Tax Season

It seems to creep up on us every year, tax season.  As members of The United States we are subjected to yearly federal income taxes.  It should come to no surprise, since it happens every year, at the same time, but I always find myself somewhat rushed and unprepared when all of the forms start appearing in our mailboxes.

I am clearly a Type A personality.  I love to be organized and have everything together.  Unfortunately, being a Wife, Mom of 3, and Working Woman with two jobs, I often have to slack on some of my organizational ways!  Here are some tips that we use in our house to make tax season a lot less painful.

1.  Have a dedicated folder or envelope for all of your tax items.
2.  Throughout the year, when you make any donations, purchase items for a home office, receipts from professional organizations, etc., put all of those receipts into your folder or envelope. 
3.  As soon as you receive forms in the mail, W2's, 1099's, mortgage documents and more, place them all in your folder or envelope immediately.
4.  I create a spreadsheet of all of the items from the previous year that I will need to gather for this years taxes.
5.  Sometime after the first of February, begin to go through your envelope or folder and using your check list to insure you all of your documents. 
6.  If you are missing any interest documents from your bank or loan company, you may have to go onto their website to print the information.

The next debate is often who is going to do your taxes.  Back when we were first married, I did our own with a computer program.  As the years have progressed and our taxes have become more difficult, we find it best to hand it over to our accountant.  Once we drop our documents off, we usually have our taxes back within a week.  He also automatically files our federal and state taxes for us.  Personally for me, it is a huge relief knowing a professional is doing our taxes and I do not have to worry if I missed something. 

What are some other tips to make tax season less stressful?

It's Never Too Soon To Start Saving For Christmas!

I'm a planner, always have been, always will be! I do not like to have a month with monstrous size bills, especially January right after Christmas. A few years back, when my husband quit his job (you can read our whole journey here) to finish school and stay home with our kids, we tried to keep our monthly expenses as even as possible every month. This is when we started saving for Christmas in February! Our goal is to have all of our money saved up by November, that way we can pay cash and not have any "typical" holiday bills after the holiday!

Here are a few keys to success, to start your Christmas savings account now!

• Pick a place to "house" your money so that you will not touch it over the course of the year. It may be a jar in your kitchen cabinet, your local bank or credit union, or an online banking institution. We have exclusively used Smarty Pig over the past several years. It allows you to set goals and see your progress to your end goal! Smarty Pig is free and pays a 1% interest rate. You can also earn more when you cash out your savings into gift cards.

• Make the monthly contributions automatic and part of your monthly budget. It you are committing to saving $100 a month, have that money automatically withdrawn and put in your designated "savings" account. That money is off limits and for a single purpose, Christmas!

•  Make a Christmas budget now and stick to it. Here is an example of a $1000 budget we have used in the past:
• Our 3 kids at $200 each = $600
• Nieces and Nephews = $100
• Parents = $150
• Sisters and Husbands = $100
• Wiggle Room = $50

This comes out to $1000 for Christmas. It you start to save in February and save until November, you have 10 months to accumulate $1000.  You need to put $100 every month in your savings account.

• The sooner you start, the easier it will be to reach your goal. We prefer to start in February, just because we have some other bills that come due in January. If you get a tax refund, make part of this refund your first deposit. If you have an extra cash at the end of another month, add it to your Christmas savings. You can accumulate your budget mount quicker, than originally thought!

The holidays can be stressful enough, make next Christmas as stress-free as possible by establishing a budget, saving the money in advance and then stick to the budget! 

Disclosure:  You can earn a $10 referral with Smarty Pig, if you would like to be referred, please send me an e-mail at spendless2savemore@gmail.com!

Let’s Save Some $$ - Contact Your Cable Company

Recently I had a very positive experience in lowering our cable/internet/phone bill. Recent bills had been $119.96 before taxes. When I received our February bill, it had jumped to $129.99. I was a bit irritated at the $10 per month increase and was ready to switch. In our area we have two competing cable companies. I searched the internet site of the competing company and they were offering $89.95 per month for the same bundle for 12 months! Wow – I want to switch now! Then I thought of all of the hassles of switching companies. I decided to call our current supplier.

