Category Archives: Money saving tip

Tax tip – file something!

bald-eagle-and-a-flag web
http://www.publicdomainpictures.net/view-image.php?image=47412&picture=bald-eagle-and-a-flag

Tax Day in 2016 is April 18th which means you’ll need to e-file or postmark your taxes or an extension by that date.   Since that’s just 2 days away, I wanted to share with you a quick tip I read in last week’s Parade magazine:

Even if you owe taxes and don’t send money, you’ll save big if you file your return or an extension by April 18.  Why?  The failure-to-file penalty can be 10 times more than the failure-to-pay penalty, which is .5% + interest.  (http://parade.com/468729/alison-abbey/still-havent-filed-these-tax-tips-can-help/)

One important note: filing an extension isn’t an extension on tax payments – the IRS still wants you to pay an estimate of your taxes owed by April 18, 2016.  For more information on how to file an extension, check out this page on the IRS website: https://www.irs.gov/uac/Newsroom/Five-Things-to-Know-if-You-Need-More-Time-to-File-Your-Taxes.

So if you haven’t finished your 2015 taxes yet, make sure you file something (your return or an extension) by Monday – you’ll save yourself a headache by doing so!

Happy Decoding!

Fun fact for today: Washington DC is celebrating Emancipation Day (the day President Lincoln signed the bill ending slavery in DC), which is April 16th, on April 15th in 2016, since the 16th is a Saturday.  As a result, Tax Day has been moved to April 18th.  So you get 3 extra days to file your taxes this year – yippee! 😉 (Source: https://www.libertytax.com/tax-lounge/tax-day-will-come-3-days-later-in-2016/)

Disclaimer: This blog post is not intended to be tax advice.  For answers to your specific tax questions, please consult a tax professional.

Tax tip – read the instructions!

Pile of coins

Copyright 2016 Sweet Doll Designs

I know by writing this post, I will be revealing myself as a major dorko, but here goes, anyway 😉

While Accounting is my profession, I am not, nor do I ever have the desire to be, a tax accountant.  Having said that, I always prepare my taxes by hand, check my work on Turbo Tax, then I file my tax return through the mail.  I do this partly so that I fully understand how my taxes are being calculated and partly because I don’t want to pay Turbo Tax to file my returns for me.

Over the years of filling out my 1040 form myself, I’ve discovered that the IRS includes really helpful line-by-line information in the form’s accompanying instructions.  With that in mind, here’s my big tax tip that will only take a few minutes, but has the potential to save you money:

Read the 1040 form instructions!

Specifically the section on Adjusted Gross Income, which can be found if you scroll down to page 31 of this pdf document: https://www.irs.gov/pub/irs-pdf/i1040gi.pdf.  Dorko alert: I read through each of these potential deductions carefully to see if I qualify for any of them.  By doing so, I found that I qualified for one – you may be pleasantly surprised that you do, too!

There are only 13 possible deductions in this section, so it won’t take you long to read the instructions.  Examples of popular deductions are: student loan interest, tuition and fees, IRA, HSA, moving expenses, and alimony paid, to name a few.

It is also worth your time to read the Tax and Credits section found on page 38 of the same pdf document: https://www.irs.gov/pub/irs-pdf/i1040gi.pdf.  There are only 7 credits to read about, so again, it won’t take much time.  In this section are credits such as: retirement savings contributions credit, residential energy credit, child tax credit, and education credits, to name a few.

I have always found that reading the IRS-provided instructions while filling out my taxes has been very helpful and well worth my time.  Also, if I have any questions when reading the instructions or am not familiar with a referenced form, I just quickly look it up on the IRS website.  I know it may seem scary, but the IRS website is really very easy to use and understand, helpful, and informative!

Good luck with your tax returns this year!  Remember to file by April 18, 2016.

Happy Decoding!

Fun fact for today: Have you ever wondered what the difference is between a tax deduction and a tax credit?  A deduction is taken before calculating your Adjusted Gross Income (otherwise known as your AGI).  Your taxes are calculated on your AGI less the itemized or standard deduction and less your exemptions.  On the other hand, credit provides a dollar-for-dollar reduction of your tax due, since any credits are subtracted from the tax amount due.  A deduction isn’t better than a credit and vice versa, but it’s important to be sure you claim all available deductions and credits if you qualify for them! (Source: https://www.irs.com/articles/tax-credits-vs-tax-deductions)

Disclaimer: This blog post is not intended to be tax advice.  For answers to your specific tax questions, please consult a tax professional.

Car Tips: Buying a Car? Do Your Homework!

Left – Ruby Sparkler and right – Shirley Temple Copyright 2015 – Sweet Doll Designs
Left – Ruby Sparkler and right – Shirley Temple
Copyright 2015 – Sweet Doll Designs

So you want to buy a new car.  It’s an exciting and daunting task!  I was reminded of that when I bought a car last weekend.  Not only is the actual car buying process in the dealership a long one, but the research it takes to get to that point is long and involved as well.  However, a well-researched purchase will make you happy for years to come.

