10.10.2008

Don't Leave Money on the Table

In these economic times, leaving money on the table is not an option.
Please remind your families, friends and people who are needy in neighborhoods that your churches may serve, people who may not have families to care for them, that the deadline to file a 2007 return to qualify for the Economic Stimulus Package, is October 15th. Many people who do not normally have to file a return believe that they are ineligible for the Stimulus Package, but that is not so. The average payment is $600 ($1200 for married couples), plus $300 for each child (must be under age 17 as of December 31st 2008), who also qualifies for the Child Tax Credit.

9.23.2008

The Economy: Marmalade or Jam?

Well, for everyone who has not been hiding behind a rock in the last 10 days, (and man that is a place that might feel a lot more comfortable than facing what we do now face) we all now know that we are going through a lot more than a rough patch in the economy. For most of us, the big resolution is out of our hands, as the Treasury Secretary – Henry (Hank) Paulson, Federal Reserve Chairman, Ben Bernanke, Securities and Exchange Comissioner, Christopher (Chris) Cox, and Federal Housing Finance Agency Director, James Lockhart, volley with the Congress to find a palatable solution for our economic hit in the jugular.

Of course, most of us are wondering how we got here. We hear that this started with the sub-prime mortgage market and the bad lending practices of financial institutions. Bank made “no-paper” or “liar” loans to people who showed absolutely no ability to repay this loan. Why? Greed, on the parts of both the borrowers and the lenders. Banks and financial institution took a gamble that with the way that loans are packaged and sold, there would be little or no trail back to the institution that made the risky loan. The risk would be exported. The chief motivator in this financial plan, was making as much money as possible, and pushing the risk as far away from you as possible.

But we all as a culture also have to absorb a piece of blame, First, folk who could not afford the homes that they insisted on buying, were doing this because they have come to believe that having as big a home as possible is what the “American Dream” is all about. Main streeters wanted to be in their own piece of the “American dream” and Wall Streeters wanted to make sure that they had the biggest estate among their peers – their “American dream.” Folks who allowed the institutions to document their loans with false information were obviously complicit in the deed. Second, folks who live on credit again want more than they can afford, and will charge or borrow ad infinitum to get it, and third, the culture of this country has for many years chosen to motivate people to be creditors or negative savers.

So without delving into the details which abound on the web, we got to the point where the drag of these poorly made mortgages on the American economy started to take a toll on financial institutions, and their liquidity. Of course this simply made a bad situation worse, because the financial sector had already been playing darts with their holdings, by using a model that did not maintain adequate liquidity for the loans they made.

As we speak, home prices continue to deteriorate, and credit markets are at a stand still. If the credit markets are not working, more houses will be lost, and the economy will have a harder time in recovering, if it will be able to recover at all. It has been estimated that to get out of this mess, each and every man woman and child in these here Unites States will basically be in hock for approximately $2300. Most of us would gladly pony up our $2300, if that would really fix everything, but will it? Only time will tell.

But let’s see what we can do about stabilizing our own lives. It's really just going back to the basics.

For starters, we have to stop believing that the adults that are in charge, really know what they are talking about, and start taking a real interest in our own finances so we can do the safe and right things for our lives. Next, we all have to start living within our means. Yes, starting right now we will have to tighten our belts and stick to an austerity program. Much of the rest of the world goes through this on a regular basis. Although this is a foreign concept in America, we as individuals have to do just that, as does our government. It will be difficult times ahead, very difficult times indeed. To start the process, if you aren’t already living on a workable budget, you need to immediately create a working budget for your own life. We also have to start saving for a rainy day, if you haven’t noticed, its pouring down torrentially right now. Maybe that will be a start to a situation where if Ben Bernanke chooses to repeat the statement below, that he means it this time.

Comments made by Ben Bernanke on Milton Friedman’s 90th birthday (Novemebr 8th, 2002) – “Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again.” (1)

(1) See the entire speech here.

NOTE: Vast Bailout by U.S. Proposed in Bed to Stem Financial Crisis - NY Times.

7.10.2008

Do not "CLICK HERE"

Hello again...


As you probably noticed I have been gone for awhile, had to deal with some medical and surgical issues. While I am not yet 100%, I am now able to focus on reading instead of pain, so, today I came across an article that suggested that folks are still falling prey to email and "phishing" scams.
Here's how they work. These scammers are now impersonating the IRS and yes, guess what they are after, no, not just your stimulus payment, but also the account you might deposit your funds into. There intent is to clean you out, and once they have your personal information, it spreads exponentially as they may then be able to get to your investment accounts and other financial accounts.


Most of us are accustomed to clicking on a link to access various pieces of information at other sites, it has become so second nature, that we no longer even have to think about it, and that is one way that our financial privacy gets invaded and usurped, that simple click on a link that you make, may allow "the enemy" at your invitation, into your computer to search and find additional information, your information that they will now use against you.