When I was talking with the Customer Service Representative he explained that our bundle pricing has expired and hence the increase we received. I asked for a better package. He came up with a cost before taxes of $123.96. Not much of a savings I explained to him. I then let him know what the competing company was offering. Quickly he said, “well we have competitive price matching let me see what I can do.” He quickly came back with $93.00 before taxes.

So with a 5 minute call, I was able to save $36.99 per month off of our cable/phone/internet bill!

Why We’re Glad to Have an Emergency Fund!

Whether you have consumer debt or not, it is important to have an Emergency Fund. Ideally you should have 3 – 6 months of expenses put away in an accessible savings account, just in case! Even if you only have $1,000 in an Emergency Fund, sooner or later you will be glad you have it!

2012 is starting off as an expensive year for us! First my husband’s truck needed a new exhaust system and catalytic converter. We were glad to have an Emergency Fund when we received the $340 bill! Its hard to part with the money, but that is why it is there, for an emergency!

Well this week, our furnace started acting up again. When we bought our house 4 years ago, we were warned it was a 20 year old furnace on its last leg! Somehow its last leg has lasted us more than 4 years. We considered us lucky. Yesterday morning (when it was 20 degrees out) the furnace was “coughing” as our favorite furnace repairman told us. He was able to clean it out for $80, but on his way out he gave us the news. Your furnace is going to go at anytime; there are no replacement parts available. He provided us the nice estimate of $2,800 for a whole new 95% efficient furnace and told us to call him when we were ready!

 So it looks like we will be dipping in the Emergency Fund again in February to have a new furnace installed. When it rains, it pours! Here’s to a cheaper 2012!

Have You Thought About Re-Financing?

Have you thought about re-financing?  I know you hear everywhere that now is the time to consider re-financing your home loan.  Interest rates are at record lows making it a great time to consider your home loan.  If you think you won't save money, it may be worth your while to call around and get some estimates.  We just refinanced our loan into a smaller term loan and our payment are less than what we had been paying.  Here are some of the other benefits we will be experiencing with our loan re-finance:

• Shaved multiple years off our home loan.
• More of our monthly payment goes directly to payoff the principal.
• Enjoying an APR more than 2% less than our old APR.

You really need to think if you plan to stay in your home.  With the real estate market the way it is, we have no plans of ever moving.  We are in our house for the long haul, unless of course someone else has other plans for us!

You also get to skip a house payment while the loans transfer, so this could be a great way to free up some extra cash to pay down consumer debt!

Our personal goal is to have a mortgage completely paid for before our oldest son goes to college, so it is time to buckle down and get serious!

Reduction in Employee Social Security Tax Rate

The Tax Relief Act of 2010 makes a major change in the withholding of social security taxes from employees' wages by reducing the employee share of social security tax from 6.2% to 4.2% for the first $106,800 of wages paid in 2011. The maximum that can be withheld will be $4,485.60, a $2,136 decrease from the 2010 maximum of $6,621.60.

CoinStar - Counting My Change!

Do you have a lot of loose change around the house? Do you dread counting and rolling all of that change to take to the bank? Does going into the bank something you hardly ever do anymore? Well all of these things forced me to make the decision to test out the Coinstar machine at our local Giant Eagle.


According to Coinstar, the average household has $90 of loose change in their house. So I took this challenge to see what we had lying around. I collected all the coins that were semi-rolled in our cabinet. I emptied out all the change that was in our change jar (aka old cake frosting container) in our kitchen. I also gathered all of the change in our 2 change holders in both vehicles (old baby food containers work great for this purpose).

On our shopping trip I stopped at the Coinstar machine first. You can either choose to cash out your change, (however a 9.8 cent fee applies to every dollar) or you can get an eCertificate to many retailers for no fee. I choose the certificate to Amazon.com since I know I could use this for upcoming birthdays and Christmas.

So after emptying all of my change, plus what was in my wallet, I got a $65.52 gift certificate to Amazon. Not too bad! It was also super easy to do and I had no issues. The whole process took about 5 minutes start to finish counting my $65.52 in change.

There are many certificates that are available, but they vary by region. The retailers include, Amazon, Amazon MP3, Borders, CVS (my machine did not have this option), Gap, iTunes, JCPenney, Lowes, Old Navy, Overstock.com, Regal Entertainment, and Starbucks.

