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The 2014 PFD Numbers Are In…

September 19, 2014

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Here is a great article from ADN.com about the big announcement:

The number is $1,884. That’s the amount of this year’s Permanent Fund dividend as announced by Gov. Sean Parnell on Wednesday in downtown Anchorage.

“I’m frankly grateful for the Permanent Fund dividend at whatever amount, and I know Alaskans are too, as they save it or spend it for their own needs,” Parnell said.

The 2014 dividend will be the third-largest check issued since the yearly distributions to Alaska residents began in 1982. The Alaska Permanent Fund Dividend Division said checks and direct deposits will go out on Oct. 2.

PFD by the numbers

More than 641,000 people are expected to receive the PFD check this year, according to the Alaska Department of Revenue. Parnell said 2014 was a record year for the Pick. Click. Give. campaign, which allows PFD recipients to dedicate a portion of their check to charities across the state. For 2014, 26,850 Alaskans donated to 511 organizations through Pick. Click. Give., making a total of 44,693 donations totaling a record $2.8 million.

The oldest dividend recipient is 109 years old, according to the governor.

The 2014 dividend is much larger than last year’s check of $900. The reason: The 2009 fiscal year — in which dividend values decreased as the nation’s economy continued to stagnate — dropped off the five-year rolling average of the Permanent Fund’s performance used to calculate the dividend. With stock and real estate markets continuing to show strong returns, all indications are that next year’s check could be even larger.

Parnell said that the size of the Permanent Fund — from which earnings are used to pay out annual dividends — has jumped dramatically since 2009. The Department of Revenue puts the current Permanent Fund value at $51 billion, a 71 percent increase over its value five years ago.

The 2014 check is $46 less than the $1,930 PFD predicted by Alaska Dispatch News in late August.

The PFD program started with a $1,000 check in 1982, an amount that dropped off in following years before it began climbing steadily, with intervening hiccups, during the course of the next three decades. The largest Alaska Permanent Fund Dividend check came in 2008, the year before the recession began to impact the Permanent Fund, when then-Gov. Sarah Palin announced that Alaskans would receive $2,069. That year’s check also came with a $1,200 “energy rebate.”

The smallest check arrived two years after the PFD program began — 1984’s checks came to $331.29. In its 33 years of paying qualifying Alaskans, the Permanent Fund dividend program has distributed a total of $21.9 billion. An Alaskan who has received a check each year since the beginning of the program would have received a total more than $37,000 in dividends.

“The other governors look at us and look at our reserves — the Permanent Fund, but our budget reserves too — and the financial institutions in New York told me, ’49 other states would love to  have your challenges,’ ” Parnell said. “So Alaskan finances are on a secure financial foundation, and that’s going to continue.”

Annual Maintenance

September 16, 2014

home maintenance 250.jpgA common expectation of homeowners is to want the components and systems in their home to work when they need them. Periodic maintenance is just as important as having a trusted service provider to make necessary repairs.

Victims of Murphy’s Law can attest that their air conditioner goes out on the hottest day of the year or the water heater fails when you have out of town visitors.

If the convenience of having things work doesn’t justify maintaining your home’s systems, consider that it can be less expensive than the results of neglect causing repairs or replacement.

  • Replace burned-out, dim or missing bulbs in light fixtures and lamps. Consider switching to LED bulbs.
  • Dryer exhaust vents build up lint even though you may be cleaning the filter regularly.
  • Fire extinguishers need to be recharged or replaced after expiration date.
  • Establish a recurring appointment on your calendar to change filters in your HVAC.
  • Replace missing or damaged caulk around sinks, bathtubs, showers, windows and other areas.
  • Clean gutters.
  • Schedule an inspection with a pest control a minimum of once a year unless you have a service contract.
  • Schedule a chimney cleaning prior to using the fireplace for the first time in the season.
  • Keep all tree branches and shrubs trimmed away from the home.
  • Pressure wash exterior, deck, patio, sidewalks and driveway.
  • Keep levels of insulation in the attic above your ceiling joists.
  • Check appliances with water lines for leaks or worn hoses.
    • ice maker • washing machine • dishwasher • others
  • Test all GFI breakers and reset.
  • Inspect all electrical outlets for broken receptacles, fire hazards or loose fitting plugs.
  • Have furnace and air conditioner serviced annually.
  • Test smoke and carbon monoxide detectors and change batteries.

The early fall is a great time to take care of these items before the weather becomes harsh.

UAA is Bringing Back the Nostalgia of the Drive-in Movie…

September 11, 2014

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DRIVE IN MOVIE

Sep 12, 5:00PM – Sep 13, 12:00AM

The Alaska Airlines Center is excited to bring back the nostalgia of the drive-in movie with the style of the 21st century. Starting at 5:00pm, a rodeo of local food trucks will be located in the parking lot of the arena for your dining pleasure. At sundown (approximately 9pm), we will watch Jurassic Park. Sound will be broadcasted through FM radio, as well as speakers for those that are planning to join on foot. Food trucks and vendors will be serving throughout the movie.

Space is very limited, so please car pool and arrive early.
Admission: Free!

Money Down the Drain

September 9, 2014

iStock_000012313013Small200.jpgPrivate mortgage insurance is necessary for buyers who don’t have or choose not to put 20% or more down payment when they purchase a home. It is required for high loan-to-value mortgages and it provides an opportunity for many people to get into a home who otherwise would not be able.

The problem is that it is expensive and a homeowner’s goal should be to eliminate it as soon as possible to lower their monthly payment and avoid putting good money down the drain.

FHA loans made after 6/1/13 that have 90% or higher loan-to-value at time of purchase have mortgage insurance premium for the life of the loan. FHA loans made prior to 6/1/13, can have the MIP removed after five years and if the unpaid balance is 78% or less than the original loan-to-value.