Another way is they simply pretend to be one of your financial vendors, and ask for detailed personal information. Generally it comes with a sense of urgency, e.g. if you dont send this information, you'll lose out on something; we'll have to close your account; you'll be charged a fee, and so on, and of course if caught off guard, we might succumb, after all we think its our vendor, and so we may go ahead and key in the information. NO credible financial vendor will ask for your information via email, or ask you to key in your information after clicking on a link. You will generally be asked to go to the authentic website and make your changes through a secure website - where you will see a "locked padlock" symbol. An additional word of caution here - you should also watch out for oddities in the websites that you visit, e.g. if you see words that are spelt incorrectly, it could also mean you are not on the authentic website of your financial institution. Use the tools in your internet security package to check whether the site is known as a "phishing" site.

Regular check-ups of your financial accounts should also clue you into whether or not someone has gotten hold of your information.


Here is some information from the
IRS , they have seen a sharp increase in the number of scams being perpetrated in their name.

Lastly, adults, please inform your kids, young adults, please inform your friends - its not cool to CLICK on phishing sites, or on links in emails you receive.

5.28.2008

Were You Better Off Than Your Parents? Will Your Kids Be Better Off Than You?

While you may feel that you are better off than your parents, and I hope you do, our kids will have a definitely more difficult time making this statement. Much has changed. Our national economy has been impacted by a number of things, a war, not yet concluded; much increased fuel prices with expectations they will continue to rise, lower job creation, and increased competition globally. While we as Americans have had a much lower savings rate than most of the rest of the world, we are now in the realm of having a negative savings rate. Retirement benefits have decreased, and health care costs have risen. Social Security in all probability will not be around in the way we know it today, for our children. With all these factors that impact wealth creation, what can we do to ensure that our kids have a fair chance at being better off?

While some things are outside of our individual control, there are some areas where we can direct and guide our kids of all ages.

Understand money. Help your kids really understand money. Online payments, debit cards, credit cards and check books, may give children the impression that there is an unending supply of money. Teach your children that these are payment tools, and that you have to earn the money and have it in the bank, before you can use them. Help them understand interest rates and the cost of money. Help them understand how much money you make, and how it is spent. This will give children a good idea of the cost of living and also make indelible the fact that they will need to start saving early.

Wean yourself off of credit cards. There is no better education than the one observed. If your children observe your saving habits and not using credit cards and payday loans for regular expense items, they will be more likely to prevent the credit monkey from climbing on their backs.

Start saving now. Mandate that 10-25% of all the money that comes through your children’s hands be saved. During a regular year, kids rack up money from allowances, jobs – part-time or full-time, gifts, contest winnings, etc. Saving a percentage on a consistent basis is a good life lesson. Help your child monitor the growth of their savings, and eventually move those savings into investments. Having a real savings goal helps this process, for younger kids it may be some toy or electronic purchase, for older kids, it may be spending money on a trip, or even a partial payment on a car, for young adults, among other things it will be saving for retirement. Savings also means looking for bargains on the items that must be purchased.

Learn to budget. Introduce your children to budgeting as early as possible, but it is never too late to implement this most important wealth building tool. Also referred to as a spending plan, a budget simply puts you in control of your money so that you spend your money on the most important things to you and avoid frittering it away on impulse items. Help them create written budgets and set up a regular monitoring process. A budget must be written down and followed to be useful. Budgets in your head are not reliable.

Help your children understand that a budget is a dynamic document as income and expenses change. Help them understand the power of directing their money where they want it to go, to what is really important to them, and not frivolous impulse purchase that often generate buyer’s remorse.

Help them understand that the celebrity lifestyle that is conveyed unendingly on television and in magazines apply to a very small part of American society. Understanding that trying to rival the designer shoes or purses in a celebrity’s closet on a non-celebrity’s budget, will almost certainly lead to financial ruin, or at the very least the inability to obtain some things that may be higher on their personal goal list.

Keep good records. Along with budgeting, good record keeping is important. Learning to do this at an early age, will keep this habit throughout life. Good budget records show where you are overspending and allow you to make changes. Later on good record keeping will help you make sure you are able to claim all the tax-deductions legally allowed. Good records are also key when you have to make credit card or other purchase disputes.

Learn to give back. Being better off doesn’t begin and end with money, helping your kids learn to help ones less privileged than themselves at all levels, this is one way to fill their lives with meaning.

Get as much education as possible. Gone are the days of working a lifetime in one company. Investing in education throughout their life-time will keep your child ahead of the trends and be able to participate in the workforce as changes occur.

