How to Avoid and Prepare For a Tax Audit by the IRS

Working Remotely is the Holy Grail for Many Workers

Travel is liberating.  It allows us to experience places and cultural happenings beyond our wildest imaginations.  It puts things in perspective and gives us countless stories to recant to friends and family members who want to know what it feels like to dip their toes in the ocean, live out of a backpack or suitcase, and visit outdoor marketplaces where fruit and vegetables are sold by the bushel and where independent artisans weave rugs, handcraft jewelry, and paint portraits under the watchful eyes of tourists.

Travel lightens our spirits while toughening up our skins.  It teaches us to be patient and resilient and encourages us to live in the moment, a place often void of modern conveniences like BlueTooths and Cheez Whiz.  Travel takes us to new spiritual levels, provides us with fresh sources of inspiration, and forces us to think outside the box and to improvise.

For those that are inexperienced, long-term travel can cause anxiety.  There are a few reasons why people feel apprehensive.  Work and family obligations can limit a person.  Lack of financial resources can also damper an adventurous spirit.

Rather than forgo the trip of a lifetime, why not consider applying the skills and experience that you learned in the workplace to your new life on the road?  You would be surprised at how easy it is to be an excellent employee from any location in the world.

Nora Dunn, a freelance writer and “professional hobo”, enjoys stable income while she treks across the globe.  In addition to creating content for a number of websites and magazines, she has traded skills in order to secure accommodations.  One of her most memorable experiences involved milking goats.  She has also painted murals, led eco-treks, and landscaped yards in exchange for a place to sleep.

She offers this advice to fellow travelers:

Even if you don’t work in trade for accommodation, travel in general is an exercise in flexibility and having an open mind. It may not be a matter of life and death, but it will certainly affect your ability to “survive” the trip and come out the other side feeling fulfilled.

Negotiating a remote work location with your employer is far easier said than done.  It often requires a positive attitude and persistence.  Here are a few arguments to take to the boss:

• Some people double their efficiency by removing distractions.  You happen to be one of them.  Your track record speaks volume.  Not only are you a valued team player, you also know how to work alone.

• Your people skills are exceptional.  You know how to communicate with people from all backgrounds.  You may even know a language or two that will help you with your travels.

• You are irreplaceable.  You know your position inside and out.  There is no sense spending money on recruiting and training another individual when you can do your job from any corner of the globe.

Once you have agreed upon a plan, exceed expectations.  Communicate frequently with your employer.  Meet all deadlines and turn in quality work.  There is no excuse for failed internet connections or downed phone lines.  Have a backup plan just in case you run into any problems while abroad.

Living your travel dreams is possible with some assistance from your employer.  Keep a steady stream of income available to fund your journey by coming up with a plan that allows you to work remotely.  A week’s vacation in an exotic location pales in comparison to years of traveling and living in the country or countries of your choice.

Jeremy’s comment: As Charissa has explained, working remotely can be very rewarding. As you’re reading this I’m doing some remote working of my own. In addition to this blog I’m also a writer for About.com and work with Bundle as an editor, but guess what? I’ve been driving across the country over the past week while still using technology to work remotely regardless of where I am. It’s great! No longer am I bound to the office and I’m able to get all of my work done while enjoying the sights away from home. I know not every job has this type of flexibility, but it is becoming more and more common. At the very least, it might be something worth discussing with your employer if it’s something that interests you. The worst that can happen is they say no.

Charissa Arsaoui is a freelance writer for ChickSpeak, Buzzine, DisFUNKshion Magazine, Student Stuff, and a guest contributor for Wisebread.  She loves thrift related topics and can spot a bargain a mile away.

This is a guest post by The Financial Blogger: I’m working in the financial industry and I am specialized in personal finance. I’m always trying to find way to make money differently than receiving my pay check every two weeks. I recently hit a 6 figure income at the age of 28 and I am currently building my own online business while working 4 days a week at my day job.

Now that the stock market engine seems to be restarted for good (with a lot of volatility!), speculators are already trying to see which bubble will burst first! I am always surprised to see how quickly financial analysts are to predict that the stock market will crash again… I guess it is easier to predict the end of the world as sooner or later, it will happen and they could all say “I was right!”… only I was 5 years late….

So here are some of the bubbles that could burst at one point or another:

Precious metal, oh my so precious….

It’s been more than a year since we have seen gold push up from one record high to another. As many investors have enjoyed tremendous returns, more and more people are jumping on the bandwagon. I’d say that this is probably the first bubble to burst in the upcoming year. As far as historians remember (because the history of gold is way longer than any economic study), gold has always kept pace with inflation (but with much bigger fluctuations). In fact, an ounce of gold was good enough to buy a nice suit back in 2000 BC… and it is still good enough to buy a Hugo Boss today… after all this, the question remains: Do you really want to buy something that has already reached its peak? This is the case of gold in my opinion.

