It is a new year and that means that it is once again tax season. Although filing taxes can be cumbersome, there are steps that you can do to make it easier. First, research tax credits and deductions for which you may be eligible. You can find information about everything tax related at www.irs.gov. It is important to understand what credits and deductions are available so that you can be sure to save as much money as possible or receive a larger refund. Be sure to do your research even if you pay a professional to prepare your taxes for you because he/she may not be as invested as you are in saving you money.
Second, get all your paperwork in order. Collect your W-2’s, 1099’s, receipts, etc. so that you have everything you need in one place before you begin working on your taxes.
Third, investigate which tax filing service may be best for you. There are a variety of electronic filing options that are free and some that are low cost. You may also qualify for free assistance from the IRS. You can check with your local library to see if they offer assistance. Or if you live near a university, see if the senior year accounting and business students prepare taxes for free or at a low cost.
Finally, start preparing for next year. If you are receiving a large refund or ended up owing money to the IRS, adjust your withholdings accordingly so next year you will not owe or be owed very much. If you had trouble finding all the necessary paperwork, create a folder or box to keep all your tax related paperwork in.
Although credit cards can be a source of temptation to overspend and incur debt, they can also be beneficial to use in emergencies, to build credit, or to earn points such as cash back rewards, frequent flier miles, or hotel credits. If you decide to have a credit card for any reason, there are some basic rules that you should follow to get the most out of your credit card.
First, pay off your entire credit card balance every month. Credit cards carry very high interest rates and only paying the minimum amount each month can end up costing thousands of dollars over the course of many years. One way to be sure that you have the funds to pay off your balance every month is to think of each credit card charge as a debit transaction and record it in the same way. That way, you have the money set aside to pay your bill at the end of the month and you know when you have reached your spending limit. If you overspend one month, be sure to pay as much as you can of your credit card amount due that month and spend less the following month to ensure you don’t carry a balance from month to month.
Second, read the fine print regarding annual fees, interest rates, and rewards before accepting any card. If you know that you might not be able to pay off your credit card bill entirely each month, you will want to get a card with the lowest possible interest rate. If you use your credit card for large purchases and pay off the balance each month, choose a card with rewards that you can use. Either way be sure that you fully understand the terms of the credit card before signing the agreement. Don’t hesitate to ask questions.
Third is to know how cards can positively and negatively impact your credit score. Your credit score is based on the FICO formula which takes into account a variety of factors. One is the duration of your credit accounts. The longer you have had a credit card account or loan, the better it is for your credit score. Opening new credit card accounts frequently will negatively impact your credit score. Paying off your credit card bill every month and not charging the maximum amount on your card will also have a positive impact on your credit score. To learn more about your credit score, visit: http://www.myfico.com/CreditEducation/articles/.
If you are currently working at a job you despise or you are unemployed or see no future at your current company, you may have to decide whether to go back to school or to look for a new job. If you are considering returning to school, there are several factors you should consider before you enroll.
First, how will you benefit from going back to school? If getting a degree will only help you get a higher paying job that you dislike, it may not be worth it. Or if you are unsure of what you want to do, going back to school may be a costly way to find out. Research careers that you are interested in and interview people working in that field to be sure it is a good fit for you.
Second, can you afford to go back to school? You not only need to consider the financial cost of enrolling in classes but also the significant time commitment required to succeed in school. Although many schools offer online programs in which you can primarily go at your own pace, these programs still demand considerable amounts of time for studying and completing tasks (not to mention lots of self-discipline to stay focused). Also, you lose income for all the time you spend going to school and not working.
Third, are there jobs available for which you already qualified and would enjoy doing? If going back to school isn’t right for you, you may be able to find a job for which you are better suited. There are many online resources to search for jobs and post your resume for potential employers including monster.com, indeed.com, LinkedIn, careerbuilder.com, and ziprecruiter.com just to name a few. Whatever you decide to do, be sure to do lots of research, consider all of your options, and talk with those closest to you in order to make the best decision.