Get a career in an area that will support their desired lifestyle. Help your child examine the lifestyle that they may want to lead and guide them towards jobs and careers that can make that happen, based on the remuneration available for those jobs. Help them connect with people who are currently in similar jobs to determine whether salary or income expectations are valid.

As parents our job on guiding our children in financial matters really never ends, but if we start teaching them about money when they are young, the skills will be a lifelong asset. If your kids are teenagers or young adults and you fear that you may not have done a good job of guiding them, remember it is never too late to start.

5.07.2008

20 Ways to Give Yourself Your Own Gas Tax Holiday


  1. Keep your car well-tuned: This could increase your gas mileage by up to 4 percent - based on government studies. Keep good maintenance records.
  2. Change the oil in your car: Clean oil reduces the wear on your car caused by friction of the moving parts. Make sure you use the right grade of oil for your vehicle. Keep good maintenance records This will help increase your gas mileage.
  3. Replace the air filter in your car: Replacing a clogged air filter could improve your mileage by up to 10% - Savings 10-15c per gallon.
  4. Replace the fuel filter in your car: Replace your filter at regular maintenance checkups. The cleaner your fuel, the more efficiently your car will run.
  5. Check the alignment of your car: Engine drag will increase the amount of gas used.
  6. Rotate your tires: Rotation on a regular basis, prevents uneven wear and will save your tires and reduce your gas costs. Don’t just wait until you align your tires, you may need to rotate your tires more often
  7. Replace your tires: Check your tire treads. Balding tires need to be replaced immediately. Better tires give you better gas consumption.
  8. Replace your seasonal tires: At the end of winter replace winter tires with summer tires. Bigger snow tires use more gasoline than lighter summer tires.
  9. Make sure your tires are properly inflated: Check your tire pressure every month – the best time to do this when your car is cool and your care has been inactive for a few hours. Under-inflated tires reduce your fuel efficiency by up to 2% for each pound that your tires are under-inflated.
  10. Make sure you are using the proper tires for your vehicle.
  11. Keep your car clean and waxed: This helps reduce drag on your car and decreases your gas consumption.
  12. Service your vehicle prior to the season: Winter or summer.
  13. Plan your trips to avoid repeating routes.
  14. Purchase fuel in the cool of the morning or late evening: Gasoline becomes denser in colder temperatures and gas pumps are set to measure the volume of the fuel that you pump and not the density.
  15. Buy gas from a busy station: Stations with slower traffic may have contaminated gas from sitting too long in underground tanks and therefore less powerful gas.
  16. Avoid topping off your gas tank: When you purchase only a small amount of gas, at the station the pump doesn’t have enough time to really activate, resulting in short bursts of fuel which may short change the amount of gas that you are purchasing. The best time to fill up your gas tank is when you have half a tank or less left.
  17. Avoid running your gas tank close to empty: Keep your gas level above the quarter tank mark if possible. Driving your car when the gas gauge is close to empty, means that you may be pulling sediment from the bottom of the tank into the fuel system, fouling up fuel plugs, carburetors or fuel-injection jets, so you will probably be using more gas because your vehicle is running less efficiently.
  18. Avoid buying gas from a just re-filled station: When a gas station’s tank is replenished, sedimentary particles are stirred up in the gas, and could lead to efficiency problems, clogging your fuel filter, possibly causing your car to stall and possibly having difficulty starting.
  19. Turn the nozzle: After filling up your gas tank, turn the nozzle of the hose a full 180 degrees, this will drain up to an entire half-cup more gas into your tank, instead of into the tank of the person behind you. As you know, these half-cups add up.
  20. Don't buy high octane gas: Buying higher octane gas is a waste of your money for most cars. Regular unleaded has approximately 87 octane already and is fine for your vehicle. Octane is simply a measurement of how difficult it is to ignite the gas in your car and has nothing to do with the quality of the gas. If you are experiencing engine pings, rattles, or knocks you can switch to high octane gas. Note: Some cars like Mercedes Benz require premium fuel so you want to be sure and check your owner's manual before switching.

4.11.2008

Last Minute Tax Tips for Tax Year 2007

So you waited until the last minute to file your taxes, probably because you may have a tax liability, or maybe you are like many of us, simply a procrastinator. Well most transactions that could have helped you proactively lessen your tax liability had to be completed by December 31st, 2007, but you knew that, that’s why you will start planning for this year’s taxes right after you have filed the 2007 tax return, right?.

4.07.2008

Money Tip:Credit Cards - Universal Default Clause

If you use credit cards, get out your contractual agreement with the credit card company. Does your agreement have a "universal default clause?" Of course the best option is not to have to use any credit card company at all, but if you do - try to find one that doesn't burden you with a "universal default clause."