This is a great way to save for Christmas without even realizing you are saving money. Start your change jar now and put all of your change in it, then you will be able to cash it out for gifts!

How to Save Money When You Work Full-Time

I recently got involved in a discussion on another blog on how to find time to save money when you work full-time outside the home. WOW – that is right up my alley! I do work full-time outside the home at least 40 hours per week plus I have about an hour commute each way! I often leave the house by 6:30 am and do not return until 6 pm. I also travel for my job, sometimes day trips, but at least once a month I have to do a 2 – 4 night trip away from the husband and kids. We recently made some changes in our household, which I will be discussing in the months to come to ease the stress in our house. In the meantime, here are some on my tips on how find time to save money:


1. Meal Planning – This is essential, you have to know what if for dinner each night before you come home. This eliminates the stops on the way home to “grab” something for dinner. I do a meal plan on my blog once a week, it hold me accountable!

2. Eat at Home – I strive to eat at home 6 of the 7 nights each week. We normally only eat out once on the weekends. Huge money saver!

3. Use the Crock Pot – I love my Crock Pot. I usually prepare everything the night before and throw it in the Crock Pot. I then take it out of the refrigerator and turn it on in the morning!

4. Pack Lunches – I rarely eat lunch out at work unless it is a working lunch with my boss or direct reports. Normally I pack leftovers from the night before to re-heat and eat.

5. Use my Lunch Hour – I normally use my lunch hour at work to clip coupons, plan my shopping trips, search deals, and do quick runs to Walgreens and CVS.

6. Freezer Cooking – I do have some meals on hand in the freezer ready to go. I would love to do more of this in the future, but I would have to find the time. I usually have Meatballs and Fajita Kits in the freezer ready to go!

7. Convenience Meals – I will have a few of these on hand such as frozen pizzas or skillet meals. It is still a lot cheaper than eating out and once you get home you can still have dinner on the table within 20 minutes.

8. Clipping Coupons – I normally do not clip all my coupons. I leave my coupon inserts whole and put them in folders by the dates. I then use websites such as Money Saving Mom and Saving In Akron, which match deals with coupons. I only clip the coupons I need for my trip!

9. Stocking Up on Sales – Stock up when items are on sale and create a stock pile. This eliminates a lot of the mid week running around for one or two items. If I decide to have spaghetti for dinner, I know I can go to my basement and grab a box of noodles and jar of sauce. Same goes for toiletries. I never run out of toothpaste, I always have about 5 tubes I got for free.

10. Eating Out – We normally only eat out once a week, but when we do we almost always have a coupon or a gift card when we do eat out. Saves money in the end! My son sells the Enjoy the City book through school and it has tons of high value restaurant coupons in it.

11. Keep a Budget – Write everything down that you spend. Trust me you will think twice about your purchases. We just started this in August, check out my post here.

Finally, you cannot do it all, all the time. Sometimes you have to take a break and let things slide. That is acceptable! Sometimes I get frustrated when I force myself to buy milk for $2.49/gallon when I know I can run to another store for $1.98. However I have to consider my time and is it really worth it to make another trip just for milk? If you find that something is taking up a lot of your time and you are not getting a lot back in terms of rewards, stop wasting your time! My family is my number one priority and the steps I take above all help me being able to spend more time with them. To me that is what life is all about!

Save $$ All Year Long

Here is a cheat sheet on the best times to get a great deal on stuff you need!


January – Linens
Get great deals on linens and towels at a discount during January white sales.

February – Winter Clothes
Now is the time to stock up on winter clothes, coats, and boots. Retailers need to make room for spring clothes coming in March.

March – Small Electronics
This is the best time to buy small electronics such as digital cameras from last year. New models are usually hitting the stores and they need to clear out older models.

April – Cookware & Household Items
Retailers tend to discount cookware and other household items around April in order to entice the wedding-gift crowds.

May – Yard Sales
This is the best month to hit the yard sales. They tend to be in full swing once the weather begins to turn nice.

June – Gym Memberships
There are often deals this time of the year because more people tend to go outside and exercise.

July – Summer Items, Cars, & Carpets
Retailers use the 4th of July to hold big sales on summer items, cars, and carpeting!

