Tax Time!!

Tax Time

By Sarah C

Now that 2013 is here, it’s time to think about taxes.  Whether you’re getting a refund or not, it’s a good idea to file your return early.  In recent years, there has been a sharp increase in the number of fraudulent returns filed by identity thieves.  They file tax returns, obtain your refund, and disappear before you (and the IRS) realize someone has already filed a return in your name.   And, even without the concern of identity theft, if you’re getting a big refund, you want that money as soon as possible!  Here’s a quick guide to getting your taxes done early.

 

First, gather key documents.  You need three types:

1.      Identification documents – social security cards for you and any dependents.

2.      Income documents -W-2s, 1099s (from investments, bank accounts, or social security money received), and any other record of income.

3.      Expense documents – receipts for any expenses that might be tax deductible.  This includes student loan interest, certain child care expenses, mortgage payments, property taxes, qualifying health care expenses*, and charitable contributions.  Your records could be documents sent from the government (for student loan expenses) or cancelled checks, receipts, or other records of payment.   Some of these deductions will probably only apply if you itemize deductions, but you should gather everything just in case.  You will also need records of any contributions to retirement accounts, which can reduce your tax burden.

 

Second, figure out how you’ll prepare your taxes.  If you’re comfortable doing it yourself with an online program, go for it!  H&R Block offers free filing if your Adjusted Gross Income (AGI) was less that $57,000 and you are younger than 52.  See their website for info.  The IRS also trains volunteers who will prepare your taxes for free if your AGI is under $51,000.  Search www.irs.gov  for “VITA” (tax volunteer program) or call 800-906-9887 for a VITA location near you.

 

Third, if you are getting a refund, make a plan for the money!  More than 80% of filers get a refund.   Some tax preparers will offer you an “immediate” tax refund, but these carry a very high interest rate, so beware.  The IRS processes refunds quickly and deposits the money directly into your account, so it’s better to wait the 5-7 days for the full amount than take the quick money.

 

If you are due a refund, it means more money has been withheld from your paycheck than was necessary, and you’re getting it back at tax time.  You may want to change your W-4 withholdings so you get that money throughout the year, rather than as a refund.  However, some people count on this big check to pay down debt, save for emergencies, or otherwise invest.  Identify how you’ll spend the money before it arrives, so it’s used for a purpose and doesn’t just flow through your fingers.  Then, make that money work for you!

Identity Theft: Deter, Detect, Defend

Identity Theft: Deter, Detect, Defend

 

Identity theft is when someone uses your personal information, such as name, social security number, or credit number, without your permission, to commit fraud or other crimes.  Approximately 9 million US residents will have their identities used fraudulently each year, with an average cost of $3,500.  The Federal Trade Commission advises a three-part plan of attack to dealing with the potential of identity theft: Deter, Detect, and Defend.

 

Deter.   Keep financial information safe.  Sometimes information is obtained by stealing wallets or credit cards, so carry only what you need, do not carry your social security card, and do not have you pin number in your wallet.  Sometimes information is obtained by sifting through trash bins, so shred any trash that contains sensitive information, including free credit offers and other “junk” mail.  Finally, sensitive information may be sought through phishing, or sending emails that appear to be from legitimate institutions (banks, credit card companies, utility companies), asking you to “update,” “confirm,” or “validate” your account.  However, when you click on the link you are taken to a fake site.  The site appears real, so you may not even realize it’s a fraud until damage is done.  Never click on links in email – legitimate companies do not seek information this way.  Rather, call the company or go to their website yourself to be sure no action is needed.  Always be cautious about opening attachments in emails, no matter who sends them.

 

Detect.  Some people do not know that a thief has opened a line of credit in their name until they review their credit report or are contacted by creditors.  Check your credit report annually for free at annualcreditreport.com.  Review each report to be sure there are no lines of credit or credit cards that have been opened that you don’t recognize.  If you see any unknown credit, contact the creditor directly to find out what’s going on.  Also check the addresses – thieves sometimes file a change of address form so they can obtain credit cards at their home in your name.  If anything is wrong, correct it with the agency (Equifax, Experian, or TransUnion).  Also, it’s a good idea to review your credit card charges monthly to be sure there are no unknown charges. 

 

Defend.  If you have been the victim of fraud, consider placing a fraud alert on your credit by calling any one of the credit agencies (who will alert the other two). Anytime someone attempts to open or increase credit in your name in the next 90 days, the bank or merchant must take steps to verify that it is you.  Close any accounts that you suspect or know have been tampered with, and take steps to correct your credit report.  See ftc.gov for more information about dealing with identity theft.