The "universal default clause" allows your card company (we'll call it Company X) to raise your credit card interest rate, if it determines from your credit report that you have been late on another bill, (that bill could be another credit card, or say your utility bill, or your mortgage, among others), even if you are making timely payments on Company X's credit card. Company X now has the go-ahead to hike your rate into the interest rate stratosphere - often hiking rates as high as 24.99% and even 31%.


Check your interest rate each and every month, so if they have exercised their right, you can exercise yours and move to another credit card company, or better yet pay off the offending debt.

Let us know of your experiences with the "universal default clause."

Check the status of your 2007 Tax Refund

Check By Phone: You can check the status of your 2007 tax refund, by calling 1-800-829-4477 and pressing 1 for automated refund information or you may call 1-800-829-1954. Its reccommended that you wait at least 6 weeks from the date you filed your return (3 weeks if you filed electronically), however it is possible to receive your refund in less time. Of course the closer it comes to the return deadline, the more likely you will have a longer time to wait. You will need to have your 2007 tax return available as you will need to give:
-your social security number
-your filing status
-and the exact whole dollar amount of your refund.

Check Online: You can also
check online to get the status of your own personal refund. Again, you will have to have the following information available:

-Social Security Number (or IRS Individual Taxpayer Identification Number)
-Filing status (Single, Married Filing Joint Return, Married Filing Separate Return, Head of Household, or Qualifying Widow(er))
-Exact refund amount shown on your return

3.30.2008

Are You Making Debt A Habit?

As Charles C. Noble quotes "First we make our habits, then our habits make us," we can get into a habit of living on debt, maybe starting in our youth as college debt and carrying on into our elder years as we become accustomed to the lifestyle it affords.

The way debt is used at various stages in one's lifespan is discussed in this piece "Life-stages of Debt" from Bankrate.com's website. Insight into how the habit is acquired may give you the ammunition you need to break the habit.

Do you agree?

3.23.2008

The Money Taboo: Breaking the Taboo – Part 2

Missed Part 1 - Find it here.

How can we change?

Follow our Youth. Our young people seem to be a lot less concerned about privacy on many levels, as seen by the gravitation towards the You-Tube and social-networking phenomena. While I am less likely to adapt to some of the freedom on those networks, personal finance blogs provide a forum for financial education and some confessions, allowing folks to talk about their problems, issues and plans with anonymity. A few blogs have gone overboard, giving excruciating personal finance detail, but we won’t complain. This is a step in the right direction to breaking money’s taboo status.

Financial Literacy. We all more than ever have to take responsibility for our own financial future, become financially literate and financially mature. If we aren’t financially savvy, we should seek out people in our group who are. Folks, who may have made a money mistake or two in the past, might be happy to pass on that information to you to avoid repetition of the error. We often by pass receiving that good information because we are afraid to broach the subject, and possibly show our lack of knowledge. Until we make the move however, we are destined to remain financially illiterate.

Managing our money wisely really requires that we become educated about it. Start talking about your money to your friends. Start a “money-group.” Use it to foster discussions about all aspects of your money. Talk about the fact that , e.g. there is a universal clause on most credit cards, which can raise the rates on all of your cards, if you are late on one card, it allows your other cards, if they so choose, to raise their rates, even if you are current and early on those other card payments. Think about it, if you fell into that trap, why allow your friends to fall in too. In this particular example, it is possible that if you are unaware of the clause – and you are not the type to check your interest rate each month (a lot of folks simply look at the due date and the payment due) you may not realize for several months that your interest rate has been hiked sky high, sometimes to 30%, and you have been taken for a pretty expensive ride. After all, as far as you knew, you are current on those accounts.

Why talk about it? It can be financially beneficial. Almost 2 decades ago, in a general conversation with a friend of mine, we started talking about our properties (my first home purchase) and as we talked, I realized that I had not been taking advantage of the homestead deduction on my property taxes, for probably 5 years. Now I am quite the reader, so it is certainly probable that at some point I would have come across that information, but it could have taken another 5 years. It should be noted, however, that as a student of “continuous improvement,” I am happy to talk about anything, particularly if it will ultimately improve my process or yours. My friend also did not consider money talk as taboo, and both of us came out of that conversation a little better off financially.

Talking about money could help you determine that what you thought was an excellent compensation package is not so wonderful after all. Of course, because no-one will talk, nobody really knows what the measurement gauge is. Be careful on this front, as some companies still have policies that prohibit salary disclosure among employees.

By not talking we often make money comparisons based on presumptions or specific misinformation, and cause ourselves more stress and financial problems than we really need to. If we try to keep up with the Joneses we often use debt to mirror a lifestyle that is financially out of our reach, but which we hanker for, because if it appears that our peers can afford it, we question, why can’t we? The ability to talk to someone about our finances, whether family, friend, clergy, or financial adviser about the instruments that we are thinking of using, can at the very least educate us, give us another idea, option, or can sound the alarm. Of course, there is no guarantee that anyone in your circle is anymore financially literate than you are, but two heads in my opinion is often better than one.

