Tuesday, February 28, 2012

Resources I Use to Help Me Do Our Taxes

Even though I’ve been doing my own taxes for almost 20 years now, it doesn’t mean that I don’t need a little help occasionally along the way. As often as the U.S. tax code and our personal situation changes, it’s important to have some resources to rely upon when it comes time to again tackle our family’s contribution to the welfare of our great nation.

Here are four resources that I find instrumental in helping me do our annual tax returns and that make my job just a little bit easier.

Previous Years Tax Records
While some people may feel forced to retain their tax documentation for years (probably the ones that don’t do their taxes themselves), I prefer to keep previous years’ tax documents. As my tax situation -- and the tax code itself -- changes from year to year (other than when I was a teen, I’ve never had two consecutive years where I could follow the exact same tax format), these items provide a reference guide of sorts to help me refresh as I do my current year’s taxes.

An entire year is a long time, and having those previous years’ records as documentation to help remember how I did things last year, what deductions we took, what schedules we needed to file, and similar information just to jog my memory, makes my job filing taxes for the current year just a little bit easier and less time consuming.

Income Statements
For many people, their income documentation comes by way of their W2 form and possibly a 1099 form for bank paid interest. However, as a self-employed individual, my income derives from multiple streams and requires a bit more attention when it comes time to file taxes.

My wife is one of those people with the W2 and 1099-INT from the bank, so her income statement compilation is easy. However, I tend to pair multiple 1099 forms from various employers, with other, lesser incomes that don’t always come with a 1099. This means that I must track these incomes on a spreadsheet throughout the year in order to be able to give a proper accounting of my full income. This also means that my income tracking spreadsheet becomes an integral part of my tax resources come year’s end.

The Internet
I’d estimate that I spend several hours each year on the Internet buffing up on the latest trends or adjustments regarding the U.S. tax code or researching new aspects or areas that might be involved in doing our taxes. This year, such time spent involved researching the moving deduction (since we moved to the state of Washington, but since we didn’t meet the time requirements for living there before moving back to Illinois, we weren’t eligible to claim the deduction), and property tax payment implications on the sale of our home.

While I have found numerous valuable resources to help me with tax questions on the Internet, I’m careful not to take them all at face value, and I tend to reference what I read with specifics from the IRS, ensuring the website I visit ends in “.gov”.

Records and Receipts
You just can’t be sure when certain records or receipts might come in handy at tax time. I’m usually very good about saving any documentation I feel might be necessary to claim or prove a tax deduction or credit. Items like business expense receipts, charitable donation records, and similar items usually comprise much of this documentation. This year however, I may have dropped the ball.

Due to our lower earnings, my wife’s higher medical bills as a type 1 diabetic, and my paying of our own insurance as a self-employed individual, we might have been eligible for the medical expense deduction this year. However, since I wasn’t retaining medical expense receipts and records for the entire year, it’s very difficult to compile the necessary information regarding this aspect of our expenses. As a result, this year I’m attempting to save receipts from all aspects of our spending lives, not only for tax purposes, but as a written record to reference in an effort to better educate ourselves to our spending habits.

Friday, February 24, 2012

Wait! Don’t Take that Spare Change to the Bank Just Yet

Besides buying rolls of forever stamps or investing in government savings bonds, there may be few low initial capital investment/savings options out there for the common person.

For those of us that don’t have thousands of dollars to toss at investments -- or just don’t want to -- there are still great ways out there to save without having to sink the family nest egg into an investment in which a stable return might not be guaranteed.

Spare change is one of my favorites, and is probably one of the easiest as well. And while we can’t go melting down all our coinage just yet, the day has arrived when certain metals contained within our daily pocket change are worth more than the actual change itself. While I don’t plan on getting rich off of saving 25 tons of pennies and nickels, considering the other investment options out there right now, saving a few of these coins in a jar or bucket might be a nice little hedge against inflation and rising commodity prices.

A Penny Saved is…2.5 Pennies Earned?
I think that word is starting to spread, but if you hadn’t yet heard, the metal value of a 1909-1982 cent is currently hovering right around 2.5 cents. Kind of strange isn’t it? The metals comprising this coin are worth more than the face value of the coin itself.