 

Being aware of how identity theft works and taking simple steps to protect yourself is the most important thing you can do to protect yourself.

 

 

Holiday Budgeting

 

It’s the most wonderful time of the year…until you get the credit card bills in January.  Christmas gift-giving can cause financial stress when shopping and later when trying to pay the bills.  Here are some tips to keep your season festive while still sticking to a budget and not derailing your financial goals.

 

1.      Know your limits.  Set a budget for Christmas spending.  The four biggest categories for most people are gifts, travel, entertaining, and decorating.  But don’t forget about other items that arise – extra tips for service people in your life, holiday clothes, pictures, postage for shipping gifts, etc.  Identify these expense categories beforehand and estimate how much you can spend on each one.  Then, like your regular budget, track your expenses.

 

2.      Plan ahead.  If you can set aside money in your regular budget for a couple months ahead of time, use cash!   If you use credit, plan to pay it off within two months. Next year, plan “holiday spending” right into your monthly budget so you have enough saved by December that you don’t have to use credit.   Monitor your expenses and save your budget to help guide you next year.

 

3.      Make a list.  Jot down the names of everyone you’d like to give a gift to.   Now, see if you can make the list a little smaller.  Could you do a gift swap with your siblings or another group instead of shopping for everyone?  If money is really tight, explain to some people that you have a tight budget and can’t exchange gifts – sharing a potluck meal with friends can result in just as must good cheer as a gift.  When you have your final list, set a price limit for each gift.

 

4.      Think creatively.  Consider your own gifts – what can you make or offer someone?  Some ideas: volunteer in your child’s classroom in lieu of a gift; handwrite a letter to your parents telling them what you have learned from them; offer to make someone a home-cooked meal; or swap babysitting with a friend.  There are tons of ideas online for homemade gifts, from crafts to recipes in a jar to homemade soap.  Take a look and try something new!  If you are purchasing a gift, remember that a thoughtful gift chosen with the recipient in mind will be more meaningful than the latest gadget.

 

5.      Shop early to take advantage of deals.   Maybe.   Taking advantage of Black Friday or Cyber Monday deals is great, but be careful not to buy something just because you’re caught up in the excitement.  With smart phones and the internet, comparison shopping has never been easier.  Make sure it fits into your gift-giving plan.  And, if you do buy early, cross that person off your list and make sure you don’t keep buying for them!

 

Above all, remember the reason for the season!

The Magic of Compound Interest  -- Or --  How to Retire a Millionaire

 

Compound Interest is a powerful tool to building wealth over time.  Here’s the idea: you deposit money into a savings vehicle that pays you interest, such as a savings account, money market account, or mutual fund (the stock market).   Wait patiently!  Over time, your money earns interest and that interest earns interest.  After many years, even modest investments can grow to great sums.

 

Here’s an example:

 

Jennifer, age 20, invests $5,000 in a Roth IRA with an average return rate of 8%.  She does nothing else; she simply leaves it alone.  At age 65, that initial investment will now be worth $160,000 à a nice chunk of change for retirement.  

·         Investment = $5,000

·         Time = 45 years

·         Total at retirement = $160,000

 

If Jennifer waited until she was 39 to invest that $5,000 in a Roth IRA with the same return rate of 8%, the investment would only grow to $40,000.

·         Investment = $5,000

·         Time = 26 years

·         Total at retirement = $40,000

 

Starting early was the key!  Even better, if Jennifer can start early and make an investment of $5,000 every year, the growth is huge!  $5,000 each year will grow to more than $1.93 million.

·         Investment = $5,000 per year (over time, $225,000)

·         Time = 45 years

·         Total at retirement = $1,932,528

 

There are many compound interest calculators online.  Here’s an example where you can set your own investment amounts, whether it’s a one-time investment or monthly saving.  I ran the numbers on a small savings of $20 per month at 3% interest (something like a money market account).

·         Investment = $20 per month

·         Time = 15 years

·         Total = $4,593

http://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php#.UIPZyo7Fm0s

 

How can you use the magic of compound interest?  Start saving now, even if it’s just a small amount.  Don’t touch the money and let time work for you.

