Posts Tagged ‘Personal Finances’

A few weeks back, I pledged to use cash exclusively for ALL of my daily expenses — basically everything other than my fixed monthly bills. I knew going into the exercise that running off to the bank every time I needed lunch money could become a bit cumbersome, but the whole point was to test if watching cold hard cash drain out of my wallet would curb my spending.

While my results are mixed, I’ve realized something: credit and debit cards have spoiled me. I remember a childhood spent going to the bank with my mom to pick up cash for our errands, and you know what? I am really glad I don’t have to do that — other than the missed lollypops, of course. Read more »

Many taxpayers who owe the IRS money tend to wait until the very last minute to file their taxes.  (San Franciscans, Houstonites and New Yorkers are the three worst procrastinators, according to TurboTax.)

I can’t say I blame them, but for those of you who fall in this category, remember there’s still about five days to dig out your receipts for charitable donations, which can lower your tax bill.

The IRS says you can deduct the “fair market value” of donated clothing and household goods, based on how much your donations would sell for in today’s market. Read more »

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 »

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 »

Much is made of making New Year’s resolutions, only to see them go by the wayside in just weeks into the year. Why make them, then? Because trying is better than not trying, and having a plan is better than not having one. If you aim for nothing, you’re sure to hit it, but you’re still left with nothing.

One key to remember is that even if you mess up and fall off the wagon, you can get back up and start again. Never allow failure to take you out of your plan. One way to do that is to make these resolutions yours. Print them out and hang them up on the fridge where you can see them — often. Print them in big letters so you can’t avoid them.

1. Live on a budget. DO NOT avoid this one. This is the most important thing you can do — live within your means, and avoid going deeper into debt.
2. Eliminate debt. Pay off your debts, smallest to largest, and get rid of them. Don’t take on any more debt unless absolutely necessary.
3. Get rid of all but essential credit cards. We all have too many credit cards anyway. Plus, with debit cards as easy to obtain as credit cards, it forces you to live more by what you have in your account rather than the amount of your credit limit.
4. Plan for the unexpected. Grow a small cash emergency fund of under $1,5000 for those unexpected emergencies. Begin to put part of your income into an account for longer-term emergency purposes, like medical bills, etc.
5. Save more money — and do it automatically. Make sure you save money by having part of your paycheck automatically deposited into a savings account or other financial account that’s more difficult to make withdrawals from.
6. Reduce expenses. Look for ways to live with less. Cut back on the amount of cable or satellite channels, drop unneeded cellphones from your plan, or eliminate your home phone if that makes sense for your family. Eat out less. Shop with coupons. Compare prices at least three sources before making larger purchases.
7. Make an effort to save for retirement. Increase your contribution to your 401(k) or IRA accounts.
8. Look for ways to increase your income. Take on a part-time job — even if it’s delivering pizzas or waiting tables. Money coming in is better than money going out, and it can add up quickly.
9. Review your insurance needs. Make sure you have what you need from an insurance standpoint. Look at term life insurance offerings, and make sure your family is covered in the event of a catastrophe.
10. Make a will. This is often ignored but critically important. Do not overlook this one. Remember, it’s not for you, it’s for those you love.

There’s always an upside to any crisis. It might not be real pretty, but it’s there, nonetheless. The old adage that every cloud has a silver lining is proven in this listing of the Ten Best Consumer Finance Events of 2008:

1. The outcome of the 2008 presidential election. No one can doubt that the outcome of this election, while heralded for its historical importance, has also helped change the ill feelings toward the direction of the nation that will ultimately affect how much money consumers will spend.
2. The Fed lowering the prime rate. The mortgage meltdown brings lower financing costs for loans.
3. Falling oil prices after the financial crisis. Consumers severely curbed their driving activities, which caused demand and prices to plummet.
4. Falling automobile prices. As a result of the credit crunch, vehicles became more affordable, even if loans aren’t quite so readily available.
5. Lower prices at the supermarket. This was felt mainly after the election in November and at the beginning of the holiday buying season. Retailers’ reaction to what was going to be a dismal buying season brought lower prices across the board.
6. Saved marriages. Divorce rates fell as financial realities overrode the need for change in many situations.
7. Selling and buying used instead of new. It’s always been great to buy used, but now it’s the “in” thing to do. Long live eBay!
8. A slow trend towards debt retirement and financial solvency. Even with the bad news about the mortgage and consumer credit crises, there’s a trend towards getting out of debt and living financially independent. With several national personal finance experts pushing this topic, it’s beginning to take hold, especially in the middle class, where it’s needed most.
9. An increase in credit card competition. Yes, this is good news for the consumer. It means lower rates and fees on the best credit cards available to those with good to excellent credit scores.
10. Industry sectors that prove to be advantageous as career choices. Think healthcare-related fields. As the Baby Boomer generation continues to march towards retirement, long-term care of the elderly is on solid ground as a job option.

For some unhappy couples, the unfortunate timing of the collapse of their marriage during a slumping economy has left them in a kind of marital purgatory, neither together nor apart, but somewhere in between.

A recent Associated Press story reported on the growing number of divorced couples who’ve chosen to continue living under the same roof indefinitely, not because they want to, but because they can’t sell their house.

Judges and divorce attorneys have noticed the trend most especially in those states hard hit by foreclosures. Now, spats about who gets the master bedroom have replaced arguments over finances after a divorce or splitting the chores. Living in marital limbo can also lead to awkward moments when one part of a divorced couple starts dating again.

Sometimes, a couple that’s headed for divorce has second thoughts after realizing how costly divorce will be, despite the head-shaking disapproval of friends or family. In one case, a spouse moved out of the house after a divorce but moved back in with her ex after running out of money.

Who knows? Maybe family therapists will hail the recession as a blessing in disguise if it prods battling spouses to give it just one more shot.

If things turned sour in your marriage, could you ever imagine your spouse staying on ⎯ as a roommate?

Being a personal finance writer means reading and writing about the state of the economy on a daily basis, at a time when there’s not a whole lot of good news out there. Inflation fears one month, deflation the next. Falling prices following closely on the heels of rising prices. Rescue plans in assorted flavors. Jaw-dropping budget deficits. Job losses, foreclosures and debt. And the many incredibly resourceful ways Americans are cutting back or doing without.

Most days you can count on me to be outraged over well-compensated bank and insurance executives getting taxpayer-funded handouts, scared about what lies ahead and certainly depressed about my withering 401(k) balance.

There’s always a survey to tell us how we’re thinking, and now there’s a new one by the Pew Research Center that tells me that what I’m feeling is remarkably in sync with the rest of the country. According to the results of a November survey released yesterday, pollsters have ranked the emotions Americans most frequently feel in the pit of their stomachs when they read the latest economic news:

Angry (49%)
Scared (43%)
Confused (37%)
Depressed (35%)

And, inexplicably, 30% are feeling “optimistic.” Huh?

Perhaps not surprisingly, people age 65 and older are more likely than any other age group to feel angry when watching the evening news report. I guess they’re thinking that the secure and worry-free retirement they worked so hard for is slipping from their grasp, and, being past normal working age, there’s not much they can do about it now.

What’s going on in your mind when you tune in to your local news report?