August – Lawn Furniture & Gardening Supplies
This is the best time to buy summer gear such as lawn furniture, gardening supplies, a/c units (if you can find any), and of course that final summer clearance items!

September – School & Office Supplies
Back to school sales are in full swing and you can take advantage of the school supply deals out there as well as great deals on computers and dorm items’!

October – Appliances
New home appliances are often introduced in the fall, so you can score last years’ models at a discount, unless you are holding out for that new candy apple red washing machine!

November – Holiday Items
The sales start as soon as Halloween is over. You can get great bargains on toys and flat screen TV’s.

December – After Christmas Seasonal Items
The best time to buy Christmas decorations is after Christmas. Stores mark these items down 50 – 90% immediately after Christmas. Buy I suggest shopping on the 26th or the selection gets picked over!

New Rules for Gift Cards

New Federal Reserve rules provide important protections when you purchase or use gift cards. Here are some key changes that apply to gift cards sold on or after August 22, 2010:


Covered by the New Rules
Store gift cards, which can be used only at a particular store or group of stores, such as a book store or clothing retailer.
Gift cards with a MasterCard, Visa, American Express, or Discover brand logo. These cards generally can be used wherever the brand is accepted. (Not all cards with a brand logo are covered; see "Other prepaid cards" below for exceptions.)

New Protections
Limits on expiration dates. The money on your gift card will be good for at least five years from the date the card is purchased. Any money that might be added to the card at a later date must also be good for at least five years.
Replacement cards. If your gift card has an expiration date you still may be able to use unspent money that is left on the card after the card expires. For example, the card may expire in five years but the money may not expire for seven. If your card expires and there is unspent money, you can request a replacement card at no charge. Check your card to see if expiration dates apply.
Fees disclosed. All fees must be clearly disclosed on the gift card or its packaging.
Limits on fees. Gift card fees typically are subtracted from the money on the card. Under the new rules, many gift card fees are limited. Generally, fees can be charged if you haven't used your card for at least one year, and ou are only charged one fee per month.

These restrictions apply to fees such as:
dormancy or inactivity fees for not using your card,
fees for using your card (sometimes called usage fees),
fees for adding money to your card, and
maintenance fees

You can still be charged a fee to purchase the card and certain other fees, such as a fee to replace a lost or stolen card. Make sure you read the card disclosure carefully to know what fees your card may have.

Other Prepaid Cards
These new rules apply only to gift cards, which are just one type of prepaid card. The new rules do not cover other types of prepaid cards, such as:

Reloadable prepaid cards that are not intended for gift-giving purposes. For example, a reloadable prepaid card with a MasterCard, Visa, American Express, or Discover brand logo that is intended to be used like a checking account substitute is not covered.

Cards that are given as a reward or as part of a promotion. For example, a free $15 gift card given to you by a store if you purchase merchandise or services of $100 or more may have fees or an expiration date of one year rather than five years. Regardless, you must be clearly informed of any expiration dates or fees for these cards.

Go here for more info!

New Credit Card Rules in Effective 08/22/10

More new rules from the Federal Reserve mean more new credit card protections for you. Here are some key changes you should expect from your credit card company beginning on August 22, 2010:


Reasonable Penalty Fees
Let's say you are late making your minimum payment.

Today: Your late payment fee may be as high as $39, and you likely pay the same fee whether you are late with a $20 minimum payment or a $100 minimum payment.

Under the new rules: Your credit card company cannot charge you a fee of more than $25 unless:
One of your last six payments was late, in which case your fee may be up to $35; or
Your credit card company can show that the costs it incurs as a result of late payments justify a higher fee.

In addition, your credit card company cannot charge a late payment fee that is greater than your minimum payment. So, if your minimum payment is $20, your late payment fee can't be more than $20. Similarly, if you exceed your credit limit by $5, you can't be charged an over-the-limit fee of more than $5.

Additional Fee Protections
No inactivity fees. Your credit card company can't charge you inactivity fees, such as fees for not using your card.

One-fee limit. Your credit card company can't charge you more than one fee for a single event or transaction that violates your cardholder agreement. For example, you cannot be charged more than one fee for a single late payment.

Explanation of Rate Increase

If your credit card company increases your card's Annual Percentage Rate (APR), it must tell you why.

