Friday Finance Findings for January 30th
By Jeremy Vohwinkle with 8 Comments
The first month of 2009 is already almost in the books. Didn’t that seem to fly by? If there’s one thing I dislike about this time of year, it’s getting tax documents in the mail. Most of our documents have come in and before actually doing my taxes, I ran some estimates in a tax estimator calculator and it looks like we’re still going to owe again this year. This is frustrating because last year we set up estimated taxes as well as reducing our W-4 exemptions to zero, and the plan was to end up pretty close to owing nothing. Ideally, I was expecting to fall in a range between a $500 refund or owing $500. Unfortunately, that doesn’t seem to be the case.
Of course, the silver lining is that we made more money than was expected a year ago. And who knows, maybe once I sit down and really start plugging in all of our numbers and add up all the little business expenses, we’ll find that we’re pretty close to the target tax range. Regardless of the outcome, it has become clear that we need more tax relief. Luckily, we have a child on the way very soon, so that will help. But either way, when I look at how much money I fork over to the government and see what I get in return, it’s clear that I need to work on reducing my current tax bill.
But enough complaining. Here are some good reads from the past week.
Use the Right Tax Forms for Your 2008 Taxes – Between Form 1040, 1040A, and 1040EZ, how do you know which one you should use? Filing the right form will save you time, and possibly some money.
American Bailout: $1 Million A Day For 2,260 Years – Have you heard about that new bailout/stimulus/rescue plan? Think about it in terms a little more comprehensible. A million dollars a day for over 2,000 years. Staggering.
The Creative Job Hunt: 5 New Ways To Find Employment – If you’ve found yourself in the unemployment line, you’re not alone. Unemployment is at its highest in decades. But you don’t have to always rely on the old tried and true methods for finding a job. Here are five new ways you might be able to find employment.
Use Your Credit Cards to Avoid Cancellation – This is happening all over the place, and your credit score could be damaged just because a bank closes an inactive card. If you have old cards, use them once and a while to keep them from being canceled! You don’t want to lose years of credit history just because a bank decides to close your inactive card.
Income Re-Distribution Features of the 2009 Stimulus Plan – I already aired my discontent with taxes, but if you want to see where some of your tax dollars are going, check out this post that highlights some of the new tax credits and features in the stimulus plan.
Staples Coupons – Good until February 1st, here are some coupons you can use at Staples online. There are a few different coupon codes that will give you anywhere from about 16-25% off your purchase depending on how much you spend. So, check it out if you need something from Staples.
What Is An Inverse ETF? – There has been a bit of discussion surrounding inverse ETFs, but what are they exactly? They claim to be able to make money when the market is down, so how does that work?
No Hype – The Straight Goods on Investing Your Money: Book Review and Giveaway – Frugal Trader has an in-depth review of this book. Even better, if you head on over there before 5 pm today (Friday) you’ll have a chance to enter the giveaway where you might win a copy of the book.
Lending Club, My Best Investment of 2008 – It should actually come as no surprise, but many people who use Lending Club or Prosper to fund loans are finding they were the best investments of the year. I actually just signed up and funded a bunch of loans this past week myself. I’m going to give it a try and see how it works so I can hopefully provide an in-depth review of the process and performance for everyone here.
Save Money on Utilities – As most people’s budgets get tighter in these lean times, one way to make some headway is with your utility bills. While we all need electricity, heat, and water, this also means we are in control of how much we spend on these things each month. There are plenty of things you can do to minimize your utility bills. Check it out.
I Am Not A Consumer; I Am A Person – You know, I’ve noticed this in the media lately as well. They keep referring to us as consumers. Well, I might buy some stuff, but I’m more than just a bank account that should be used to prop up the economy!
Insurance Policies 101 – Understanding Insurance Policies and Claims – Ever wonder what’s inside your insurance policies? It can be quite confusing with a lot of terms you’re not familiar with, but Ben does a good job at breaking down policies into the basics.
