Money, money, money. (financial software ) (column)
by Daniel Janal
There's this beach house I know of right on the ocean that has a view of the tide from every room. I want it. I want to to open the floor-to-ceiling sliding-glass doors leading from the carpeted loft office onto the open-air deck overlooking the blue surf and breathe in the salty air as I earn my daily bread.
I want to hear the person on the other end of the phone say, "What's that noise in the background?" And I want to reply: "Noise? What noise? Oh, that. That's just the ocean, and it's high tide."
Now I have to see if I can afford it. I have two choices: I can call my tax advisor, who knows me, my investing vesting temperament, my financial stability, and my tax situation. Or I can invest a couple of hundred dollars in software endorsed by celebrities.
I decided to give the celebrities the first shot. After all, if I live at the beach, the stars might be my neighbors. Why be rude to the neighbors?
Andrew Tobias' Financial Calculator published by MECA Ventures (203-226-2400) calculates mortgages quickly. I typed in the loan amount, interest rate, and number of years on the loan. I found that a 30-year, fixed-rate mortgage was quite affordable. For the fun of it, I changed the mortgage rate from the special 8 percent the bank offered to the prevailing 10 percent offered by S & L. The computer took about two eye blinks to compute the difference. I blinked twice when I saw the savings that would result from that 2 percent difference. What a deal!
"Now," I thought," If I make the down payment and the closing fees, I'm going to be strapped for a couple of months. Where can I get some extra income?"
Rather than think of ways to work harder (what's the point of working at the beach if you can't join the 5:00 p.m. volleyball game?), I wondered if I might be entitled to a tax refund. If the refund was sufficient, I wouldn't have a cash-flow dilemma to worry about.
I sought the advice of Sylvia Porter and her Rapid Tax, published by DacEasy (214-248-0205). This program computes your federal and state income taxes. If you don't know which forms to fill out, the program will ask you a series of more than 50 questions' your responses will indicate which forms to use. A lucid manual explains how to complete the forms. The manual is so clear, the IRS should issue it along with its forms.
First, I needed to find the dollar figures for all Sylvia's financial questions. Fortunately, this was nota taxing experience, since I keep all of my financial records on Quicken from Intuit (415-322-0573), a program that keeps running totals on my income and expenses based on my checks and deposits.
Both programs are easy to use. After filling out forms for nearly one hour, Sylvia told me I would get a refund of about three month's mortgage, maintenance, and taxes! I began to smell salt air.
This sounded too good to be true. I called my tax advisor and asked him to go over the numbers.
He figured the mortgage in about five eye blinks. He analyzed my tax return from the past year and asked about current income, assets, and anticipated income. He added the carry costs, taxes, mortgage payments and living expenses.
With steam rising from his calculator, Chet said, "You have a good chance of being approved for a mortgage and being able to pay for it each month." He also gave me investment advice, which the other programs could not do. He advised me to sell my condo (which I had expected to do). "You'll also save money because you won't have to pay for a vacation because your house is a vacation."
Hot diggedy! I could buy the beach house!
Only one question remains: Who won the battle between human and computer, or in this case, tax advisor and tax software? The software cost approximately $200, less at discount stores and mail order. I worked on it for two hours. My tax advisor spent about an hour, offered advice the computer programs couldn't possibly match, and charged me $125. The human wins! (Sounds like aline from a grade-B sci-fi flick.)
You won't go wrong by buying any of the programs I've mentioned here, however. All of them perform as promised: They're excellent tools and computed the mortgage on the beach house. They're excellent tools that I can use to double-check the advice vice of my financial advisor.
However, they can't replace a human being's acumen for deciding other factors, such as selling my condo to help raise the down payment on the beach house. Also, I'm sure that my tax preparer was better able than I to make sure I had used all the right forms, took all the entitled deductions, and paid the correct amount.
The lesson? "Computers are very good at managing information and presenting it in a solid, usable manner, but they can't suggest financial plans and strategies that match the capabilities of a trained, seasoned, financial pro. Remember that the next time you want to run the financial side of your home business yourself.
Gotta run. Surf's up.