March 2007
You are currently browsing the articles from General Finance written in the month of March 2007.
Now might be a good time to shift some of your investment money into Certificates of Deposit. CDs currently offer an excellent alternative to stocks because you can get almost 5.5% APR return for one year.
CDs are a good option now:
- CD Rates are high
- The Fed will probably drop rates a couple time this year
- You will have a better APR locked in while others drop
- FDIC insured
As I have mentioned before there are online savings accounts that have APYs around 5.50% so that is an option as well. However, if rates do go down, so will the APY on these savings accounts. Therefore, if you lock in a good CD rate you will be able to capture the upside of the high rates for longer. Also, if you begin to ladder some CDs now you can keep those high rates even longer and protect yourself from falling rates when the Fed makes their Fed Fund Rate cuts later in the year. Now you need to go out and find the highest yield CDs available.
Bankrate.com can give you the highest yield CD available for specific time ranges and minimums: Highest CD yields.
Written by Nagel on March 21st, 2007 with no comments.
Read more articles on Investing.
Many of us have mounds and mounds of financial paperwork that we have little idea if we need to keep it or if we can simply throw it away. Here is a list of what financial documents to keep and what to throw away:
Obviously You Need to Keep:
Will, living will and durable power of attorney.
All Life insurance policies.
Separation and divorce documents.
Real estate deeds, titles and property surveys.
Not-so-obvious to Keep:
All Retirement plan documents from your pension, profit sharing, 401(k), and IRAs.
Records of nondeductible contributions made to your employer-sponsored retirement savings plan or IRA.
All Military records
Tax returns and supporting data for at least the last seven years after the original return is filed.
Keep buy/sell trade confirmations.
Dividend reinvesting statements (for seven years after you file your tax return showing a gain or loss
Big ticket purchases
Receipts for items under warranty until the warranty expires
Pay stubs – until the end of the year when you compare the year end totals with the amounts shown on the W2 form you get from your employer.
Throw Away:
Receipts of bank deposits and ATM transactions, once you verify that the transactions.
Canceled checks – save only those needed as support for tax purposes.
Bills – once you’ve paid them and verified that the checks have been cashed.
Monthly or quarterly brokerage statements – if your annual year-end statement summarizes all transactions made during the year.
Always shred financial documents when they’re no longer needed, along with destroying pre-approved credit card offers. I have heard many stories of identity theft occuring when someone has dumpster dived for your financial documents.
Written by Nagel on March 20th, 2007 with no comments.
Read more articles on Household.
When saving to buy a house there are many issues to consider. One is what you do with the money you are saving to buy a house?
The rule of thumb is to put this money into a safe investment vehivle like a money market account or savings account. The logic behind this is that you do not want to be in the stock market and have a correction when you need access to the money. Also, you do not want to invest in anything illiquid or volatile.
Now I have heard stories about those that were saving to buy house buy investing the money they saved. Yes, it turned out well for them and they grew their money that way. However, if you followed that path recently last week’s stock market drop and continued volatily could put your home purchase on hold because your $50,000 has become $45,000 all of the sudden.
It is silly to risk your savings to buy a house because currently there are many online saving account options that offer an APR over 5%. The safety, liquidity and growth really cannot be beat.
Remember that any money you will need to access within the next three years should be in a high yield savings account or money market. It was tough gfor my wife and I to avoid the stock market with this money, but we did it. And near the end each month we were seeing a big chunck of interest being deposited into our account.
Written by Nagel on March 19th, 2007 with 1 comment.
Read more articles on Banking and How To and Investing and Real Estate.
One the true pleasures in my life is traveling, especially outside the U.S. I am still young and I hope to do all of my foreign travel before I am old. This is simply because I do not think I will be able to handle the long flights and walking that is par-for-the-course when traveling to places like Europe. I am holding most of my U.S. travel for those older years when foreign travel might be out of the question (though I hope it never is).
Anyway, I have always prided my ability to find vacation values so I can go on trips for much less than many others would pay.
Travel packages can be attractive. These often include flight, hotel and transportation. If you search enough you can find combo vacation package deals that will save a lot of dough. However, most of the time I have to buy plane tickets, hotel, etc. separately to get the value I need.
Most of my travel is done off-season. Most say that might take the fun out of travel, but I enjoy Europe in February or early March. First, there are less tourists wherever you go and that means no lines, or at least much shorter ones. Plus it is easier to blend into the culture if you are not there in the high season. This time is also advantageous because prices for flight, hotels and more are discounted because it is the off-season.
Check into any group you belong to, any credit card you have or points cards that might offer some sort of discount you can take advantage of.
Fortunately, I have some friends in Europe and have had the chance to stay with them on many occasions. obviously, this is kind and generous of them and saves me a lot of money. However, the best parts are being close with your friends all the time and blending in with the culture and avoiding tourist traps. I feel like I have a real idea of what is a typical day in many places I have visited because of these friendships I have.