 

By: Sarah Coats

 

Setting SMART Goals

Setting SMART Goals

 

A goal defines where you are going, and helps motivate you along the way.  The steps toward achieving the goal are the roadmap.  Some parts of the map are difficult, but having the end point helps remind you why your hard work is worth it. 

 

Taking the time to put your goals in writing has many benefits:

·        A goal gives you a target to aim for.  Something that is meaningful to you.

·        A goal helps focus your time and energy.

·        A goal can provide motivation, persistence, and desire.

·        A goal can help you prioritize your activities and choices.

 

Defining your goal takes a little work.  Goals should be SMART:

·        Specific.  Be as specific as you can about your goal.  Want to save $1,000 for an emergency fund within a year?  Want to earn a 3.0 next semester?

·        Measurable.  Define your goal so you can determine if you’ve reached it and/or made steps along the way.  Seeing measurable results will motivate you.

·        Attainable.  Aim high, but also set goals that are achievable.  Make sure you are willing and able to work toward your goal. 

·        Relevant.  Goals should be important to you!  You’ll care more about reaching goals that you’ve chosen and have personal meaning.

·        Time-Bound.  Set a time-frame for meeting your goal.   Without a time-frame, there’s no urgency.  Also, you can monitor your progress and results.

 

Go ahead, take a couple minutes to write out one of your goals, whether it’s in the financial, career, or personal arena.  Make it a SMART goal.  Now tuck that goal someplace where you can look at it from time to time to remind you of one of your priorities.  You deserve to achieve your dreams!

 

 

Got A Resume?

An updated resume prepares you for the job hunt!

Hi!  I’m MJ and I’ll be blogging about resumes, job-hunting and self-marketing.  Some of what I share will be my based on my own experiences when divorce pushed me into the job market after fourteen years as a stay-at-home mom.  That time for me was very challenging (i.e, SCARY!!).  I learned a lot of things I think are worth sharing and talking about.  I hope you will find some of the information helpful.  If you have any questions or want certain issues addressed, please let me know. 

A stand-out resume is still the strongest tool in any job-hunter’s toolbox.  Think of your resume as your advertisement, or your sales brochure, for you as an employee.  That’s what it is, after all - a marketing tool to sell that wonderful, excellent, unique entity that is YOU!

In this post, I will review a few basic rules for updating your resume.   You may have heard them all before but they are worth repeating.

1. Be sure your contact information is current.   If you dropped your land-line service and now use a cellphone exclusively, make sure the correct phone number is on your resume.  The same thing for your email address.  A variety of situations can cause a change in email providers, be sure the email address you list on your resume is current.  Same thing goes for your snail mail address.
2. Keep the fonts uniform.  If your current job titles were listed in bold type, make sure the one you are adding is in bold type as well. 
3. Use correct verb tenses.  In your former jobs, you managed employees.  In your current job, you manage employees.
4. Correct typos and misspellings.  Everyone makes them.  Double-check the spellings of former employers.  Use the spell-check feature on your computer, but don’t rely on it.  It is a good idea to have someone with fresh eyes proofread your resume for you.  

Use this list as a simple guide when updating your resume!  A stand-out resume is still the strongest tool in any job-hunter’s toolbox.  Think of your resume as your advertisement, or your sales brochure, for you as an employee.  That’s what it is, after all - a marketing tool to sell that wonderful, excellent, unique entity that is YOU!

Keep smiling.

Until next time,

MJ

LEARN HOW TO MAKE A SPENDING PLAN

Where did my money go? How am I going to pay this month’s bills?

·       How much is too much to spend on something new?

Have any of these questions passed your mind? These questions and more can be answered in your personal spending plan. This one-page document summarizes all income and expenses in your family. Also known as “budgeting,” making a spending plan allows you to take control over your finances.

On Tuesday, September 25, we’ll spend an hour talking about your personal financial goals. Then we’ll talk about how a spending plan can help you reach those goals. In subsequent webinars, we’ll review our spending plans, talk about tips to living within our means, and share our setbacks and triumphs in a caring space. All you need is a tracking paper and the desire to take control over your finances!

This webinar is designed to give you the tools to make your money work for you. It’s not to pass judgment on how you spend money. We all make choices, every day, about our finances. The purpose of creating a spending plan is to see how your money is earned and spent, and make sure it fits with your life goals. We’ll talk about some general guidelines, and share tips on trimming expenses, eliminating debt, or handling credit. But any changes are up to you. Plain and simple.

Join us to start the process of being intentional with your finances!