Here are a few car buying tips to help you get on your way:

  1. Decide what type of car you’re interested in buying. By that I mean to ask yourself – do you want to buy a sports car, a small car, small SUV, regular SUV, truck, motorcycle, moped…you get the idea.
  2. Once you’ve decided on the size car you want to buy, look at the makes and models in that particular class. Do you like the look of any specific one?  Try to narrow down your search to just the few that you’re interested in investigating.
  3. Not to be forgotten is your budget! You probably have an idea of how much you can afford to pay for a car payment each month.  Go online to a site like bankrate.com to get a rough estimate of how much that means you’d be able to afford to finance.  That will tell you the top price you can pay for a car.  Then it’s up to you to determine if you have enough in savings to put a down payment on the car.  Also remember your current car that you may consider trading in – check out what a fair price may be for the trade-in value on Kelly Blue Book.
  4. Purchase a membership to Consumer Reports. It costs $30 a year and it will be well worth the money.  Once you’re a member, you can research the reliability, satisfaction, and safety ratings of the cars you’re investigating.  If you’re buying a used car, pay particular attention to the reliability ratings of each model year – you may find there are certain model years that you should avoid.
  5. Search for the car model and year in Edmunds.com to see what a fair price to pay is for that particular car.
  6. Make a note of all the features you’re looking for in a car. You may not find a car with all those features, but if will be a good starting point.
  7. Now you’re ready to start looking for available vehicles to test drive. You can find available cars by searching local dealership websites, checking cars.com, searching Consumer Reports online, and searching Edmunds.com, to name a few. Look at the mileage on each car, year, and color.  Investigate each listing to determine if you’re interested in the car.
  8. Have fun test driving the cars you’ve found! After you’ve test driven a few, you’ll be able to decide which model you like best.
  9. When you go to the dealership, know your budget and stick to it! They are great at trying to upsell you on features you don’t need.  Stand firm in your budget and know the fair price that you should pay for the car and insist you get it!
  10. It’s helpful if you don’t fall in love with any of the cars you’re interested in – your greatest negotiation tool is being able to walk away.

This process can be overwhelming, especially in the dealership.  Consider bringing a friend who can help keep you on track with your budget or any other aspect you feel may be helpful.  And most of all, enjoy your new car!

Optional: Come up with a fun name for your car.  Here are the names of my cars so far: The Beast, Black Beauty, Esmerelda, Shirley Temple, and Ruby Sparkler! 🙂

Happy Decoding!

Fun fact for today: An estimated 16.9 million cars were sold in the US in 2014! (Source: http://www.nytimes.com/2015/01/06/business/us-auto-sales-jump-for-2014.html)

Change is in the air – emergency funds

http://www.publicdomainpictures.net/view-image.php?image=32842&picture=-100
http://www.publicdomainpictures.net/view-image.php?image=32842&picture=-100

With the unofficial end of summer behind us, and the change in seasons imminent, it made me think about change in general.  Change can be an exciting and sometimes scary thing.  However, you can take steps in order to put yourself in a good financial position so that you don’t have to worry about any change that may come your way.

So what kind of a change am I referring to here?  Well, sometimes the company you work for may go through a merger, consolidation, move, or reduction in workforce, to name a few options.  Or you may decide to move to a new area or to take some time off to stay home with your kids or re-think the direction of your career.  And sometimes the pipes burst and you need to pay the plumber to come over to fix the issue.

An emergency fund can be the perfect parachute for you in these unexpected times.

You may have heard of people talking about the importance of an emergency fund.  Do you have one? It may be just what you need in order to tide you over for a bit when unexpected expenses or situations arise.

What is an emergency fund?  It is simply a savings account where you regularly deposit money for unexpected events.  I recommend depositing money to this account each time you receive a paycheck.  As they say – pay yourself first!  You can also use the coins that you roll toward this emergency fund.

How much should you have in this account?  Of course, the more money you have in there, the better.  Suze Orman, financial expert, suggests having at least 8 month’s worth of expenses in your emergency fund.  I don’t think it would hurt to have at least a year’s worth of money in there.

How do you figure out how much to put away?  Let’s say you want to have one year’s worth of savings in your savings account.  That means, if you spend $500 each month on housing, $100 on cable/phone/internet, and $400 on groceries, then you know that your monthly expenses are $1,000.  To have one year’s worth of expenses in your emergency fund, then you need $12,000 in your account.

That may seem like a lot of money, but remember that you’re working toward this amount a little bit at a time.  Each paycheck, you will be putting money away in your savings account.  Don’t be discouraged if you save a modest amount each month.  Even if you start out only saving $5 each paycheck, that will add up over time.  Start saving a comfortable amount, then challenge yourself to increase that amount over time.  You will see the balance of your savings account increase faster than you expected!  And remember, any amount that you’re able to put in this fund will go a long way toward easing any tension and worry from unexpected events that you may experience.

I wrote about savings accounts in a previous post – click here to read more about types of accounts that I recommend.  You’ll earn more interest on your money than you will at a regular bank.  I think you’ll like it!

Happy Decoding!

Fun fact for today: Paper currency is actually made out of fabric – 25% linen and 75% cotton (Source: http://www.federalreserveeducation.org/about-the-fed/structure-and-functions/financial-services/fun_facts.cfm).

Money saving tip – Soap

Copyright 2014 - Sweet Doll Designs
Copyright 2014 – Sweet Doll Designs

As you know, soap is an important part of our lives.  Using it frequently helps us to stay clean and healthy.

I have a quick money saving tip for you about soap.  Consider buying shampoo when it goes on sale for really cheap – for example, sometimes V05 goes on sale for less than $1.  Soap is soap, so you can use this shampoo in your soap dispensers around the house.  You will still get clean and you’ll have even more scents to choose from!

If you’re using foaming soap dispensers in your house, you can still use this trick.  Make your own special foaming soap by cutting it with water.  I use a ratio of 1/2 water to 1/2 soap, which works beautifully!

You can also use this inexpensive shampoo as body wash, dish soap, and other household cleaning soap.  The sky is the limit!

I hope you find this money saving tip to be helpful!

Happy Decoding!

Fun fact for today – There is more Monopoly money printed in the US each year than actual US currency.  In 2013, there was $30 Billion of Monopoly money printed, as compared to $974 Million of actual US currency (Source: http://www.cnbc.com/id/41375422/page/5)