Canadian housing market to collapse?

As previously mentioned last week, the Canadian Government played with Canadian mortgage rules in order to reduce accessibility to the housing market. With these measures, it hopes to slow down the housing market and avoid a 2^nd American nightmare…

Since the housing bubble didn’t burst in Canada back in 2007 and we are still navigating through a low interest environment for a while, the government felt the urge to modify a few mortgage rules. While they ignore the concept of bubble yet, it is very possible that making a few changes over time will slow down the housing market and calm the flurry of first home buyers. If they could threaten to increase rates significantly, this would definitely put an end to this madness. However, economics is not as simple as raising or dropping an interest rate . This is why they opted for other alternatives.

Emerging markets – can they hold it for long?

Since 2009, emerging markets (more importantly the BRIC) has taken the world on their shoulders and are slowly taking most countries out of the recession with their huge appetite for resources. However, they also have started to run into a few speed bumps such as 8% inflation in China and striking employees looking for better working conditions in India.

These countries could experience their own industrial revolutions as well and god knows what will become of it. There is a lot of hope invested in the BRIC but their stock markets are inefficient and not transparent at all. I guess this is why we have such risk of having the bubble burst from the “truth”.

Among the top 3 bubbles to burst, I’d put my 2 cents on gold… I really don’t like this precious metal. In fact, I don’t even like its color… I prefer silver!

This is a guest post from MD of Studenomics. A personal finance blog for 20-somethings that want to kill debt, make some cash, and enjoy life. If you like the article, please consider subscribing for free updates.

In the North American society it’s no secret that owning a home has become apart of life. For many years the adage that, “renting is throwing away money,” was rarely challenged. As young people graduated from college and went through their twenties, buying a home simply became apart of life. Well, that is until the recent mortgage and real estate problems. Now the 20-something crowd is starting to challenge the home ownership axiom. Young people are worried about all of the mortgage crisis and all of the recession talk. Now buying a home doesn’t seem like the greatest idea.

Listen, I know I’m just some random blogger dude behind a computer screen. I can’t make the largest (or one of) decisions in life for you. However, I do feel good knowing that I can at least influence your decision or give you something to think about before you sign over the mortgage papers:

How stable is your job?

Buying a piece of real estate won’t completely kill your flexibility, but it will come pretty close to doing so. I don’t like giving financial advice to friends (you know all the legalities and stuff), but when someone asks me about buying a home, I ask the same question: how steady is your current job?

As a 20-something in today’s economy there’s no telling where you could end up tomorrow, a week from now, or a few months from now. Gone are the days of life long jobs and mega corporations never going down. Anything can happen. I don’t want to scare you. I just want you to open your eyes.

Then there’s your side of the stable job equation. How much longer do you see yourself working in the same company? Perhaps you’re sick of the job and are waiting to get out. You could be looking to leave the company and venture out on your own. You could even be looking to do some long term travel in the near future. The options are endless. Just because you have a job today it doesn’t mean that you’ll have one next week.

Key takeaway point: Consider your job stability before you decide on where you’ll establish home base.

How much money do you really have?

How much money do you really have for a mortgage down payment? Okay you have 30 grand. That’s cool, but do you realize how much of that 30 grand will actually go towards your mortgage down payment? Not a whole lot. Once you factor in the cost of a lawyer, real estate agent, moving costs, and relevant property taxes, you’ll realize that your 30 grand didn’t go all that far.

You need to take a realistic lo0k at your financial situation to decide if buying a home is right for you. Many young people don’t like the fact that they have a large lump sum of cash in the bank, so they feel the need to invest in tangible assets. Unfortunately, many home ownership costs are often overlooked and a decision is based without knowing all of the facts.

Key takeaway point: Don’t assume that all of your savings will go towards the mortgage down payment.

What is the price difference between rent and mortgage?

This is usually the deciding factor for anyone that is on the edge of buying a home. If there’s a minor difference between all home ownerships costs (and I mean ALL) and rent, then the option of buying becomes very attractive. Unfortunately, many potential home-owners only look at the cost of rent and the cost of the monthly mortgage payment. All relevant home ownership costs need to be considered: mortgage, property taxes, maintenance fees, moving costs, potential repair costs, and insurance. Once you have considered all of the proper costs, you make a more educated decision on the largest purchase of your life.

Many of my readers from the Bay Area have made it clear that the difference between renting and buying is astronomically in favor of renting. In my opinion, it really depends on the area you want to live in. Nobody knows about your area better than you do.

