and a dot-com startup employee.  I’ve worked in industries from server management software to hospitality / tourism to education.  All together this allows me to see employment as a fairly balanced process, employees need jobs and businesses need employees.  The market rate for the work is how badly each side needs the other.

The dot-com boom (and bust), which I caught the tail-end of in San Francisco, was the far side of the pendulum where employees were in the drivers seat.  Companies were desperate for tech workers, and some employees developed prima-donna attitudes.  While this certainly wasn’t right (as I used to tell the CEO of my company when he hand-delivered my morning coffee and I was chastising him for not putting enough milk in it), the standard attitude prima-donna attitude of the employer isn’t right either.

Asking for a salary history is an example of this.  How is it any business of a potential employer what you’re being paid at your current or previous jobs?  This is between the previous companies and yourself and has nothing to do with potential employers.  If you were to turn the question around and ask them to provide a copy of last weeks payroll to all the employees in the company (or even asked the salaries of everyone working comparable positions at the company or what they’ve budgeted for the position) there’s no way they would answer.

No one likes answering this question, but I think enough people feel intimidated by the interview process that they do (and it has become a standard question).

How Answering Hurts You

The company obviously has a range they want to pay for the position, you have a range in salary you’re hoping to earn.  If you’re lucky there’s an overlap and both side want to a) come to an agreement and b) have that agreement be the best possible deal for them (low salary for the company, high salary for the employee).

The problem is, if your current salary is very low, it may be below what they’d intended to pay, in which case they’ll happily match your current salary (or give you a small bump that’s still below what they originally intended as the low-end).  For someone who had to temporarily take a job at a lower salary, this can make it a very painful process to claw there way back up to what they should be getting paid.

Conversely, if you quote too high a salary, they might just decide that you’ll be unhappy working for what they can afford to pay you and not offer you the position.  You may have considered the salary they’re willing to offer, but by having quoted the high number you never get a chance to hear their offer.

I don’t advocate lying, even in answer to inappropriate questions, but there’s extra reason not to lie here:  a lie can STILL hurt you if it’s the wrong number.

Ways To Evade The Question

This is a tough one (much harder than the old “don’t be the first to mention a number” idea).  In truth, I’ve always been fairly confident that I’m getting paid market rate (and have been happy to negotiate with an offer letter in hand) and have provided this salary history information when asked.  I don’t think I will if I’m ever asked in the future however.  Off the cuff, some ways I’d consider answering would be:

  1. “Unfortunately that’s priviliged information I’m not able to share.”
    • PRO:  Quickly ends the discussion, if pressed you can say that YOU make it privileged, not the previous employers (much like when someone tells you “sorry that’s against our policy” as a “reason” why they can’t do something).
    • CON:  You come across as somewhat aggressive, which for most jobs isn’t the image you want to convey.
  2. “I’d like to focus on whether I’m a fit for this position, and I’m sure we can work something out with salary after we’ve determined that.”
    • PRO:  Taps into the “don’t talk numbers” game, and they might let it go without firming it up.
    • CON:  Probably they won’t accept the attempt to sidetrack things and will try to pin you down.
  3. “Why would you like to know that information?”
    • PRO:  If you ask this sincerely and don’t come across as defensive, it may give you a chance to just talk philosophically about salary information (perhaps discuss some of the points in the section above) and you both may agree to just leave this question unanswered.  Depending on why they say they want to know, you may be able to answer the underlying question without providing the history.
    • CON:  They may not take it as sincere and you may come across as aggressive.  They might just say it’s part of their interview process and not provide a rationale (and demand an answer).
  4. “I’d be happy to give you that information, but first could you please tell me what salaries people currently in this position at this company are earning”
    • PRO:  Clearly makes the point that this is a one-sided questions that is clearly inappropriate.
    • CON:  Most people don’t hire smart-asses, so you’ve probably just talked them out of hiring you.
  5. “Well, I don’t think my recent salary history is relevant because of XYZ”
    • PRO:  If you have a solid reason (such as learning something new at your most recent position or being overpaid for some reason) they might accept that as a reason not to answer.
    • CON:  In all likelihood they’ll just say “we’ll take that into consideration” and still want to know.
  6. “My last job paid $1,000,000 annually, and the job before that paid $1 / year”
    • PRO:  Perhaps as a second attempt to deflect after one of the early responses, humour may be able to put off the question.
    • CON:  Even when it’s an obvious lie, deceit as part of a job interview may not be the best idea.