At some point, I am confident that we will come around to the realization that we carry around an unnecessarily huge burden when we isolate our money issues. The more we hide our money issues, the more problems or damage we are liable to cause ourselves. Actually as Shira Boss states in her book, most people are eager to hear the money details of others, they are just not that ready to share their own, and therein lies the rub, maybe we start by reverting to the childhood – "I’ll show you mine if you show me yours."

Share your opinion. How do you see it? Should money remain under our kimonos, or is it time to shake off the taboo?

The Money Taboo: 8 Reasons why Money is still taboo. – Part 1

When was the last time you had an open discussion about your salary, your mortgage payment, or your tax returns with anyone besides your partner or spouse? Many of us still aren’t even able to have those frank discussions with our partners and spouses. Discussing money openly may be the last taboo.

So exactly why won’t people talk? Money discussions are taboo for many reasons:

Belief that money is personal. Often there is a generational belief that money is not to be discussed, as noted in Jamie Johnson’s (heir of Johnson & Johnson pharmaceutical fortune) documentary "Born Rich."
Watch the video excerpt on this page. His family was more than a little peeved that he chose to speak out about their money. Warren Buffet’s granddaughter (in-law) got a little harsher treatment, she was apparently disowned. Watch.

In speaking to an associate recently, she indicated that she would be most uncomfortable commenting to a family member about a particular financial transaction the family member had made. When I asked, what if your financial experience could provide a benefit? The response was, “that’s something that you just don’t do.”

Corporations have also long used a privacy policy on discussing one’s salary with others, to maintain their bargaining advantage, which also probably plays into an individual’s belief that money discussions should be personal.

Guilt. If you are financially set, you may feel a tad guilty that you have done much better than the other guy.

Superiority. You revel in your financial success and certainly don’t feel obligated to talk about it with folks who have been less successful, in fact you have a certain disdain for those who you feel can’t “get it together.”

Shame. If you are in a bad money space, you may have feelings of shame that you haven’t done better, whether it’s due to poor money habits, or because you feel that your opportunities are limited. This often causes some folks to “beg off” from attending those high-school reunions.

Inferiority. You may want to do a lot better financially, but just can’t figure out which of your habits are preventing you from progressing. Your income is competitive with your peers; they just seem to be doing better. You really just aren’t sure that what you earn, or what you have amassed is as acknowledgeable as you might feel it is.

Financial illiteracy. You feel that others around you are more financially savvy, and so you keep silent about your own financial situation. You won’t talk about the huge financial mistake you just made, for fear of ridicule, or for fear of showing your lack of knowledge of how money works. Lack of math skills could also have a part to play here.

Jealousy/Envy. You maintain an image, commensurate or ahead of your peers even though it has to be supported by massive debt, which you dare not disclose, as it would reduce or destroy your perceived status in your community. The interesting thing here is that it becomes a never ending tale of the dog chasing its own tail. Herd thinking fuels each person’s effort to out-spiral each other, when no-one can afford to. Obviously not much thought is given to the damage and debt that this causes.

In Texas, this is referred to as folks with a “big hat and no cattle,” being showy without any substance financially. One young student, stated in a local newspaper article, that she had no idea why her parents moved into a huge house in a great neighborhood, yet she was never able to participate in extracurricular activities, because there was never any money to support those activities.

Shira Boss in her book ‘Green with Envy: Why Keeping up with the Joneses Is Keeping Us in Debt', talks about how she miscalculated the financial status of their next door neighbor – by presumption, innuendo, and gossip. Their neighbor’s apparently “financially carefree” lifestyle basically made them feel somewhat inferior, until through a series of events and meetings they realized that the lifestyle they almost envied was supported by huge credit card debt, home equity loans, and mortgages.

Dishonesty. There are probably enough cases where folks would rather not talk about their finances, because of the existence of “under-the-table” components, which could include illegal sources of income, under-estimation of taxable income, or erroneous tax deductions. Here keeping silent avoids them tripping themselves up. If you have watched any of the episodes of CNBC’s “American Greed” the con men featured were rarely an open book.

So, should we change? We all have our own belief systems about money, mostly indoctrinated in our early years. But our inability to openly discuss the one item that we need almost as badly as we need air to survive, can be damaging. Like anything else open discussion brings more items to the table. We are charged more so now than at any other time in our history to be in control of our finances for a lifetime. Improving our financial literacy will only come with our ability to have frank and open discussions about our money.