While this is only true if you were able to actually melt down the penny for its metal (which is currently prohibited by law in the United States), should that law change, we might see pennies from this time period start to disappear from circulation rather quickly.

Even newer cents from 1982-2012 (which are mostly Zinc -- 97.5% to be exact) are worth ½ a cent, since zinc prices -- like many other commodities recently -- have been on the rise. These cents’ metal value might soon join the ranks of other coins that have their melt value be worth more than their face value.

Don’t Discount Those Nickels
One of these other coins is the 1946-2012 nickel. Even though most of the nickel’s composition (non-1942-45) is mostly copper, between the copper and nickel mix content, and the current price of commodities, the melt value of the US five cent piece is now nearly six cents.

Just Look at Silver
If you want a reference on how things have changed when it comes to our pocket change over the years, consider some of the pre-1965 coins that were made largely from silver. Got a dime from that time period? It could have a silver content worth nearly $2.50. Have a quarter from the 1950s or early 60s? Its melt value could be worth over $6.

So before you go tossing that change away or pass up a coin on the sidewalk, you might want to take a closer look. There might be more value in that pocket change that you think.

The author is not a licensed financial professional. The information provided in this article is for informational purposes only and does not constitute legal or financial advice. The author is not advocating the melting of US currency or the breaking of any laws. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.

Tuesday, February 21, 2012

Having a Child: Financial Factors in Staying Home or Going Back to Work

It can be a tough call when deciding whether to go back to work or stay at home with your little bundle of joy after having a child. There are certainly the financial and long-term career aspects to consider, but it can be awfully hard to turn away from that sweet little pumpkin who is now such an integral part of your life.

Personally, my wife and I decided that one of us would be at home with our little one until he headed off to school. It was a choice that my wife and I made together, but not one we made without considering a multitude of various factors first. We reviewed how these factors would play not only into the raising of our child, but our future work and career paths as well.


Wednesday, February 15, 2012

My Money Saving Television Options Just Keep Growing

More and more television shows revolving around money saving options and opportunities keep popping up. I love such shows since they are not only interesting and educational, but they can build knowledge and confidence regarding various money-making techniques.

There are three main categories of such shows that I’ve found have proliferated the airways lately, and the options seem to just keep growing.

Auction Shows
I grew up going to auctions as a child, so I know just what kind of deals are out there when it comes to the auction environment. I went to my first storage auction a couple of weeks ago, but they had changed the dates, so I still haven’t lost my storage auction virginity just yet.

There are the wild storage auction battles taking place on Storage Wars, the heavy hitting bidding of Allen Haff and Ton Jones (yes, I said “Ton”) on Auction Hunters, the more laid back atmosphere of the southern-based Auction Kings, and the ever-interesting movie memorabilia finds on Hollywood Treasure.

What you’ll discover when it comes to such shows is really up in the air. Take all these shows together and you can learn something about almost any and every type of antique, collectible, or memorabilia out there.

Pawn Shop Shows
Before I started watching shows like Pawn Stars and Hardcore Pawn, I never really knew much about pawn shops. Besides getting a good education on how to authenticate items that people might “claim” are antiques, I also glean some good haggling and negotiating techniques by way of such shows, which can certainly be beneficial in various resale settings.

The knowledge that such shows provide, also helps viewers to get a better idea of what various items can be worth. However, these types of shows also drive home the point that just because people have an idea of an item’s value, that doesn’t necessarily equate to what they’ll get paid when they resell it. There can be a big gap between an item’s appraised or estimated value and what someone will actually pay for it.

Educational Picks
My educational picks are a smattering of several shows that bring varied offerings to the television viewing audience. With shows like American Pickers and Antique Roadshow, audiences can get a feel for the value of true Americana. They may even see a few items they have sitting in their attics or that were passed down from parents and grandparents.

Meanwhile, programs such as ‘til Debt do us Part or The Suze Orman Show can cater more toward everyday financial hurdles the average American might face. From paying down debt and cutting expenses, to making the right investment choices, planning for a child’s education, and deciding whether one can actually afford a big ticket purchase, such shows can help build a viewer’s financial education.