Key takeaway point: Keep a close eye on the difference between rent and ownership costs when making your decision.

I hope I’ve provided 20-somethings with some food for thought when it comes to making a decision on home ownership. For further reading on real estate in your twenties check out my 2,00o word post comparing renting to owning a home.

There Are Many Ways to Save on Car Costs

Do you own a car? You probably do, and that means you probably know how expensive it can be. Did you know that the average person will spend over $500,000 on vehicles and vehicle-related expenses over their lifetime. It really starts to add up. Vehicles don’t last forever so you need to replace them over time, you need to put gas in them, and then you have to think about insurance and maintenance–and that’s just in today’s dollars, not adjusted for inflation. Half a million dollars just to drive a car. When you think about it, that is kind of absurd when the average retirement account balance for most baby boomers these days is under $50,000. No wonder our cars are making us poor. How wealthy would we all be if we took the money spent on owning a car into an investment account?

Unfortunately, cars are a necessity for most of us. Without an extensive public transportation system we rely on buying our own cars so we can get around. It’s one of those things that we can’t escape. But just because it’s a necessary expense that doesn’t mean there aren’t ways to save on your car expenses. In fact, if you’re good you can literally save hundreds or thousands of dollars each year on your vehicle expenses. Save $1,500 a year for the next 40 years and that puts $60,000 in your pocket. Then if you use that savings wisely you’ll be living comfortably in your later years. Here are 28 tips that can help you save money on your car expenses.

How to Save Money on New Car Purchases

• Keep your car longer instead of trading in or upgrading every couple of years. Not only does the cost of new cars rise each year, but cars depreciate quickly, and when you trade frequently, you lose money on low trade-in values. And don’t forget about interest if you have to finance part of the purchase. Buy a good quality car and keep it for at least five to seven years. Potential Money Savings: $400-1,000/year.
• When buying a new car, consider the smallest model for your needs. Smaller cars are often cheaper, and because they’re lighter, they usually get better gasoline mileage. In addition, insurance tends to be cheaper on most cars compared to a large SUV. Potential Money Savings: $400-600/year.
• When buying a new car, consider the impact that various options have on fuel economy. For example, you sacrifice a few miles per gallon when using air conditioning on the highway and even more in stop-and-go traffic; automatic transmissions get about five miles per gallon less than manual transmissions; and six-cylinder engines get about four to five mpg less than four-cylinder engines. Potential Money Savings: $400/yr or more by choosing the right options.
• Don’t buy credit life or credit disability insurance through your car dealer when purchasing a new car. Some dealers do a hard sell on these coverages, but they are highly overpriced, and if they’re folded into your car loan you not only end up paying 100% to 500% more than you should for the coverage, you also pay interest on it. Stick to regular life and disability insurance through your employer or an individual policy. Potential Money Savings: $300-500.
• Be extremely wary of purchasing service contracts or extended warranties on new automobiles through your dealer. Many of them have very limited coverage (in spite of what the salesman may lead you to believe) and they cost much more than policies purchased directly from providers. Make sure you understand what your current warranty covers so you’re not just throwing money away. Potential Money Savings: $500-1,000.

How to Save Money on Maintenance

• Keep your car properly tuned. A poorly tuned car uses between 25% and 33% more gasoline each year. It’s also cheaper to pay the cost of a tune-up than it is to repair a major problem. Potential Money Savings: $50-100/year.
• Change the oil and oil filter in your car according to your owner’s manual. A 3,000 mile oil change may not be necessary since many cars are now built to go much longer between oil changes. Potential Money Savings: $50-100/year.
• Check your car’s air filter monthly. A dirty filter drags on engine efficiency and reduces gasoline mileage up to 10%. You can clean the filter by removing it and blowing it with an air hose, or you can replace it. Potential Money Savings: $130/year or more.
• Use the proper tires for your vehicle. Having extra wide, large, or performance tires may drag on your gas mileage.  Potential Money Savings: $100/year or more.
• Unless your manual suggests it, don’t waste money on premium gasoline. For most cars, premium gasoline offers no benefit. Unless your car has a high-performance engine and your manufacturer recommends a high-octane gas, use the less expensive gas. Premium gas costs 10% to 15% higher than regular. Potential Money Savings: $200-400/year.
• Check your tire pressure regularly. You can improve your gas mileage by around 3.3 percent by keeping your tires inflated to the proper pressure. Under-inflated tires can lower gas mileage by 0.3 percent for every 1 psi drop in pressure of all four tires. Properly inflated tires are safer and last longer.. Potential Money Savings: $100-250/year.
• Add thousands of miles to the life of your tires by having them balanced and rotated once a year. In addition to destroying the tread, improperly balanced tires can wear out your shock absorbers and damage your suspension system, leading to more expensive repairs. Potential Money Savings: $125-200/year.
• Check fluid levels regularly. Make sure your power steering and radiator fluids are at proper levels with each oil change. Also check automatic transmission fluid, brake and clutch fluids. A bottle of fluid costs just a couple of dollars. Replacing a broken or worn part due to low fluids will cost you hundreds. Potential Money Savings: $50-300/year.