Vacation values rely on a lot of factors, but if you are willing to spend some time searching and doing homework you can find the deals to save you more money than you might think possible.
Written by Nagel on March 18th, 2007 with no comments.
Read more articles on Budgeting and Household.
Honestly, who doesn’t want to retire early if they have the means to do it. However, the means is precisely the roadblock in many people’s way. I have a plan on getting there, but there are a lot of hurdles in the way.
On average we live longer; therefore, we must save more so it will fund our entire lifespan. This is no easy feat, but it can be done. It will take discipline and wise investments in order to get there.
If you want to discuss early retirement there are a couple great forums out there where you can bounce some ideas around. Also, you can see sample plans on how to retire early, executing an early retirement plan and making your funds last your entire lifetime.
Here are a couple good early retirement forums:
http://early-retirement.org/forums/
http://www.retireearlyhomepage.com/
Written by Nagel on March 15th, 2007 with no comments.
Read more articles on Retirement and Uncategorized.
A college education has taken the place that the high school diploma once had; it is necessary to get a job in the 21st century job force. The major problem is that is that affording to pay for college is becoming more and more difficult. Recently, the cost of a college education has risen more than double the inflation rate. Fortunately, there are more options for setting aside college money in tax-efficient investment accounts than in the past. In 2001 Congress enhanced both 529 plans and Coverdell Education Savings Accounts (formerly known as Education IRAs). Other time-tested strategies, such as contributing to a minors custodial account (UGMA/UTMA accounts), continue to offer potential benefits.
529 Plans
Like many government-related tax issues the 529 plan derives from the section of federal tax code. They were first adopted in 1996 and now are generally sponsored by individual states, but in some cases may also be sponsored by qualified educational institutions. The 2 kinds of 529 plans:
· Prepaid tuition plans allow participants to pay for future tuition at present cost levels. Usually these options are only available only to residents of the sponsoring state, and typically must be used for in-state tuition.
· College savings plans allow participants to invest their contributions in managed financial instruments. College savings plans can be used for qualified undergraduate and graduate expenses at any accredited college or university. Some 529 college savings plans allow contributions to be allocated to a specific portfolio based on your child’s age, and shifts accordingly as your child reaches college-entry time.
Advantages of 529 plans include:
· Tax-free earnings
· Gift tax benefits for contributors
· Generous contribution rules
· Account control
Evaluating 529 Plans: Questions to Ask
· Can you transfer account ownership?
· Are there contribution limits?
· Do investment choices fit your needs?
· Are there any fees?
· Is your intended school considered a qualified institution by the IRS?
Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA)
· You can establish and contribute to a custodial account in a minor’s name without having to establish a trust or name a legal guardian.
· Contributing can:
o Help a future student prepare for college costs
o Reducing the value of a contributor’s taxable estate.
· Offer favorable tax treatment of investment earnings.
· The assets in the account belong to the child, not to the contributor. When the child reaches legal adulthood at age 18 or 21, depending on the state, they can use the money for anything they want.
Coverdells
· Qualified investment accounts that allow nondeductible contributions of up to $2,000 annually per beneficiary.
· Earnings in the account are not taxed
o Withdrawls used for qualified education expenses are tax free as well.
· Assets must be used before the beneficiary’s 30th birthday.
· The designated beneficiary of a Coverdell account is free to take withdrawals at any time
o However, any amount in excess of his or her qualified education expenses will be taxable as income.
o A 10% penalty may also apply.
· Coverdells allow qualified withdrawals to be used to pay for an elementary, secondary, or college education. 529s are only for college expenses.
· Coverdells impose income eligibility limits on contributors.
o Single filers with modified adjusted gross incomes of more than $110,000 and joint filers with incomes of more than $220,000 cannot contribute.
You can use more than just one of the aforementioned options—it is not a zero sum game!
Written by Nagel on March 14th, 2007 with no comments.
Read more articles on Household.
The last day to file income tax returns for 2006 is Tuesday, April 17, 2007. So if you cannot file your tax forms by then you better consider a 2006 tax extension.
The clock is ticking quickly and tax day will be upon us soon. Currently, you may find yourself short of time to file a complete and accurate return. If this is you, simply apply for an extension by the due date of your return, April 16, 2007. Now this is important: Go to irs.gov and print out Form 4868 and send this extension request to the Internal Revenue Service office with which you file your return. You get an automatic 6-month extension if you file the correct paperwork on time, and if you give a ballpark estimate of what you probably will owe–you will owe interest on any tax not paid by April 16, 2007. Paying tax by credit card is an option–SEE FORM 4868 for all the details. If the tax paid with Form 4868, plus withholdings and estimated tax payments for 2006, is less than 90% of the total amount due, you will be subject to a late-payment penalty (usually one-half of 1% of the unpaid tax per month)—unless you can show reasonable cause. Remember: Do not mess with the IRS! They have the government behind them and that is not something you want to get yourself involved in.