While I don’t do everything such shows recommend -- choosing instead to make my own financial decisions -- sometimes I can pull certain aspects of what they advocate into my own financial lifestyle.

Tuesday, February 14, 2012

Solar Flares and the Demise of the Internet: I Have a Plan, do You?

With the recent news of massive solar flares stemming from our sun, there’s been talk about possible disruptions to things like Internet service. While initially it might not seem like a huge deal, should such a disruption continue unabated for a significant period of time, it might not be taken so lightly. In fact, it could disrupt a huge portion of our daily lives for many of us, affecting everything from our work to our play and just about everything in between.

While it might not happen soon, and who knows, it might never happen in our lifetimes; should it happen, I have a plan…do you?

Emergency Fund
Of course an emergency fund is a pertinent aspect of most any financial life whether or not the Internet fails us. Having a backup plan upon which to rely and survive temporarily for a variety of unexpected emergency situations can come as real peace of mind.

I find that breaking my emergency fund into various portions can help protect me in situations where electronic banking might not be available. Having some cash on hand, some cash in a safety deposit box (in the event that banks are still open), a little “real” silver coinage, and an extra food and water supply (so we don’t have to run right out to the stores during less than ideal situations) are the main portions of such emergency fund preparations.

Maintaining Productivity
Doing without the Internet temporarily might not lead to epic chaos in which we’re reduced to cash only transactions or worse yet, buying loaves of bread with silver dimes or bucket loads of cash. However, it might make it difficult for those of us who utilize the Internet to conduct a portion or all of our work.

Therefore, part of my plan regarding a loss of Internet service involves maintaining, if not a full work schedule, at least some level of productivity. This way, as a self-employed individual, I’ll be ready if or when Internet service resumes.

Emergency “Work” Fund
In the event of an Internet blackout, I have an emergency “work” fund to supplement my regular emergency fund. This ensures that I’m not left with absolutely no ready work to resume and recover my income once services are back up and running.

This backup plan of sorts consists of work items that I can conduct regardless of Internet service. By knowing what types of work my employers want on a regular basis, and having an inventory of available projects on which to work, I can ensure that I stay busy and am ready for when service resumes. While this plan certainly won’t keep me from losing a little productivity, I figure that overall, at least being able to sustain 70 or 80 percent of my regular productivity, at a time when much of the world may not be doing much of anything otherwise, isn’t all that bad of a plan.

Friday, February 10, 2012

IndyCar at its Best!

I know this is supposed to be a personal finance blog, but I just couldn't help posting a link to this awesome IndyCar footage from Chicagoland Speedway.

While we've lost the IndyCar race at this track (hopefully just temporarily), I hope it's back sooner than later. I have some great memories of the two races I attended there (as well as my laps there in a stock car), and I only wish I could have been at the race I linked to, although I was at a great one in 2009. And of course I can't leave out the 2008 season finale and an oldie but good from '02. What great memories!

Miss the track and hope it's back on the schedule soon!

Thursday, February 9, 2012

Welcome Back to Illinois! Here are Your New Costs

Well, surprise, surprise! We’ve been back in the “Land of Lincoln” for just a week now and we’re already finding out that during our six-month absence, there have been a few changes. These are changes that could end up affecting our wallet either directly or indirectly and did not make for the most pleasant of homecomings.

Here are the three big items we’ve stumbled across already (one of which came only minutes into our entering the state) in what has been just our first week back.

Just minutes into our homeward bound journey to Illinois, we were greeted with our first new costs of once again being back in the great state of Illinois. A flashing sign just across the state line informed us that tolls were increasing as of January 1, 2012. Since we were traveling on January 4th, this meant that we were several days late, and now several more dollars short.

Come to find out, there was a 100% increase for driving on the toll roads in the Chicagoland area, which is a common occurrence for both commuters and just passers-by. The average toll rate per mile (for travelers with the I-PASS automated toll payment system) has gone from 3 cents to 6 cents per mile.

