Archive for the ‘Personal Finances’ Category

There has been talk since 2002 of creating Universal Savings Accounts, or USAs, as they’re called. What do you need to know about them?

Currently, Roth IRAs are the most popular tax-free savings account, but they have limitations that can be addressed with a USA. You can only contribute to a Roth IRA if you’re making less than $160,000 as a married couple or $110,000 if you’re single. Your annual contributions are limited to $5,000 if you’re under age 50. If you take distributions before your Roth IRA is five years old or before you turn 59½, you’ll pay a 10% tax penalty (with some exceptions). Read more »

Ever wonder what your car really costs you during its lifetime? It’s much more than the purchase price.

Last fall, I read a Kiplinger’s article that set out to calculate whether hybrids are worth the higher price you pay for the better gas mileage. The article mentioned that the Toyota Prius and the Honda Civic Hybrid are tied for lowest total ownership costs over five years, at $39,780.

Since I already knew that Honda hadn’t improved much on the fuel efficiency of its lineup in the 10 years since I bought my 1999 Honda Civic HX (EPA-rated 34 city/38 highway, based on the old estimate formula, or 29/35, based on the new formula), I was curious to see if I beat Kiplinger’s total ownership cost estimates based on my own real-world driving habits and oil-changing proclivities. Read more »

Have you noticed the ads lately on television and other media that offer you the opportunity to make lots of money by selling your gold jewelry? They seem to be everywhere right now, and the reason is because these companies are attempting to take advantage of current market conditions to sway people to sell their unwanted jewelry for cash.

The whole concept is based on this premise: gold is always in demand + gold prices are high now and a lot of people have gold jewelry = a chance to make lots of money.

Is it really a good deal for those who sell? Only if it meets your expectations. But be sure not to sell important family heirlooms without consulting other family members.

What are the pitfalls to watch out for in this area? Be on the lookout for those buyers who offer a lot less than market value. The price of gold is based on the troy ounce of 24-karat pure gold, which is 31.1 grams. You can find current market prices at www.goldprice.org.

Where can you find a reputable buyer? Stay away from pawnshops and mail-based gold buyers. They offer the lowest prices for your gold, while jewelry stores tend to offer the most, mainly because jewelry is more valuable in that form than it is as scrap.

This is the time of year when many of us grow impatient to end our winter hibernations and start daydreaming of our upcoming summer vacations.

If, like many people these days, you’re reining in your spending, there’s a low-cost vacation option you may not have considered before. For those who have a hankering for fine art, historical architecture, prestigious rare-book collections and other culture, but on a shoestring budget, the New York Times has turned the spotlight on an intriguing vacation destination – college campuses. Read more »

First Hyundai “assured” customers they could return their new cars if they lost their job within one year of purchasing it without any negative impact to their finances. Next, the car company upped the ante by tossing in three months’ worth of payments to give you time to look for a new job. Well, now it seems their “we-understand-it’s-hard-out-there” approach to business is catching on. Citigroup just announced its pledge to take a similar approach with its customers.

The seriously-hurting bank promises to cut monthly mortgage payments to $500, on average, for three months to give mortgage holders who’ve lost their jobs and have fallen behind in payments a little breathing room. Citigroup thinks the new Homeowner Unemployment Assist program will help thousands of mortgage holders bridge their financial gaps until they can find a long-term solution. Read more »

As the recession continues to deepen, what should you be doing with your discretionary money at the end of the month, after your basic living expenses are paid? Conventional advice has, in the past, touted the benefits of paying off high-interest debts as quickly as possible, then dividing your money to pay off debts and set some aside for savings. But in today’s economic slump, there are certain scenarios in which you may want to consider a different approach.

If there’s a chance you could lose your job …

Let’s face it, there probably aren’t many jobs that are 100% secure in this economy. If you have reason to believe you’re likely to get laid off, the best thing you can do for yourself is pay off debts. When you’re laid off, your income will be reduced to the amount of unemployment benefits you’re eligible for, and chances are you won’t have access to additional credit. Paying off as much debt as possible before you’re laid off will increase your available credit line in the event you need to access more money than you receive through unemployment benefits.

Read more »

Being unemployed has just gotten a little easier.

Unemployment benefits vary, depending on where you live, and range from a modest $133 per week in Puerto Rico to $628 a week in Massachusetts. But the passage of the massive federal stimulus package has resulted in an additional boost of $25 per week, or an extra $100 a month, for the unemployed. Combined with other unemployment benefits the stimulus package provides, the enhanced benefits should make a substantial difference. For example:

• Those who are out of work are now eligible to receive 20 extra weeks of unemployment benefits in all states, and another 13 weeks if you happen to live in a state with a higher unemployment rate.
• Previously, all unemployment income would be taxed as income. In 2009, you get to keep the first $2,400 of your unemployment income all to yourself, tax-free.
• Thanks to COBRA, workers can extend their health insurance coverage while they’re unemployed. Read more »

Recently I wrote about the benefits of cutting credit cards out of your life to save money and help rein in your budget. I figured it’s only fair to put my money where my mouth is and follow through myself.