How do you answer when you’re asked about your salary history for a job?  Do you feel this is a reasonable question?  Any ideas for better responses than I’ve come up with?

Categories
Money

Make Home Affordable Refinance Program Changes Eligibility Requirements For Easier Refinancing

The Make Home Affordable mortgage refinance and modification program was announced earlier this year as part of the 2009 stimulus package.  The idea behind this refinancing program was to enable some home owners who are having difficulty making payments on their house a way to refinance even though they wouldn’t normally qualify because their mortgage is worth more than 80% of the house.  With a little bit of help, hopefully these home owners can keep their house and get back on track.

Allowable Loan to Value ratio (LTV) has been increased to 125% from 105%

When this refinance program was first announced – it only applied to home owners who had a loan-to-value (LTV) ratio of between 80% and 105%.  This meant that if the value of your outstanding mortage (the amount still owing) divided by the value of the house was between 0.8 and 1.05 then you might qualify for this loan modification.  However, it appears that not many people have been able to take advantage of this program so the government decided as of July 1 that the criteria for loan modification would be eased to allow more home owners to get their mortgage refinanced.  The new rule is that the loan-t0-value (LTV) has to be between 80% and 125%.  In other words if your outstanding mortage (the amount still owing) divided by the value of the house was between 0.8 and 1.25 then you might qualify for this loan modification.

This is great news for home owners who didn’t have a high enough house value to qualify under the old rules but can now apply.  This article answers the question – Do I qualify for the Making Home Affordable Refinance program?

How do I calculate the Loan to Value ratio (LTV)?

Ok, so maybe math isn’t your strong suit.  Here are the steps to calculate your loan to value ratio to see if it falls between 80% and 125% which is what you need for this refinancing program.

Step 1 – Determine how much you owe on your mortgage

You should be able to check online with your mortgage provider or by telephone to see how much you owe on your mortgage.  Perhaps you get a statement mailed to you from your mortgage provider which will contain this information.  It’s important to note that you only want the amount of mortgage that you still owe.  This is not the original amount of the mortgage when you bought the house!

If you don’t have the exact mortgage amount in front of you then don’t worry – just estimate as best you can and verify the exact amount later.

Step 2 – Determine the value of your house.

This value should be the appraised value of the house.  I would suggest calling your mortgage broker to see if they can help obtain this value.  If you don’t have a proper appraisal then just estimate as best you can.

Step 3 – Do the calculation

The basic calculation is to divide the mortgage amount owing by the house value.  So for example if your house value is $300,000 and the amount owing on your mortgage is $312,000 then you should divide $312,000 by $300,000.  To get the percent then multiply by 100.  in this example the answer to $312,000 / $300,000 * 100 = 104% which is within the criteria of this program.

Categories
Announcements

Big Blog Sale/Purchase And LinkStuff For July 20

Big news in blogworld last week – Gather Little By Little which is one of my favourite blogs was sold and purchased by none other than The Financial Blogger.  GLBL was run by Larry who has been a pretty good friend to me over the last couple of years – he has been very helpful with a lot of aspects of blogging.  Ironically, the new owner, Mike is also a friend – I wish both of them the best.

The Links

Cam Birch wrote an interesting post about fear of a tax audit.  He says that people fear them too much.

Squawkfox wrote a fun post on how to make a kite with recycled materials.  Great stuff.

Million Dollar Journey has some radically frugal ideas.

Where Does All My Money Go discusses the $4k to 10k rebate on electric cars in Ontario.  This might help demand but those cars aren’t cheap.

Good Financial Cents ask what kind of investor are you right now?

Bible Money Matters answers some questions about the new Cash for Clunkers program.

Canadian Capitalist talks about the Pixar phenomenon.  How do they keep cranking out the hit movies?

 

Categories
Money

Texas Unemployment Benefits Extension – 13 More Weeks

The state of Texas has recently announced that a 13 week unemployment benefit extension has been made official.  This will affect anyone who has exhausted or will exhaust their 59 weeks of unemployment benefits.  The money for this extension will be coming from the 2009 stimulus package announced by President Obama at the beginning of the year.  This extension was prompted by a jobless rate of 7.5% in June.

When will the 13 week extension start?

According to the Texas WorkForce Commission (TWC), the benefits should start paying out by the end of July.  Letters will be sent to claimants with instructions on how to file for the extension.  There are about 82,000 Texans who might be eligible for the 13 week extension.