It seems that there are advertisements for companies that promise to get your student loan forgiven everywhere these days. Since the average student loan debt for graduates is now almost $30,000, the idea of having that debt forgiven is extremely appealing. Nevertheless, beware. If it sounds too good to be true, it most likely is a scam. Although the government has developed a few programs to forgive student loan debt for people who meet specific criteria, the majority of advertisements are for companies who merely consolidate the debtor’s loans. While consolidating loans can be advantageous for some, it can also result in the debtor losing some benefits of the original loan (in some cases, the ability to have the loan forgiven). These companies generally charge a fee up front and sometimes charge hidden monthly fees.
Before paying a company to have your student debt forgiven, research the government approved debt forgiveness programs. The Consumer Financial Protection Bureau and the Department of Education provide information on student loan debt forgiveness programs. If you think you may qualify for one of these programs, make sure the company you choose has a good reputation. Check the Better Business Bureau for reviews and google the company to see what previous customers have said about their services. Finally, trust your instincts. If something doesn’t feel right, find a different company.
If you do not qualify for a government approved debt forgiveness program and are having difficulty making monthly payments, talk with your lender. Most companies prefer to work with you than have you default on your loan.
Time magazine recently published an article warning consumers about the pitfalls of the new 8-year auto loan. Although it may seem that the more affordable, lower monthly payments outweigh any risk associated with the longer-term loan, there are several factors to consider. First, how long do you plan to keep your new car? If you typically purchase a new car every 6 years, then taking out an 8-year loan is not a good idea because you would still owe on the car when looking for a replacement.
Second, how much will the car be worth in 5 or 6 years? Car values depreciate every year and you do not want to wind up owing more than what the car is worth. Third, how much can you afford to pay monthly? If you can afford the monthly payment of a 5 year loan, then you should opt for the shorter term loan. In the end, this option could save you thousands of dollars in interest.
Additionally, prepare before shopping for a car. Know how much you are willing to spend, what monthly payment you can afford, and what type of loan you are willing to consider before visiting any dealerships. Research what type of car best fits your needs and budget. Is a new or previously owned car the best option? If buying a used car, be sure to check the history of the vehicle. Is it better for you to buy or lease?
Finally, don’t be afraid to negotiate. Dealers often expect to negotiate with consumers.
The best way for children to grow into adults who practice good habits is for them to learn those habits at an early age. There is a lot of focus from the White House and in the media about teaching healthy eating and exercise habits. Unfortunately, there isn’t as much focus on the importance of teaching children good money management skills.
Children, however, can benefit greatly from learning how to budget and the importance of saving at an early age. Since these skills are not always the most fun to practice, it can be difficult to engage children in learning them. Thankfully, the internet provides us with many resources to help teach money management skills to children in innovative and fun ways. A few fun and free money management apps and online games are:
1. P2K- for IPhone, IPad, and IPad touch
2. Kids Money- for IPhone, IPad, and IPad touch
3. Save! The Game- for IPhone, IPad, and IPad touch
4. Kids Farm – for Android
5. Rich Kid Smart Kid (http://www.richkidsmartkid.com/ )
6. H.I.P Pocket Change (https://www.usmint.gov/kids/games/)
Try these apps and games out and have fun with your kids while learning about budgeting and saving!
If you want to earn a higher interest rate and you don’t need a physical bank for your banking needs, you should consider opening a checking account with an online bank. (All of them allow you to deposit your checks by taking a picture of them with your phone, and allow you to pay bills online.) Here are some of the best online checking accounts being offered now:
- Highest Interest Rate Option for a Low Minimum Deposit: FNBO Direct. Their APY is currently .65% and you can start an account with as little as $1.
- Free Checks: TIAA Direct Interest Checking. Your first order of checks is free, minimum required deposit is $100, and there’s no monthly fee.
- Best ATM Options & Customer Service: Ally Bank. They have no minimum balance to open the account, provide the use of thousands of ATMs nationwide at no cost, and provide live customer service 24/7.
- Best for Overdrafts: Capital One 360. If you tend to overdraft your account at times, this checking account charges less than $1 for an overdraft of $100.