Can we change? Yes we can. Change occurs even in the most unwilling situation when accompanied by crisis. Like every long-standing habit, change will be gradual, but the mortgage and credit card mess with its ability to potentially decimate the finances of a large percentage of the population, may cause us to remove more layers of the onion in a speedier fashion. In the effort to take control of our finances, we will be challenged to remove , or at a minimum lessen the taboo. Maybe we are on the brink of that change.

The Money Taboo: Breaking the Taboo – Part 2

3.19.2008

Tax Tips: Purchased an auto, boat, aircraft or home in 2007? (Sales Tax)

If you did, do NOT forget to deduct the sales tax for these items in addition to the generic calculated tax on Schedule A. You have a choice which deduction to take, your sales tax deduction, or your state tax deduction. For states that do not have state taxes, e.g. Texas and Florida – you don’t have a choice – the sales tax deduction is the deduction available to you. However, you can only deduct the sales tax amount that is calculated with the same sales tax rate as the general sales tax rate. Here’s more detailed information.

Tell your friend about this blog, it could save them some money.

For more tax news, don't forget to check the IRS Newswire on the News Stand, located or the right hand side of the blog.

3.13.2008

Get Your Will Off Your To-Do List!

I was sitting in a tax class many years ago, when I commented to a class-mate that I had purchased a couple of family history logs for my young son’s grandparents to complete, so my son would be aware of his ancestry. I told her that my in-laws were aging and I wanted to have them fill these books out so I could pass them on to him. She turned to me and said, you know, its time for us to create those history logs for our kids too. I suppose, intellectually I knew that I wasn’t as young as I used to be, but somehow, completing a heritage book seemed to be something grandparents did, not me. Her comment really landed like an arrow right between the eyes, it woke me up to the fact that even if I wasn't old, the years were going by, and I needed to be prepared.

3.08.2008

60 Second Advice: Estate Planning 101 [VIDEO]

Source: Smartmoney.com


Watch the
Video.




Should I Pay My Taxes With Plastic?

Source: SmartMoney.com

By Bill Bischoff
March 5, 2008

WORRIED ABOUT HOW you're going to pay your tax bill? It might be tempting to slap it on plastic. After all, you've probably heard you can charge taxes due on your 2007 federal income-tax return on your Visa, MasterCard, Discover Card or American Express. What if you want a filing extension? No problem. You can just charge what you expect to owe the IRS. And if you owe estimated taxes for tax-year 2008, you can charge those, too. In fact, in many states, credit-card payments are available for your state income-tax bill as well.

Clearly, charging your taxes is convenient. And with the right card, you can even rack up some extra frequent-flier miles or other goodies to boot. So what's wrong with this picture?


The "convenience fee," that's what. It amounts to a hefty 2.49% of the amount you charge. This is in lieu of the fee that merchants pay credit-card companies when you charge your purchases. Only in this case, the "merchant" is the Internal Revenue Service, and Uncle Sam isn't interested in turning 2.49% of his revenues over to the card companies, which means you have to pay it. Until now, you may have been blissfully ignorant of these merchant fees, but you will become painfully aware of their bite when they come directly out of your own hide. The money is collected by one of the two vendors that facilitate these transactions (Official Payments Corp. and Link2Gov Corp.), and split with the card issuers.


Granted, paying $9.96 for the convenience of charging a $400 tax bill to your credit card isn't really a sin. But what about paying $124.50 on a $5,000 tax bill? And in addition to that, your friendly credit-card company steps up and starts charging you interest (often at 13% or more annually), unless you pay off your bill within the grace period. Bottom line? You can probably find a better way to dig up the money to foot the bill.


Our suggestion? Try to find other (less expensive) ways to raise the cash needed to pay your taxes. Perhaps your credit union, your parents or your rich brother-in-law. Also, don't overlook the IRS itself. You may qualify to set up an installment payment plan with the government. If so, this may be the cheapest way to go. You'll be charged a $52 setup fee (assuming you arrange for automatic payments out of your checking account) and then a monthly interest rate on the outstanding balance. Currently, that interest rate is 0.833% per month (which equates to 10% annually). However, the interest rate is subject to change every quarter. File IRS Form 9465 to get that ball rolling.


Of course, if you have a credit card with a low APR — say 5% or less — this could turn out to be the cheaper option. That is, provided you really do pay off your tab in a reasonable amount of time (i.e., before that introductory rate jumps up to something much higher). If so, visit officialpayments.com or pay1040.com to process your payment.


SmartMoney.com
Attn: Customer Service
1755 Broadway
2nd Floor
New York, NY 10019

3.07.2008

Tax Savings Tips [VIDEO]

Eisner's Tim Speiss on year-end tax planning tips that can help you reduce your tax bill. Watch the Video from Forbes.com.

Make Millions...In 2010 [VIDEO]

Don't get out of debt, be a millionaire, says author Loral Langemeier. Check out the Video from Forbes.com.