There had been some concerns recently that the benefits might be delayed by a month or more because of problems converting the computer system but according to the TWC – that is not the case.

If you have any more information about the extension then please leave a comment.

Please note that Texas will benefit from the H3548 employment benefit extension – since Texas is not considered a high unemployment state since it has less than 8.5% unemployment rate – the potential total weeks of benefits for unemployed Texans will be increased by 13 weeks. States with a higher unemployment rate will see their total benefit weeks extended by 20 weeks.

Categories
Money

Does My Car Qualify For The Cash For Clunkers Program?

Here are the rules for the new “Cash For Clunkers” government program.  If your car qualifies then you could receive a credit of either $3500 or $4500 towards the purchase or lease of a new car.  Read more about the details of the Cash for Clunkers bill.

[edit Aug 30 – Cash for Appliances program announced – Get rebates for new fridge or other appliances.

[edit July 31 – the Cash for Clunkers program has ended]

[edit July 31 – the Cash for Clunkers program has been continued]

[edit Dec 9 – Cash for Remodeling]

Is the Cash for Clunkers credit considered taxable income?

Car must be less than 25 years old from manufacture date

This applies to the date of trade-in relative to the manufactured date of the car.  See this article on the cash for clunkers program for exact instructions on determining the age of your car.

You must purchase or lease a new car

The credit will only be received for a trade-in on a new 2008,2009 or 2010 car with a purchase price of $45,000 or less.  It has to be a purchase or lease.  Used car purchases are not eligible.

Mileage limits

The old trade-in car must get 18 mpg or less (city/highway combined).  See this website to find out the mileage for your car or this site to find your car.  The new car must have a combined fuel economy of at least 22 mpg.

Domestic and foreign cars

Applies to new cars of any country – domestic and foreign cars are all eligible.

Eligible trade-in dates

The trade-in must occur after July 1, 2009 and before November 1, 2009 or until the program funding (1 billion dollars) is depleted.

Amount of credit

Credit will be either $3500 or $4500.  If the new car gas mileage is between 4 and 10 mpg more than the old car then the credit is $3500.  If the difference is at least 10 mpg then the credit is $4500.

Proof of ownership

The trade-in car must have been owned by you and insured for the past year (ie 365 days).  You must provide documentation for this.   Car must be driveable!!

See this article for answers to more common questions about the Cash for Clunkers program.

More information on the Cash for Clunkers program

2009 Cash for Clunkers

Cash for Clunkers program

Cash for Clunkers bill

Gas Guzzler Rebate – Get cash for your old car

Car Allowance Rebate System (CARS) has been finalized

Categories
Money

2009 Cash For Clunkers Program – Trade In Your Old Junker For Money

President Obama has recently signed the “Cash For Clunkers” program – officially known as the Car Allowance Rebate System (CARS).  This federal program is being run by the National Highway Traffic Safety Administration and has a budget of $1,000,000,000 (1 billion dollars).  The basic idea of the program is that you can trade in your old gas guzzler pimp-mobile for a new car which has better mileage.  The government will pay you either $3500 or $4500 for your trade in which is likely a lot more than the car is worth so there is profit to be made.  This is yet another dimension of the 2009 stimulus package which has seen quite a few different efforts already.

[edit Aug 30 – Cash for Appliances program announced – Get rebates for new fridge or other appliances.

[edit July 31 – the Cash for Clunkers program has ended]

[edit July 31 – the Cash for Clunkers program has been continued]

Is the Cash for Clunkers payment considered taxable income?

[edit Sept 27 – Cash for Appliances – List of Eligible Appliances]

[edit Dec 9 – Cash for Caulkers

There are several motivations for this program:

  • Environmental – Getting people out of fuel-hogging gas guzzlers and into smaller, newer more efficient gas-sippers is better for the environment.
  • Help the car industry – Car sales are down dramatically this year so any sort of boost which motivates people to buy new cars will help the car companies.
  • Stimulus money – Adding more stimulus money into the economy should help (in theory) revive the economy and reduce unemployment.