Save Money on Gas

• Pump your own gas if you can. Self-serve gas is usually 5% to 10% cheaper than full service. Potential Money Savings: $50-100/year.
• Combine errands when driving. If you plan your drive so that you hit all of your errands in one outing instead of making extra trips you’ll save on gas. If you save just 10 miles a week that’s over 500 miles each year. Potential Money Savings: $25-75/yr.
• Purchase your gas with a cash-back rewards credit card. You can likely save up to 3% on all future gas purchases. Potential Money Savings: $50-100/year.

Save Money on Insurance

• Ask your insurance agent how much money you can save by raising the deductible on your auto collision insurance. Often, raising the deductible from $250 to $500 can save you 10% to 30%. Increase it from $500 to $1,000 and save even more. If you have a good driving record, you could come out ahead. Potential Money Savings: $50-225/year.
• Make sure you notify your insurance company of all the safety features that qualify you for discounts on auto or homeowner’s insurance, such as automatic seat belts or air bags in your car, smoke detectors in your home, etc. Non-smokers or non-drinkers can often get additional discounts and it requires little more than letting your insurer know. Potential Money Savings: $50/year.
• If you drive an older car, consider dropping collision and comprehensive coverage (but don’t drop liability coverage). Collision coverage is required if you have a car loan, but for older cars that you own free and clear, weigh the car’s book value (what the insurance company would pay you if the car was totaled) against your collision premiums. If your car is over five years old or is worth less than just a couple thousand, keeping collision and comprehensive coverage may not be worth what you’re paying in insurance premiums. Potential Money Savings: $100-300/year.
• Before buying a new car, ask your insurance agent whether the model you are considering will require a surcharge due to higher theft, damage or repair costs. Certain vehicle makes and models do carry higher premium.  Potential Money Savings: $50-200/year.
• Shop around for insurance. If you’re getting good service from your company and are happy with the rates, you may want to stay with them, especially if you have had accidents or tickets. But if your record is good, shop around to see how much you can save, then decide if the savings are worth the switch. Potential Money Savings: $50-200/year.
• Consider combining your auto and homeowner’s insurance under one policy. Many insurers give a 5-10% discount for having multiple policies. Potential Money Savings: $50-200/year.
• If you have a high school or college student under 25-years old in your household, ask about the good student discount for auto insurance. If your student qualifies, you could save up to 25%. Potential Money Savings: $100/year or more.
• This is common sense, but avoid tickets for speeding or moving violations. Many insurance companies give a discount of up to 20% if you have not had an accident or ticket for three years or more. Potential Money Savings: $100/year or more.

Save Money While Driving

• Car pool to work if you can. By sharing the drive with just one other person, you could save an average of $20/month or $200/year in gasoline alone, if your commute is 20 miles round-trip each day. Sharing the driving with two others increases your savings even more. Savings vary depending on the length of your commute and the current price of gas. In addition to savings on gasoline, you’ll save maintenance costs and wear and tear on your car. Potential Money Savings: $400-700/year.
• Another benefit to car pooling is that it reduces the annual mileage on your car. Since this reduces the risk of accident, your insurance company may charge you less for your coverage. Potential Money Savings: $25-50/year.
• Wasteful driving habits can double your fuel consumption. Develop gas-saving habits, such as: (1) always accelerate gently (2) watch traffic ahead of you so you can anticipate slow-downs and avoid stops (3)coast up to traffic jams by lifting your foot off the gas pedal instead of approaching at full speed and slamming on the brakes. It takes 20% more gas to accelerate to normal speed from a full stop than it does from four or five miles per hour (4) don’t drive too fast or too slow. It takes 20% to 30% more gas to drive at 70 mph than 50 mph (5) maintain a steady speed on the highway by using the cruise control. Avoid getting stuck behind slow cars where you have to slow down to their pace and then speed up to pass. Potential Money Savings: $200/year or more.
• Don’t warm your car up by letting it idle for lengthy periods of time. Modern car engines are running efficiently just seconds after ignition so a long warm-up time is not necessary. And idling wastes about a quart of gas every 15 minutes. Potential Money Savings: $20/year.

Hopefully you’ll be able to use some of these tips to keep your car expenses to a minimum. Saving $20 here and $50 there really does add up. There are probably other tips out there, so what have you found works best for you when it comes to saving money?