Re-evaluation of recent rate increases
Today: Your credit card company can increase your card's APR with no obligation to re-evaluate your rate increase.

Under the new rules: If your credit card company increases your APR, it must re-evaluate that rate increase every six months. If appropriate, it must reduce your rate within 45 days after completing the evaluation.

This set of rules is the latest in a series of regulations that implement the Credit Card Accountability, Responsibility, and Disclosure Act (the Credit Card Act). For information on protections under the Federal Reserve's other credit card rules can be found here.

4 Smart Ways to Pay for College

It is never too late to save for college. Any money you save now for your children, will further reduce their expenses and loan they may have to take when they are actually attending college. Whether your child is in preschool or high school the time to start saving is NOW! I am a strong supporter of a college education. I believe that in today’s corporate America, a college degree is a must, just think what it may be 18 years from now! Here are the four best plans to save for college:

The 529 Plan

Every state offers at least one version of a 529 plan and you don’t need to live there to sign-up. Plans vary so visit SavingforCollege.com to compare your options. Most states offer tax breaks for the 529 contributions, but you need to choose your state’s plan to qualify. In Ohio, visit CollegeAdvantage.com.

Pros:
No annual contribution limit
Accounts can hold up to $380K (caps vary by state)
Anyone can add to the account
You can transfer the money to other children (or relatives) if one child decides not to attend or gets a scholarship

Cons:
Risk – you are investing in the stock market
You will have to pay penalties and taxes on the interest if it is NOT used for college expenses

Coverdell ESAs

Parents can contribute up to $2000 in these education savings accounts (ESAs) each year. The money grows tax-free until you withdraw it to pay for school expenses

Pros:
Lower fees and more investment options than 529 plans
You can use funds for K-12 expenses (supplies, uniforms, or tuition)

Cons:
Couples must earn less than $220K combined or $110K to be eligible
Congress has to vote to keep the current benefits or the contribution limit may drop to $500 per year and the K-12 expenses will no longer be covered

Roth IRAs

You can use funds in a Roth IRA before the age of 59 ½ to pay for your child’s education without penalty. You can invest $5000 per year if you are under 50 years old and $6000 per old if you are 50 or older

Pros:
Money grows tax-free
Funds can also pay for your retirement

Cons:
You should only use your Roth IRA money for college is you have retirement savings elsewhere
Couples must earn less than $177K combined or $120K to be eligible

Savings Accounts, Money Markets, CDs and Bonds

Just go to the bank or online and open these accounts or buy CDs or Savings Bonds

Pros:
Total flexibility, if your child does not go to college you will not have to pay any penalties or fees
Minimal risk

Cons:
Low returns on your money
You must pay income taxes on your earnings

Do You EBAY?

eBay has a new program, eBay Bucks!  You can earn 2% on your purchases as certificates back on eBay, plus if you shop first through EBATES, you earn an extra 1 - 3% back, plus a $5 bonus the first time your use EBATES!

We are on a mission in our house to de-clutter and reduce the among of "things" that lay around.  I made a committment to list 5 things on eBay every week.  I am in now week 3 and still growing strong.  It is amazing the things I am finding to sell.  I just sold a cookbook I never used for $26!!  Check out my items for sale under kdecker96-half on eBay!

Money Answer Book - Dave Ramsey

So I am on this money saving kick and I read another one of Dave Ramsey's books, "The Money Answer Book"!  Okay so perhaps I am becoming a little obsessed with budgeting and saving money.  My husband reluctantly told me this morning that he thought his drill was about to blow up.  I think he thought I would say, "No - you cannont buy another drill".   I surprised him and said, "I know you use it all the time, we can get another one."  He was shocked!

Anyways, this is another great book.  Dave tackles 100 tough questions on paying debt, budgeting, and spending.  It was a great, quick read filled with lots of great insight.  A couple of the things I learned:

1. Dave does not ever recommend buying new cars because they lose so much value, you are much better off paying cash for a 2 year old+ vehicle.
2. When buying life insurance, make sure to buy term life, not whole life policies!
3. Everyone needs a will!! (I second that)!
4. Make a budget to tell where your money goes, don't look back at the month and wonder where your money went!
5. Invest 15% of your pay in retirement once you are out of debt and have a 3 -6 month Emergency Fund.