The Hidden Benefit of a Depressed Housing Market – Lower Property Taxes » – My property taxes did not go down this year. So, does that mean my home didn’t decrease in value? Or is our local tax authority artificially propping up tax rates? Hmm… Hopefully it’s the former.
6 Ways To Motivate Yourself – I need to bookmark this post and revisit it every few days. I have a lot of things on my plate, and a lot of things I’d love to accomplish, but finding the motivation is the hardest part. This post has six tips to help you (and me) stay motivated.
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Great post, I haven't read all of it though, will continue during my lunch break because I want to take notes. Thank you,
We discovered the same thing this year. We would owe on our taxes. My wife was very upset as we hear about everyone else getting big refunds. She claimed 0 but I claimed 2, so I guess I need to cut back to 1 or 0 myself. We are likewise looking to have a baby this year, so that should help. The tax system isn't too kind to 2 income no kid families.
yeah, sometimes i forget about how "personal" all of this personal finance stuff is. when i made a marked decision to get my financial life in order 6 months ago i looked everywhere for a magic solution and a detailed list of things to do but it really is different for every person, and some things work for certain people, while other things work for others. maybe if i file for more exemptions this year, i can start some kind of automated transfer into savings so my "income" will be the same but my savings can accrue without me having to think about it. i might still be in that phase where if the money's there i'm not 100% positive that i won't spend it on something irresponsible or impulsive rather than doing the right thing with it and progressing towards my goals.
thanks for the good advice. i really do appreciate it, it's always good to read your blog because i seem to absorb and relate to advice and experiences from people in a somewhat similar age bracket and situation as i'm in. :-)
Zach, there's nothing terribly wrong about that, but what others are telling you is true. If you changed your exemptions to get you closer to a break even point on taxes, you'd basically be spreading that refund out across each paycheck over the course of a year. In your case, this might put an extra $200/month in your pocket as opposed to waiting until you do your taxes to get it all at once.
Now, this would only be beneficial if you strictly used that extra cash flow to continue to pay off your debt or fund your savings. If you are disciplined enough to do this, then yes, it's in your best interest to put that money to work for you as soon as possible instead of letting the government hang on to it for a full year and not give you any interest in return.
But for some, this added money each month might end up getting spent on other things instead of being applied to debt, savings, or investing, so it ends up not being a real benefit. So it really depends on whether or not you can ensure you put the extra cash flow to work or not. For some people, the idea of getting a larger refund is a way of forced savings, so that method works best for them. But if you can stick to your plan and put the money you save on tax withholding to work, it would be beneficial to do that for sure.
I am with you on the taxes, I will definitely owe again this year. Seems like no matter how much we plan, there are always surprises. Thanks for the mention!
this is something i've wondered about for a while. i've currently got my exemptions set to zero, and i've found for me this to be a good thing because i get a lump sum of money with my refund and generally treat that as a means of paying off debt, or dumping a large amount into a savings account. my refund usually ends up being between 2 and 3 thousand dollars.
is this totally flawed? everyone tells me i should have more exemptions and be using that money throughout the year, but realistically my credit card debt was accrued out of poor spending habits and stupidity, and it's not money i "need to live". over the last 6 months i've definitely changed my spending habits but i still feel like the idea of getting a large sum of money at once makes it far easier for me to to take one sweeping action against a debt rather than regularly paying the money off in smaller chunks that, relative to my income, seem less substantial.
good luck with your taxes. it's never a fun time of year but it seems to come and go quickly every year so hopefully once everything's settled it'll be smooth sailing for the rest of the year for you and your family. :-)
I agree the time flew by. Anyway, just wanted to say that I really liked how you wrote "Luckily, we have a child on the way". I know it was related to you getting tax relief, but it was such a pleasant change to see a personal finance blogger use 'child' and 'luckily' in the same sentences.... rather than treating them as cost centers! ;) (I count myself in that). Good luck with the forms!
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A lot of people won't realise how important this post is. You've highlighted an area that have affected me in the past "Use Your Credit Cards to Avoid Cancellation" I feel victim to this after having a good credit but lost it cos I never used it as much,saving it for the rainy day.Thanks
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