Did it hurt to do your taxes this year? Was it painful to write that check? Was it a hassle to wade through a sea of receipts? Aren’t you glad its over until next year? Well it’s not!
Taxes Year Round
Although we only have to file once a year, we’re paying taxes almost every day of our life. The Tax Foundation actually calculates how many days the average person in the US spends working for the first few months of the year just to pay their taxes. This year Tax Freedom Day is on April 30th. Can you believe if you spent every dollar you earned on paying taxes it would take from January 1st – April 30th to pay the off in 2007? So contrary to the title of this post, the 2007 tax season doesn’t start today, it began on January 1st.
As I dropped my return in the mail last night I heard a man comment, “thank goodness I’m done with taxes for another year.” I used to feel the same way. I didn’t know much about the tax law, I just paid whatever TurboTax said I owed every April.
Over the last year I’ve learned that if you know the tax rules there are many things you can do throughout the year to help ease and manage your tax burden. Unfortunately the tax code is immense and overwhelming. It’s so complicated that companies and individuals pay tax lawyers and accountants big bucks to help them decipher how it best applies to them. Despite this complexity, I’ve decided to take on the task of learning more about the tax rules.
Lower Your Taxes
A common saying states that “knowledge is power”. In the case of taxes, understanding the tax rules can give you the power to reduce the taxes you owe. Tax expert Sandy Botkin phrases it well when he says, “The more you know, the less you owe!”.
I’ve started listening to Sandy’s audio series Tax Strategies for Business Professionals on the drive to and from work and as I pickup tax tidbits I’ll share them with you here. It’s a long term project; it will take me at least a year to see the benefits of what I learn. However, many of the things I learn one year should carry over to following years so using the title of Sandy’s book; eventually I’ll be able to lower my taxes big time!
Everyone makes mistakes. Sometimes the way you handle your mistake can actually turn it into an opportunity.
Due to bad listening on my part, I’ve spent the majority of the last two days at work, fun fun. My boss made a commitment to our Vice President of Technology and asked me to make sure it was carried out. I misunderstood the timeline so when my bosses boss came looking for status on Monday morning it was panic time.
Everyone from my boss on up to the Vice President were expecting a deliverable that could save or cost the company hundreds of thousands of dollars. The bad news is that it wouldn’t be done on time and it was fault. Rather than dodge responsibility for the issue, which seemed tempting at first, I acknowledged my error and set to correcting it. Now after two days of long hours and hard work it appears the project will be a success. Although I was the cause for the delay, my handling of the situation proved my ability and dedication to my boss and his managers.
As we all know, everyone makes mistakes. If you can learn from those mistakes then you’ll be better off. A great illustration of this is the young businessman who blew a $100,000 dollar deal with a client. As they left the meeting the dejected businessman asked his boss, “Sir, are you going to fire me for losing that client?”. His boss gave him a funny look and said “Are you crazy? I just spent $100K training you, why would I fire you now? You’ll nail the next one, if not, then you’re fired.” We all make mistakes, how we handle and learn from them determines how others will reward or punish us for them.
In an ironic twist my boss called me today with some exciting news. I saw his number on my phone and thought it was more bad news about the project. However, when I answered it was a different type of news altogether. The promotion I’d been waiting on had come through!
Hopefully this shows the promotion advice I’ve given has some merit. Unfortunately promotions typically require a good deal of hard work to come by. Turning your mistakes into opportunities can help speed up the process of getting promoted. Just don’t make too many mistakes
I spent most of this weekend organizing the “store” in our garage and realized there is a cost to being disorganized. I ran across some seasonal items I had purchased to resell on eBay but missed the boat because I forgot they were there!
The good news is I’ve made a lot of progress so I shouldn’t run into that problem again. The bad news is I’m still not finished so the garage is a mess and both our cars are still parked outside in the cold. I’ll get it knocked out this week; it sure will be nice to have an organized space to work in. Due to my organizing I haven’t been as up on the personal finance articles as normal but here are the ones that I did notice.
Clever Dude tells us to take advantage of hindsight as he reviews his money mistakes.
Matt @ Binary Dollar reminds us that watching Warren Buffett can give some investing ideas.
Flexo at Consumerism Commentary asks the provoking question whether high schools should require money management classes.