Financial Planning the Right Way [VIDEO]

Write down your goals, don't get emotional, and stay on course. Watch the Video. from the Forbes.com Video Network.

More Family. Less Money [VIDEO]

Expert conversation on how to make financial plans before a baby comes along. Watch the Video.

Financial Compatibility - Don't Keep Secrets

Financial Compatibility Don't Keep Secrets (The Ladue News)
There may be disagreement about whether it's love or money that makes the world go round, but if couples don't see eye to eye on money matters, their world can implode. Diana Flower, associate managing director at The Private Bank and Trust Company, says couples should begin discussing their financial compatibility once talk of marriage comes up. If you know that person well enough to be engaged, you should have some idea of his or her financial history and habits, she says. It also depends on each relationship: If one party is in a better financial situation, bringing it up too early can convey the wrong intention. It's up to the couple to gauge the seriousness of their commitment. She says initial discussions should focus on three main topics: financial history, personal habits and goals. For more of this story, click here. --------------------------------------------------------------------




Annual Credit Report

Everyone is legally entitled to obtain a free credit report each year from each of the credit reporting companies, and you can do so at this website AnnualCreditReport.com. Consider requesting a different report every 4 months.

When Will I Get My Economic Stimulus Money?

usnews

Q&A:
Q&A: When Will I Get My Economic Stimulus Money?


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Taxes: Other Opinions

Read:

Savvy Tax Hints From a Pro (US News)

The Pitfalls of Filing Your Taxes Early (US News)

5 Smart Ways to Reduce Your Taxes (US News)

What the Weak Housing Market Means for Your Taxes (US News)

3.06.2008

Taxes: Other Opinions

Take a Look at the article from SmartMoney.com:

Should I Pay My Taxes With Plastic?
By Bill Bischoff
March 5, 2008

WORRIED ABOUT HOW you're going to pay your tax bill? It might be tempting to slap it on plastic. After all, you've probably heard you can charge taxes due on your 2007 federal income-tax return on your Visa, MasterCard, Discover Card or American Express. What if you want a filing extension? No problem. You can just charge what you expect to owe the IRS. And if you owe estimated taxes for tax-year 2008, you can charge those, too. In fact, in many states, credit-card payments are available for your state income-tax bill as well.

Clearly, charging your taxes is convenient. And with the right card, you can even rack up some extra frequent-flier miles or other goodies to boot. So what's wrong with this picture?

The "convenience fee," that's what. It amounts to a hefty 2.49% of the amount you charge. This is in lieu of the fee that merchants pay credit-card companies when you charge your purchases. Only in this case, the "merchant" is the Internal Revenue Service, and Uncle Sam isn't interested in turning 2.49% of his revenues over to the card companies, which means you have to pay it. Until now, you may have been blissfully ignorant of these merchant fees, but you will become painfully aware of their bite when they come directly out of your own hide. The money is collected by one of the two vendors that facilitate these transactions (Official Payments Corp. and Link2Gov Corp.), and split with the card issuers.

Granted, paying $9.96 for the convenience of charging a $400 tax bill to your credit card isn't really a sin. But what about paying $124.50 on a $5,000 tax bill? And in addition to that, your friendly credit-card company steps up and starts charging you interest (often at 13% or more annually), unless you pay off your bill within the grace period. Bottom line? You can probably find a better way to dig up the money to foot the bill.

Our suggestion? Try to find other (less expensive) ways to raise the cash needed to pay your taxes. Perhaps your credit union, your parents or your rich brother-in-law. Also, don't overlook the IRS itself. You may qualify to set up an installment payment plan with the government. If so, this may be the cheapest way to go. You'll be charged a $52 setup fee (assuming you arrange for automatic payments out of your checking account) and then a monthly interest rate on the outstanding balance. Currently, that interest rate is 0.833% per month (which equates to 10% annually). However, the interest rate is subject to change every quarter. File IRS Form 9465 to get that ball rolling.

Of course, if you have a credit card with a low APR — say 5% or less — this could turn out to be the cheaper option. That is, provided you really do pay off your tab in a reasonable amount of time (i.e., before that introductory rate jumps up to something much higher). If so, visit officialpayments.com or pay1040.com to process your payment.

SmartMoney.com
Attn: Customer Service
1755 Broadway
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Are You Ready?

A harsh reality of life is that a disaster can occur on your door-step at any time. Should it occur you want to have done some planning beforehand, that may soften the blow. One thing that will give you some piece of mind is to have your family's household insurance inventory current and safeguarded.

Take a peek at this
video, from the Insurance Information Institute. The Institute site also allows a download of their inventory software - Know Your Stuff.