The book focused on the 7 Baby Steps laid out in his other book, The Total Money Makeover!

The Total Money Makeover

So I finally decided to read The Total Money Makeover by Dave Ramsey. A lot of the bloggers I follow live by the principles and “Baby Steps” that Dave has developed. So I decided to check the book out at our local library and read it over our vacation to see what it was all about and if my husband and I could adopt some of his principles.


First of all the book was very interesting to me and I found I could not put it down! It was definitely an eye-opener on many of the points he makes about “myths” and “truths” in today’s society. The motto of the book is “If you will live like no one else, later you can LIVE like no one else”! It is about making sacrifices today to secure your future in retirement later in life. There are also some wonder Budget sheets and debt worksheets in the back of the book for your use. I have already made copies to look more closely at our finances and budget.

One of the items from the book we will definitely be adopting is a stricter budget. My husband and I have always used a budget but it has been loose. We have decided to tighten it up a little bit and pay more attention to where our money is going every month. It also has some great insight on life insurance, saving for retirement and saving for college.

So if you are wondering like I was, the “Baby Steps” that Dave lays out are as follows and they MUST be completed in order to be successful!

1. Save $1000 as a Starter Emergency Fund FAST

2. Start the Debt Snowball

3. Finish the Emergency Fund

4. Invest 15% of Your Income in Retirement

5. Save for College

6. Pay off Your Home Mortgage

7. Build Wealth

I was disappointed in how much he downplayed the importance of college. His book made me feel like he did not see the value in a post high school education. My personal feeling is that you should encourage your children to attend college or at least obtain some type of training post high school. I feel that this is a MUST in today’s society. Yes I am sure there are exceptions of successful people without degrees, but I feel this is the exception not the rule. I consider an education as a security policy. You need that degree to back you up in case something happens to your job. A lot more doors open when you have a degree. I have a bachelor’s and master’s degree and have had a very successful career since graduating college 10 years ago. My husband had a bachelor’s degree and will finish his MBA in December. Education is a strong pillar in our family and will always be!

Even if you do not have credit card debt, I highly recommend reading this book. Imagine paying off your house and no longer having to make mortgage payments! Or even better paying cash for a house if you are currently renting! Dave maps out the road to success to make this happen!

Dave would probably not agree with my family taking yearly vacations. But this is something my husband strongly agree on doing with our children. We plan and save throughout the year so we are able to give our kids a yearly vacation. Some of my most vivid memories as a child are our family vacations and I am striving to give my kids the same types of memories. You only live life once so you need to enjoy it. If you can afford it then I say go ahead!

Monthly Money Tip – Credit or Debit – Which is Better?

So if you read my blog, you know that I am in favor of using credit cards for the perks IF you can pay your balance every month AND you are living below your means. Well I found an interesting article in the May 2010 issue of Money on situations where it might be better to use Credit instead of Debit:
1. You’re Planning to Make a Major Purchase – Credit Cards offer the strongest protection on purchase disputes. If goods or services aren’t delivered as stated, the issuer will battle with the merchant on your behalf. Until the problem is resolved, the charge is suspended with no interest accrues. With a debit card, the money is gone from your account and you have to wrestle with the merchant to get your money back.

2. You’re Buying Gas, Checking in at a Hotel, or Renting a Car – When you debit for those transactions, the merchant figures out the maximum you could spend, and then puts a hold on your bank account for that amount. You cannot access the excess that is frozen until the transaction is finalized which can take up to 48 hours. When checking into a hotel for 3 nights, the merchant may freeze $1000 dollars; however your total bill may only be $600.
3. You Want Big Rewards – Many debit cards now have rewards programs, but they no way compare to the best credit card programs available. Many credit cards offer at least 1% cash back on purchases. If you spend $65 per week at the grocery store, over the course of the year you will spend $3380, but could get $33.80 in cash back rewards.
4. You Don’t Vigilantly Monitor Your Account – If your credit card is stolen, your liability is $50 maximum by law. If your debit card is stolen and money is used, the money is gone and you’ll have to jump through hoops to get it back. In the meantime you could end up spending more by bouncing checks or miss bill payments. If you do not have time to regularly check your bank account activity, use a credit card that way it’s the bank’s money that’s on the line and not yours!


Source – Money, May 2010.