Golbguru assures us there really are smart people that know nothing about personal finance. Sad but true, hopefully his conversations with them will spark their interest in money matters.
JD has a good discussion of how much we should give.
SVB points out that real estate prices are out of control in some parts of the country.
Congratulations to Trent @ The Simple Dollar who is expecting a child in September. He talks about the financial & lifestyle choices that a new child bring.
Lazy asks whether your home is an asset or liability.
Another great post in the series on financial troubles over at Gen X Finance tells us we may be in financial trouble if we’re only making the minimum payment on our credit card.
Wisegeek asks what if we could decide where our tax dollars were spent with personal tax earmarking.
I have someone’s money and they won’t return my emails, what should I do? This is a problem I’ve never experienced before and am looking for ideas on how to handle it.
I sold an item to a lady on eBay back on April 3rd. She paid the $100 for the purchase and postage right away through PayPal. I went to ship the item and the Postal Service informed me she had provided an address with an incorrect zip code. I’ve contacted the woman 4 times through eBay asking for a correct address but she has not responded to any of my inquires.
I talked with eBay today about the problem and they won’t contact a customer on behalf of a seller. They did give me her phone number, however, when I call the number is no longer in service.
What Should I Do?
I have a phone number that doesn’t work, an email address that isn’t responded to, and a postal address that may wrong. The part that makes it more complicated is I also have her money.
1) Wait for a Response
I’m hesitant to just wait this one out. The woman only has a feedback rating of 2 so she’s not an experienced eBay user. If she is waiting on the item and doesn’t receive it, she might think I ripped her off and leave me negative feedback. In case you’re not an eBay user, keeping my 100% positive feedback is key to continuing sales.
2) Ship the Item
I’m also apprehensive about sending the item to an address that may be incorrect. It could get lost in the mail or returned to me. Either way, I’ll be out money by losing the item or having to eat the extra shipping costs.
3) Refund her Money
I had this item for sale for quite some time before it sold so I’m reluctant to refund her money and start over again. I purchased it for $10 and sold it for $90 so it’s a sale that I’d really like to close out. This may be what I have to end up doing but I’d like to avoid it if possible.
Thanks in Advance
Any ideas would be appreciated, Thanks!
Money concepts can be confusing and overwhelming. There are many things I don’t understand about the world of finance; you could say I see it as a big puzzle.
What are Blue Chips?
Every day on the drive home I used to hear newscasters announce the Dow was up or blue chips were down. I knew up was good and down was bad but I had no idea what the Dow was or what kind of company was classified as a “blue chip” stock. Finally I got tired of not knowing what they were talking about and did a few minutes of research on the Web. As I discovered the meaning behind a blue chip stock and the Dow Jones Industrial Average a small piece of the big money puzzle fell into place.
The nice thing about looking at money as a puzzle is that you don’t expect yourself to know it all. If you come across something you don’t understand just realize it’s just a missing piece. You’ll figure it out and over time the “financial picture” will become a little clearer.
The Finished Masterpiece
When you start a puzzle what’s the first thing you do? Put the picture on puzzle box where you can see it so you know what the end result should be. I think the same applies with your money puzzle. If you can visualize what your long term goals are, i.e. the finished masterpiece, then it makes it much easier to put your money puzzle together.
Your Money Puzzle
We all have a different vision of what we want our finished puzzle to look like and we all go about solving the puzzle a different way. If we can visualize the end result and realize that the progress will be gradual rather than immediate, it will motivate us to learn about money and keep us from getting discouraged or overwhelmed. What tricks have helped you overcome frustration and confusiong while putting together your money puzzle?
Have you ever been given money simply for trying something out? I just experienced this last weekend and it’s pretty neat!
New Bank in Town
Marshall & Ilsley Bank opened a new branch in our neighborhood and is looking for new customers. They sent me a flyer in the mail, offering $75 if I’d stop into their bank and open an account.
The whole process took less than an hour and now the bank is going to deposit the money in my account in two weeks. Literally, all I did was sit in a comfy chair for less than 60 minutes and answer a few questions to earn $75. I typically sit in a chair all day long and answer hard questions at work and I’ve never earned $75 an hour! But wait, it gets even better.
