Frankly, this isn’t new financial advice. James Wesley, Rawles, author of Patriots who blogs at, has been urging people to accumulate nickels for years. There are two reasons behind it. First, the raw metals that make up a nickel – copper and nickel – are worth 7.3 cents as of the close of business on February 18th. So for 5 cents you get something worth more if it is melted down. If commodity prices decline to zero, the coin will still return 5 cents. In other words, it is an investment that only has an upside.

Second, Gresham’s Law says good money drives out bad. In other words, money who’s nominal value and commodity value are close will be worth more than those where the commodity value is virtually nil when compared to the nominal value. To put this in perspective, a dime whose nominal value is 10 cents has a commodity value of 2.6 cents. An even greater disparity is found in the golden Presidential Dollar coins. Their face value is $1 but their melt value is only 7.7 cents.

Debit-Card Fraud

This is a good video about banks and your protection against debit-card fraud. Given that only 44% of banks will make you whole on your losses, it is a good idea to check with your bank to see if they are part of that 44%.

Since I have been the target of identity theft in the past, one tip I would suggest is to make use of your bank’s email notification services. For example, I get an email every morning from my bank telling me what my balance is from the previous day. When I was responsible for my late mother’s accounts, I had it set up so that I got a low balance notification and a notification for any transaction over a certain dollar amount. This last one would be very useful in providing alerts of unauthorized transactions.

Finance Friday

There is an old saying that the only thing certain in life is death and taxes. For this Finance Friday, I will be talking about making tax decisions in a period of uncertainty and what can happen if you do a DIY (do it yourself) will.

Tax Decisions in Limbo

If Congress does nothing, the Bush tax cuts will expire at the end of the year. Officially, the Economic Growth and Tax Relief Reconciliation Act of 2001 sunsets at the end of 2010. What does this mean for you?

First, the 10% tax bracket goes away and 15% becomes the lowest tax bracket. With all the talk about the EGGTRA giving the rich and wealthy tax breaks, we tend to forget about this part. Thus, tax payers in the lowest bracket could be facing a 50% increase in taxes.

Second, the maximum capital gains rate will rise from 15% to 20%. If you have been sitting on unrealized capital gains – that is appreciated stock or property that hasn’t been sold yet – you have to make a decision about whether it is better to keep holding it or sell before the end of the year.

Third, many dividends are only taxed at 15%. These are called qualified dividends. Next year, if EGGTRA is allowed to expire, all dividends will again be taxed as ordinary income. For some, this means dividends will be taxed at up to 39.6%.

With all the competing proposals about either letting the tax cuts expire or to extend them for various amounts of time, what should you do?

Tax lawyer Robert Wood has some suggestions in this article in Forbes. One thing I’d say for sure is that you want to discuss this with your tax adviser if you are sitting on capital gains.

Do It Yourself Wills or Why You Really Want an Attorney

If the late Chief Justice Warren Burger can screw up a will – and he did – what makes you think something you copied out of a book at the library will pass muster. Burger left an estate of approximately $1.8 million. Due to the way he wrote the will, he ended up costing his heirs $450,000 in estate taxes. A moderately competent estate lawyer would have cut this bill to virtually nothing.

Everyone has a will whether they know it or not. If you don’t make your wishes known by drawing up a will, the state will do it for you. This is what is known as dying in testate or without a valid will. Your assets will be divided according to the provisions of state law. The bottom line is that your wishes while alive have no impact unless you draw up a will.

And this leads to the best argument for having an attorney draw up your will. A will assures that what you want to have happen in terms of the distribution of your assets at your death, will. Every state has differing laws when it comes to wills and inheritances. The software you buy at Target or BestBuy rarely takes this into account. The DIY Wills book you checked out from the library might be OK for California but not work in North Carolina. In terms of marital assets, California is a community property state and North Carolina is a common law state. They have differing methods of dividing an estate.

What kind of attorney do you need? A general practice attorney might do a good job but your odds increase to near 100% if you get a board-certified estates and trusts attorney.

If you need more convincing, then read this article by Deborah Jacobs. It contains some good advice and some real horror stories.