So last month I put my credit card on the shelf and relied exclusively on my debit card for, well, everything. Turns out I charged a total of $975.95 to my debit card, and saved $228 in interest fees by doing so.

But besides the obvious benefits of saving on those added interest costs, I also wanted the exercise to help me pinpoint where my money goes. I can’t say I am surprised at where the bulk went, but the amount shocked me — especially since, like the rest of America, I’ve been cutting back for many months already.

Maybe it’s because I’m tired when I get home, maybe it’s because I’m a bad cook, or maybe it’s because I live upstairs from a restaurant row; whatever the reason, I’ve realized I spend most of my money dining out — $338.83 last month, to be exact. This includes dinners, brunches, workday lunches, happy hours, take-out and anything else prepared by a restaurant.

So I’m taking on a new challenge this month: Cash only! And when I say cash only, I mean literally using greenbacks exclusively. It will probably be a pain to run to the ATM on a regular basis, but I’m hoping (hypothesizing even) that watching the cash dwindle before my eyes will help me put the breaks on spending across the board.

When using a credit or debit card, it’s easy to separate needs (gas and groceries) from wants (clothes and dining out). But when I have a finite cash flow for everything, I’m hoping it will force me to scrutinize each and every purchase — be it an office vending-machine snack or buying the expensive brand of shampoo at the grocery store.

So I’m only a few days into the month, and I’m already committed to a cash-only lifestyle. Oh, and I have to run to the ATM.

Be sure to check back in a couple of weeks and see how I’m doing with my cash-only diet.

Do you think I can stick to it and save? Are you willing to join me on a cash crusade to rein in spending habits? If you do switch to a cash-based existence, let me know about your progress!

Managing your finances is, in some ways, like managing your weight, according to a recent New York Times article.

Taking these three steps can help get your finances, and your body, in shape:

1. Changing your environment to remove food temptations eliminates habitual eating. If you can eat a bag of chips in front of the television and not even realize you finished the bag until it’s gone, you could solve the problem by keeping chips out of the house altogether, or by only eating in the kitchen, at the table, with the television off.
   Changing your environment to eliminate temptations will help you avoid shopping, too. If the Internet tempts you to shop, don’t visit retailers’ websites, and be sure to unsubscribe from online shopping newsletters.It makes sense that if you’re breaking your budget due to certain environmental cues, like the countless opportunities to spend money online, removing those cues will make it easier to cut back on spending. Read more »

Millions of Americans have faced, are facing, or will face foreclosures since the booming housing market busted and the mortgage crisis set in. While President Obama is working feverishly to bring his $75 billion mortgage rescue plan to fruition, people caught in a bind right now are finding creative ways to deal with a foreclosure looming over their heads.

Take the story of one woman whose “American Dream” came crashing down on her. After Heather Gray broke up with her fiancé and was laid off from her job as a public information coordinator for Mesa, Ariz., the 33-year-old found herself in over her head and about to lose the 2,200-square-foot home she bought in 2007. Then she got resourceful.

To escape her impending foreclosure unscathed, the Air Force veteran decided to donate her house to the Murray Grey Foundation, which in turn plans on raffling off the $280,000 home for $100 a ticket. The raffle is scheduled to take place on April 11.

The non-profit foundation financially aids military families facing foreclosure — a facet of the population that saw a 217-percent jump in foreclosure proceedings in the first four months of 2008.

According to a FoxNews.com article, Gray and the foundation struck a simple deal that allows her to “walk away” from her current predicament with a clean slate:

“We made the plan to raise $500,000,” Gray says. “I need $350,000 to pay off my debts in the home that I owe, and the charity will receive at least $150,000, and anything we receive over $150,000 will go directly to Murray Grey, 100 percent.”

The raffle tickets count as a 100-percent charitable deduction and — bonus —every person who purchases a raffle ticket will receive a $500 voucher good for either food or groceries anywhere in the U.S.

But like any too-good-to-be-true deal, there’s some fine print you need to be aware of before you take a stab at it. You’re responsible for paying taxes to the government for the home as taxable income — the same way you’d have to if you won the lottery.

While this probably isn’t an ideal solution for most homeowners facing foreclosure, it seems to work for Gray. She gets the chance to support a charity close to her heart and walk away from $350,000 untouched. Broke, maybe, but debt-free.