Rules of the 2009 Cash For Clunkers program

  • Car must be less than 25 years old (built in 1984 or later).  This applies to the date of trade-in relative to the manufactured date of the car.  See section below for more info.
  • Can only be used for trade-in on a new 2008,2009 or 2010 car.  Outright purchase or lease.  Used car purchases are not eligible.
  • Trade-in car must get 18 mpg or less (city/highway combined).  See this website to find out the mileage for your car or this site to find your car.
  • Programs ends on November 1, 2009 or when the program funding (1 billion dollars) is depleted.  Trade-in must occur on July 1, 2009 or later.
  • The new car must have a purchase price of $45,000 or less.
  • Credit will be either $3500 or $4500.  If the new car gas mileage is between 4 and 10 mpg more than the old car then the credit is $3500.  If the difference is at least 10 mpg then the credit is $4500.
  • Applies to new cars of any country – domestic and foreign cars are all eligible.
  • The new car must have a combined fuel economy of at least 22 mpg.  See this website to find out the mileage for your car or this site to find your car.
  • The credit will be applied to the purchase of the new car.
  • The car buyer doesn’t have to file anything – the car dealer will handle the documentation.
  • The credit will not be considered as income for the car purchaser.
  • All the normal credits and rebates for the new car will still apply in addition to the ‘cash for clunker’ credit.
  • The trade-in car must have been owned by you and insured for the past year (ie 365 days).  You must provide documentation for this.
  • Car must be driveable!!

Click here for more information on the Cash for Clunkers program.

How do I know exactly how old my car is?

To be eligible for this program there has to be less than 25 years from the date of car manufacture and the trade-in date.  To find out the manufacture date of your car – check the following:

The month and year of manufacture (e.g., 1-96 (January 1996)) appear on the safety standard certification label that is located on the frame or edge of the driver’s door in most vehicles.

  • If the car was built in 1985 or later then it is less than 25 years old.
  • If the car was built in 1984 and the car manufacture month and day is greater than the trade-in date then it is less than 25 years old.
  • If the car was built in 1984 and the car manufacture month and day is less than the trade-in date then it is greater than 25 years old and not eligible.

For example if you do the trade-in on Aug 1, 2009 and the car was built on Sept 18, 1984 then it is less than 25 years old.

If you do the trade-in on Aug 1 and the car was built on April 1, 1984 then it is older than 25 years and is not eligible.

Please note that having a car less than 25 years old does not mean you automatically qualify for the rebate.

Is it worth doing?

This program is worth taking advantage of only if both of the following scenarios apply:

  1. Your old car is worth less than the rebate.  This might seem obvious but if your old car is worth $8,000 then you don’t want to use this program to get a $3500 or $4500 rebate.
  2. You were planning to buy a new car anyway.  New cars are expensive so if you are using this program to help you justify a new car purchase using credit then it’s probably not a good idea.  Some people are better off just selling the old car and buying a used car if they can’t afford a new one.

Downsides of this program

This program seems very slanted towards benefitting the car industry.  Undoubtedly there are a few consumers who might benefit from this (if they were going to buy a new car soon) but there will also be others who buy a new car because of this program when they should really just buy  a used car or even just hang on to the old junker for a while longer.

Some issues:

  • More consumer debt – Some consumers will be tempted to take on more debt because of this program which might hurt them.
  • Environmental impact – The environmental impact of making the new car might outweight the gas mileage reduction.  In some cases the difference in gas mileage won’t be enough to offset this.
  • Lack of eligibility – It’s hard to imagine that there are very many people who can afford a new car but are driving an old junker around.  A lot of people who buy new cars sell them before they get to the $3500 value level.
  • Dealer scams – Consumers might be “rushed” by dealers to pay a higher price for the new car since the program only has a certain level of funding.

More information

Does my car qualify for the “cash for clunkers” program?

Clunkers for Cash – Is it even worth it?

Categories
Personal Finance

No Fee Canadian Credit Card With Unbelievable Rewards and Insurance

[Edit from Mike:  Please note this post has no affiliate links and no compensation was received for this post from MNBA or anyone else – Henry just really likes the card]

I was pleasantly surprised when I first read about MBNA Smart Cash Credit Card on redflagdeals.com. 3% cashback on groceries and gas up to 600 dollars spent a month. Yup, that is correct. Comprehensive insurance benefits that includes 1 million dollar travel accident insurance. Yup, that is correct. No annual fee. Yup, that is correct.  MNBA already offered one of the best no-fee Canadian rewards cards but this one is even better.

What is included?