VA loans do not require mortgage insurance.

Conventional loans, in most cases, with higher than 80% loan-to-value require mortgage insurance. The cost of that insurance varies but with a $250,000 mortgage, it could easily be between $100 and $200 a month.

Your monthly mortgage statement should itemize what your monthly fee is for the mortgage insurance. Unlike interest that is deductible, most homeowners are not able to deduct mortgage insurance premiums.

If you plan to remain in the home or to stay there for a considerable number of years, the solution may be to refinance the home. If the home has increased since it was purchased, the loan-to-value at its new appraised value may not require PMI. You might even be fortunate enough to obtain a lower rate than you currently have.

10 Easy Ways to GO GREEN at Home!

September 4, 2014

Being green and earth-friendly is easier than one may think. Not only are these tips beneficial to the environment, but they are also easy on the wallet.

1. Change regular light bulbs to compact fluorescent bulbs. – uses 75 percent less energy and will last about 10 times longer than an incandescent bulb, so you’re not only saving energy but money, too.

2. Power down computers every night. – Leaving computers on all the time shortens their lifetime due to heat stress and mechanical wear.

3. Recycle what you can.

4. Cut down on junk mail. – The Direct Marketing Association has an online free service that allows you to opt out of catalogs and junk mail. Yellow Pages has an online service to cancel the phone book.

5. Use a programmable thermostat. - Setting your thermostat three to five degrees lower while you are asleep and when no one is at home will lower your utilities bills and save energy.

6. Make sure all unnecessary lights are turned off. – Leaving lights on is a huge drain on electricity.

7. Turn down the thermostat on your hot water heater. –  Your home only requires your hot water heater to be set at 120 degrees, but some manufacturers have set their heaters to 140 degrees, a temperature that can be scalding.  Can save you between 6 to 10 percent in energy bills.

8. Unplug cell phone chargers when not in use. – Even when your phone isn’t being charged, your charger is using electricity.

9. Use eco-friendly cleaning products.

10. Turn off water while brushing your teeth. – The EPA claims you can save eight gallons of water a day if everyone in your household turns off the water while they brush their teeth in the morning and at night.

Cash Flow and Equity Build-up

September 2, 2014

Cash Flow.pngMany years ago, Las Vegas hotels would entice customers with inexpensive rooms, meals and entertainment so they would gamble. It may have worked initially but if you’ve been to Las Vegas recently, the bargains are gone. Hotels expect each division to be a profit center on its own. As a consumer, I might not like the changes but as an investor, I’d have to be pleased with increased profitability.

Years ago, real estate investors used to accept negative cash flow buoyed by tax incentives in hopes of making a big payday due to appreciation when they sold it. Today’s investors are focusing on tangible, current results like cash flow and equity build-up.

Cash flow is the amount of money you have left over after collecting the rent and paying the expenses. Since rents have gone up considerably due to supply and demand in the last few years and mortgage rates are at near record lows, income is up and expenses are down, making the cash flows attractive.

If the cash flow is sufficient, you could have a good investment even if the value of the property never increased. Cash on Cash doesn’t consider appreciation and measures the cash flow before tax advantages by the initial investment. A rental with $3,170 CFBT divided by an initial investment of $29,000 would generate a 10.93% Cash on Cash rate of return.

Low down payments on investor properties are also a thing of the past. Non-owner occupied mortgage money is available but the investor should expect to put down 25-30%. An advantage of having a smaller mortgage is a lower payment.

Most mortgages are amortized loans with both principal and interest due with each payment. The forced savings of the principal contribution builds equity in the property and can be considered a part of the rate of return.

A $100,000 mortgage at 4.5% for 30 years would have $1,613.29 applied to principal in the first year. Divide that by the same $29,000 initial investment and the amortization would generate another 6%.

Without factoring in appreciation or tax advantages, this rental example generates much more than most alternative investments. There certainly are many different aspects that affect the risk and return on rental investments. If you haven’t scrutinized single-family rental opportunities in a while, you should look again.

Which Filter to Use?

August 26, 2014

iStock_000012737667Small250.jpgA dirty air filter decreases the effectiveness of your HVAC system because it inhibits airflow and allows dirt, dust, pollen and other materials to blow through the system.

The challenge is how often it should be changed to keep the system working efficiently and extend the equipment life. Too often and you’re wasting money and not often enough and your increasing the operating and maintenance costs.

Fiberglass panel filters are inexpensive and easy to find but they’re not very efficient and they allow most dust to pass through. They were popular years ago but there are much better products available currently.

Pleated air filters are available in MERV ratings from 5 to 12. As these filters collect dirt and other particles, they become less efficient to the point of impacting air flow. Allergy sufferers can benefit from this type of filter. These should be changed every two to three months based on local conditions.

HEPA filters stand for High Efficiency Particulate Arrestance. They are very efficient and more expensive than previously described filters. Since they are very efficient, they require changing more frequently; possibly, every month.

Electrostatic air filters are permanent and washable. They generally cost more initially but the savings will be based on how long they last. This type does not add to landfill issues or produce ozone.

Improperly maintained filters will lower the quality of the air in the home, have a negative impact on air flow, cause it to use more electricity and eventually require maintenance to the systems.

In an attempt to easily comparing filters, a rating system was created called MERV, an acronym for Minimum Efficiency Reporting Value. The rating from 1 to 16 indicates the efficiency of a filter based on standards set by ASHRAE. Higher ratings indicate a greater percentage of particles are being captured in the filter.

To create a system to remind you when to change your filters, set a reminder on your electronic calendar to recur for whatever frequency you determine is best for you. Be sure to keep a supply of filters on hand to be ready to change them out when the time comes.

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