If you know October 15, 2007 still will not be enough time to come up with the necessary tax payment you need Form 9465 to request an installment arrangement. Now this will not be easy nor pretty.
If you owe under $10,000 you have a chance.
- Prove you you will not have the means to pay the tax
- Prove that the last 5 years you filed and paid your taxes
- Plus not installment agreements in that time
- If married, you both will need to meet this criteria
- Pay tax off within 3 years
- Late payment penalty interest charge of 0.25% per month will apply
Written by Nagel on March 13th, 2007 with no comments.
Read more articles on Taxes.
Many of us are bombarded with credit card offers in the mail. Typically they go straight to the trash, and often they should be. There is the option of an opt out of credit card offers in the mail.
However, if you are shopping for a credit card you might want to keep some of those credit card offers. Websites like cardratings.com offer up a slew of excellent information on what the best credit cards available. You can dig out some of those offers in the mail or even apply online.
Some of us do not have the best credit score and are concerns about traditional credit cards. These credit card companies are not kind to those with poor credit scores. this translates into much worse terms for the lower-tier credit score applicants. Higher APRs, higher fees, higher rate of refusal, etc. However, help is on the way . . .
Greendotonline.com has become a popular option ofr many that need to build up their credit score. What is greendotonline.com? It is a leader in pre-paid credit cards. These are extremely similar to typical credit cards, and sometimes even better.
- No credit checks
- No bank account required
- Use your Debit MasterCard Card at millions of locations worldwide. Or use your Debit Visa Card everywhere that Visa debit cards are accepted.
- Use for signature and PIN-based purchases
- Use at over 900,000 ATMs in 120 countries
- Make daily purchases without carrying cash
- Your money is protected if your Card is ever lost or stolen
- Buy a Green Dot MoneyPak™ Universal Reload for $4.95 at thousands of locations nationwide, including Rite Aid, CVS, Eckerd, Radio Shack, The Pantry and others.
- Get FREE Direct Deposit and load any amount of your paycheck directly to your Card
- Easy way to track your spending and stay within budget
- No debt or monthly bills to worry about
- Customized for Spanish-speaking consumers, Uso Diario has all the benefits of the Everyday card and provides easy access to ATMs throughout the world.
Written by Nagel on March 12th, 2007 with 1 comment.
Read more articles on Credit Cards and Household.
Bouncing checks? You are not alone. Now you know you need to be careful when paying with a checking account. However, ignoring your overdrawn checking account will only lead to further problems. One one-time bank fee left unpaid can swell into a charge you can no longer afford. You do not want to left this gone without addressing because it will only get worse. Your overdrawn checking account morphs into a closed checking account then an 800 credit score or even a 720 credit score become sub-prime credit. That is not what you want because it will be more difficult to get credit and you will receive a higher interest rate on the money you borrow.
Tips to avoid an overdrawn checking account:
- Enter every transaction into your checkbook register, even direct debits. Be detailed with dates, checks, debit card purchases, deposits, automatic or preauthorized withdrawals or deposits and ATM withdrawals. Keep a running total of the balance of available funds–if you lose track call your bank’s 800# to find out your standing.
- Make sure there is always at least a couple hundred dollars for an account buffer. Your checking account gets low: you are still ok.
- Protect your account by signing up for overdraft protection either from a savings account.
- ATMs are not a cash machine in the sense of making money, though many treat them that way. Don’t withdraw money you do not have!
Written by Nagel on March 11th, 2007 with no comments.
Read more articles on Banking and Budgeting.
February 27 scared a lot of investors and made bulls out of bears. The bears are trying to win this war of wills that has been going on since Black Tuesday. Their job was easy at first because of the dearth of actual information on why the market took a big drop. Alan Greenspan’s comments in China, the Chinese market drop, housing stock default and more were blamed for the downturn in the equity market last week, but in reality it stemed mainly from a computer glitch that occured for about 2-3 minutes that prevented some large trades from being executed. This problem quickly snowballed into a panic because traders and investors did not know what was happening.
Those that “short” stocks, have tried to continue the panic so they can capitalize off it. However, as more information is revealed and the stock market shows more strength their scare tactics are playing on more and more deaf ears. However, they might be able to continue this as more earning reports come out and they claim the sky is falling. Next week will be telling to see how the Street reacts to all this information–if it can stabalize this might be the end of the sell-off. if not, then there might be more opportunities to buy stocks at a deep discount.
Written by Nagel on March 10th, 2007 with no comments.
Read more articles on Investing and Stock Market and Stocks.