  • 3% cashback on groceries and gas (600 dollars spending limit)
  • 1% cashback on other purchases
  • Cashback is mailed out in 50 dollar accumulated increments
  • No annual fees

Sign Up Bonus:

5% cashback on groceries and gas for the first six month (600 dollars spending limit) which gets lowered to the normal 3% after 6 months.

Platinum Plus’ Insurance Package

  • MasterRental: Auto-Collision Rental Insurance with $200,000 Accidental Death Benefit
  • MasterTrip: $1,000,000 Common Carrier Travel Accident Insurance
  • MasterPurchase: Purchase Assurance and Extended Warranty

What is missing from this card?

  • No road side assistance.
  • No trip interruption insurance.
  • No luggage insurance.

Who is eligible to get this card?

  • Regular Card: Students who is looking for their first credit card.
  • Platinum Plus Card: People with established Credit.

If you are a student then apply for the regular card – once you establish a credit history, you can call in and they can upgrade your card to Platinum Plus. MBNA is willing to give students Platinum Plus Card, once a credit history is established.

Final Thoughts

I am a proud owner of MBNA Smart Cash Platinum Plus Mastercard and I use it all the time. If you don’t have a premium credit card, MBNA Smart Cash Platinum Plus Mastercard is the card to get. For best application results, you should call during the day to reach a consultant at MBNA Ottawa Call Center and make a follow up call on the next day to get your credit card approved. I got my card within two weeks of application. Use your card as much as possible during the first six months to get the bonus cashback. Last not least, be ready for those cashback cheques in the mail!!!

More information – American cash back credit cards

Best cash back credit cards

Categories
Money

Keep Your Emergency Fund In A High Interest Savings Account

Having an emergency fund is one of the cornerstones of good financial budgeting.  The best place to keep that emergency fund is not underneath your mattress but in a high interest savings account such as Ally Bank.  Some people don’t like to keep cash so they prefer to utilize lines of credit, but what do you do if those lines of credit are not there when you need them?  The safest emergency fund should be in good ol’ hard cash.  That way if you need some money to pay for an unexpected bill such as a car repair, house repair, medical procedure – you don’t need to borrow money to cover it.

How much money should I have in my emergency fund?

The answer varies – Dave Ramsey suggests that you start with $1,000 if you are in the process of paying off debts.  Once you get your debts more under control or even paid off then you might want to increase your emergency fund to 3-6 months worth of expenses.  For example if your basic monthly expenses (not including fancy dinners) are $2500 then 3 months worth of expenses would be $7,500 (3 x $2500).  If you can save more and want to have 6 months worth of expenses then you would need to have $15,000  (6 x $2500).

These are just general guidelines so you have to decide for yourself how much of an emergency fund you wish to have or how much you can afford.

Should I keep my emergency fund in a high interest savings account?

The next step to manage your emergency fund is deciding where to put the money.  Should you store it under your mattress?  In a high interest bank account?  Buy some certificate of deposits (CDs)?  How about stocks or mutual funds?

First things first – there are a few key things you have to consider when storing your emergency fund:

  • Safety of principal – Never, ever, ever put your emergency fund in any type of investment that can go down in value such as stocks or mutual funds.  You have to keep it in savings accounts or certificates of deposits (CDs).  You need the money to be there when you need it.
  • Accessibility – Don’t put the money into any type of account or investment product that has withdrawal limits or penalties.  If you need the money you should be able to withdraw the entire amount without issue.  CDs are ok if you have a larger emergency fund and won’t need it all at once but even then – keep the term very short so that you don’t have to wait for the money or pay any penalties.
  • FDIC insured financial institution – Don’t hide your money under your mattress – what if the house burns down or gets robbed?  Put it in a bank that is insured by the FDIC which includes most banks.
  • Earn some money – Look around for a good interest rate, even an extra half or whole percent makes a difference over the long run.

Keep your emergency fund in a high interest savings account

For most people the best location for their emergency fund is in a high interest savings account.  The money will be safe, accessible and will earn you some $$ which is always important.  You might think that with the current low interest rates available that it doesn’t matter what the interest rate is but you have to remember that you will have this emergency fund for a long, long time so even a slightly higher interest rate will add up over the years.

Read a full review of Ally Bank which has very competitive interest rates on their savings account.

More articles about high interest savings accounts

Benefits of a high interest savings savings account – This articles has some examples showing that getting an extra percent of interest per year will add up to significant sums of money over the years.

Other bank account alternatives

SmartyPig Review – Online Savings Account