Even if you dont care to use this downloadable software, put it on your "to-do" list today, to get out your pencil and pad and create your inventory. After a disaster, you want to be able to present your information to the insurance company, so they can make you as whole as possible, as quickly as possible. Not having to worry about how you will replace even basic possessions, will start getting your life back to normal.

If you have had such an experience, tell us about it, and how you managed afterwards.

Warren Buffet has taken over the Top Spot

Move over Bill Gates...WB is at the door. Read UPI: Buffet World's Richest Man.

3.05.2008

Economic Stimulus Notice - 2008

This is a copy of the Economic Stimulus Notice, from the IRS website, that you will be receiving in your mailbox this month. Click the title above.

Remember that in order to be eligible to receive the stimulus, you must file a 2007 tax return.

3.04.2008

Consider Using a Financial Tool

Many of the people I work with tell me that they just cant get all their financial affairs straight. They never seem to be on top of everything. As a result, folks often side-step the financial management task and operate on a "wing and a prayer." That can sometimes lead to late fees, non-sufficient funds fees, over-limit fees, lost airline miles, increased credit card interest rates, lower credit scores, and on and on.

Sure if you aren't a numbers person, or a detail person, there is a certain amount of tedium present in not only keeping all your accounts current (or at least paid), but also being able to have accurate information as an input into your financial planning. If you are a ledger and pencil person, go right ahead, an EXCEL spreadsheet user - that's a good tool too. As long as the job is being done, congratulations are in order. I prefer to let my financial management software do the "heavy lifting" for me.

Using a financial tool makes almost every aspect of your financial management less of a tedious task. It is a very effective way to keep all your information in one system. One such product is Quicken - brought to you by Intuit.

It enables you to:
-Reconcile your accounts (bank, brokerage, credit cards etc.)
-Generate your net worth (Quicken keeps a running tabulation of your net worth on it’s initial screen)
-Generate saving’s goals and targets and track their progress
-Track your savings
-Track your spending - It'll give you a synopsis of your inflow and outflow, and any expected shortages and when they are scheduled to occur during the month.
-Create a budget and be alerted when you exceed it
-Track your credit accounts
-Develop a debt management plan – informs the most expedient way to reduce your debt
-Track your investments
-Create a watch list of investments
-Transfer financial data into tax preparation software
-Generate multiple customized reports at the click of a button.

Take a look at the Quicken site, (
click here) where you can compare the product’s features, and make a determination of which product is best for you.

2.27.2008

First Date: Getting to Know You.

In preparation for your first date - get yourself a pad and pencil, or open up a spreadsheet like Microsoft EXCEL, or if you use money management software such as Intuit’s Quicken or Microsoft Money – turn on your computer and open up your application.

Grab your files, your shoe boxes, or whatever your financial storage units are, and settle in for a re-acquaintance session.

Make a Date with your Money.

Have you noticed how shocked and surprised folks appear to be when someone takes the time (generally on a financial planning show, or financial segment on a talk show) to total up their income, expenses and debts. It’s like they are meeting their money, or lack of money for the first time. I am sure you are very familiar with your money, but if you are not, its time for you get re-acquainted. Your money is one of those things that will completely turn on you if you ignore it.

2.21.2008

Why another Money Blog?

Hello everyone. As you read in “About Me” this blog is meant to simply share information on money. Why did I decide to blog about money? On a daily basis I come in contact with people who have questions about their money and want to make sure that they will have enough. Enough money on which to retire, or to do the things that they want to do. In short, people who want to protect their money and make it grow. I also come in contact with folks with ostrich qualities (head in the sand), who figure that it will all work out somehow, and then just about everyone in between. So, if you are truly independently wealthy this blog is probably not for you. This blog is aimed at folks who want to figure out how to create a plan to get on the road to financial independence, or tweak their plan, to improve their chances of staying on that road.

Money is completely intertwined in just about every thing we do in life. It’s the air we breathe financially.

Watch "Money As Debt"

Ever wondered about what money represents and exactly how it is created? Take a look at the piece - Money as Debt by Paul Grignon, from video.google.com. An animated presentation on what money is and how it is created.

Money As Debt

47 min 7 sec - Feb 12, 2007
Average rating: (3912 ratings)
Description: Paul Grignon's 47-minute animated presentation of "Money as Debt" tells in very simple and effective graphic terms what money is and how it is being created. It is an entertaining way to get the message out. The Cowichan Citizens Coalition and its "Duncan Initiative" received high praise from those who previewed it. I recommend it as a painless but hard-hitting educational tool and encourage the widest distribution and use by all groups concerned with the present unsustainable monetary system in Canada and the United States.

If you're having trouble watching the video, try copying the following URL into your browser:
http://video.google.com/videoplay?docid=-9050474362583451279&pr=goog-sl

"No matter who you are, making informed decisions about what you do with your money, will help build a more stable financial future for you and your family." Alan Greenspan

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