Thankfully, since I work from home and my wife’s route to work avoids the toll roads, this isn’t a huge cost (typically running us around $60 a year in toll fees…guess it’ll be closer to $120 now); however, it’s an additional cost nonetheless, and one that was certainly unexpected.

Insurance Rates
According to an article in the Chicago Tribune newspaper, Allstate is looking to hike rates anywhere from 4-10% on some Illinois homeowners due to string of catastrophic damage suffered in many areas during 2011. Since we are looking to rent, this might not seem like a big deal. However, we have to consider that while we might not be suffering due to this increase directly, we may have to account for it in higher rental rates should the building in which we choose to live have its insurance rates increased. With those rates possibly being passed along to tenants, we could end up suffering just as certain homeowners might by way of increased rent or even higher renters insurance.

Income Tax Hike
Oh yes, and don’t let me forget about that little income tax increase to the tune of 66%. Yep, that’s right. I said “66%”.

Income tax in the state of Illinois moved from 3% to 5% this year to help bolster the state’s budget shortfall. Isn’t that nice! Since the politicians and state government can’t manage to be fiscally responsible, it once again falls upon the taxpayers to help them out. So now Illinois taxpayers can look forward to paying hundreds, if not thousands of extra dollars in income taxes each year.

Even though my wife and I were only part-year residents, the higher tax rate will still likely increase our state income tax bill by several hundred dollars this year.

Illinois Tollway. Toll information page. http://www.illinoistollway.com/tolls-and-i-pass/toll-information

Yerak, Becky. Chicago Tribune. “Insurance rates surge on disasters”. January 12, 2012.

Thursday, February 2, 2012

Cash4Books.net: Supporting Schools with Charity Event

I’ve used and written about Cash4books.net multiple times during the last several years. I’ve found that the site is a quick, efficient and effective way to earn good money for used textbooks.

By way of my articles, I’ve learned more about this Beaverton, Oregon-based company and have been impressed not only with their business acumen and view toward the future, but their apparent ability to balance a growing company with maintaining a positive work environment for their employees (they were ranked #18 in Oregon's 100 Best Companies to Work For -- in the medium size companies category -- by Oregon Business Magazine).

Most recently their CEO, Jim Smith, reached out to me to help promote the company’s efforts to raise money for schools.

Here is a portion of the press release he sent me:

“During the month of February, 2012, Cash4Books is matching customer donations to DonorsChoose.org by 100%. Any customer selling at least $7 worth of books to Cash4Books is eligible to donate the value of their buyback order to DonorsChoose.org. Once Cash4Books receives the books, the customer will be sent a DonorsChoose.org gift card for the value of their donation, along with a check or PayPal payment for any remaining balance. Customers can then visit DonorsChoose.org and decide which projects to support. At the end of the month, Cash4Books will add up all customer donations and match that amount 100%.

Facing increasing budget shortfalls, federal, state and local governments have dramatically reduced school funding over the past few years. Budget cuts have forced schools to not only cut staff and programs, but have also severely reduced their ability to purchase critical school supplies. Many teachers pay for supplies out of their own pocket, but even with this generosity many students are left without the tools that they need to succeed in school.”

This could present an opportunity for people to check out a great site for earning a few extra bucks when downsizing textbooks that may be cluttering up bookshelves and closets. It could also be a chance to do something special for charity if they so choose.

I’ve found that using Cash4books is a super-simple process (as I’ve mentioned, I’ve used their services multiple times over the years). When I have a few books that I’m interested in reselling, I just type in their ISBN numbers, see if Cash4books is buying and what they’re offering in compensation for those books. Then Cash4books pays the shipping (I typically use their free FedEx service), checks my order for accuracy and quality upon arrival, and deposits money into a PayPal account (you can also be paid by check, it just takes a little longer). It’s quick, easy, and best of all it helps us declutter our home and earn a little extra cash in the process.

The author is not a licensed financial professional. The information provided in this article is for informational purposes only and does not constitute legal or financial advice. The author has used Cash4book.net services; however, he has not been paid by Cash4books.net for this article. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.