Free Credit Report
The bank ran a credit report with TransUnion as part of the new account process. I hadn’t seen mine in quite some time so I asked for a copy of it. The banker said they weren’t allowed to give me the credit report; however, she would let me look it over while I was there. What’s better than a free credit report? Finding out your credit score is sitting pretty sweet at 780.
I’m always skeptical when someone offers something for “free”. However, sometimes it does pay off to investigate a little further. Had I trashed the flyer as I often do for mailers like those, I wouldn’t have made an easy $75 or gotten a free credit report!
Ask six different people for personal finance advice and you’re likely to get six different answers. Sun recently asked several other personal finance writers and his readers their opinion on a reader’s money question and experienced this first hand.
The Good News
A simple question like “what should my mom do with $1100″ received recommendations for investing, creating emergency funds, buying long term care insurance, and paying off a mortgage. The good news is you always have many options on how to use your money.
The Bad News
The bad news is that after hearing everyone else give you options, now you still have to decide what is best for you. Often personal finance questions are answered with words like assumption, phrases like “it depends”, and the closing disclaimer of “consult a financial professional”. Basically every situation is different, so it’s up to you to take their advice tailor it to you personal circumstances. Hence “personal” finance.
The Money Conversation
The inevitable result of one money question is another money question. Typically followed by another, and then another. We see this in action, as Sun posed a follow up money question to the reader for more background on their situation. Sometimes the conversation is between you and a spouse. Sometimes you’re talking with a co-worker or financial planner. Other times, you may simply debate what to do with yourself, playing one scenario against another.
Being Money Smart
These money conversations are why it’s important to understand or learn financial concepts. Being money literate will allow you to evaluate all of your options and make the decision that is best for you. Notice I didn’t say “right for you” because there are so many different factors and unknowns it is hard to ever say what is “right”. In my opinion, all you can do is make the choice that seems best given the information at hand.
Making Financial Decisions
So the good news is we have options but the bad news is that it’s ultimately up to us to decide which road to take. Of course, it’s really not bad news, just a little overwhelming sometimes. After hearing everyone else’s opinion, how do you go about making tough personal finance decisions?
Welcome readers, I hope you are feeling ethical and full of values today! If not, you’re in the right place at the right time. The articles below will hopefully give you some food for thought about money and it’s place in your life.
The first half of the articles deal with the ethics and values of personal finance in one way or another. I’ve included a quote from each post to give you a taste of it’s content. The second half of articles consist of interesting posts, not necessarily having to do with ethics or values in my opinion, that you might want to check out if you have time.
Ethics & Values
Wanda presents Why give? (Or, what if you derive no utility from giving?) posted at Well Heeled.
“If giving DOESN’T make you feel better, if you feel NO sense of obligation to people outside your family or community, if you are financially successful and appreciative of what you have WITHOUT giving, if you don’t have a religious reason for being charitable, why would you give?”
Tracy Coenen presents Investigation of Usana points out the problems with MLM posted at FRAUDfiles.
“However, the vast majority of Usana’s “sales” are achieved only thru the marketing of the “business opportunity.” That is, without the promise of riches, the vast majority of distributors would never purchase any Usana products. “
Tim Abbott presents Berkshares: Local Currency Strengthens Community and the Bottom Line posted at Walking the Berkshires.
“Berkshares represent a community reinvesting in itself, rediscovering its history and revitalizing its economic and social prospects through the use of local script.”
“… we ponder if pay for performance is a child appropriate reward system.”
“Affirmative action is holding back minorities much like wealthy parents who give their adult children financial outpatient care”
Henry presents Investing in Life Insurance Policies: How the Grim Reaper Can Make a Ton of Cash. posted at Binary Dollar!.
“The investor buys the policy and continues to pay the premiums until their old person kicks the bucket.”
“Changing our attitudes toward money can change our lives by making us more open to wealth. Money is not a four-letter word – so use it!”
“Money is the root of all evil, I think a much more accurate statement is that the lack of money is the root of all evil”
“It’s all a matter of perspective – and summoning up the ability to toss aside the guilt and anxiety and simply take one small, successful step after another.”
“Earning a living is hard work; not spending it all is even harder. The root of all evil is not money, but greed.”
Mr Credit Card presents Did Funky Diner Deserve Any Extra Credit Card Tips? posted at Ask Mr Credit Card’s Blog.
“Would you have even gave any extra tip at all?”
“… an increasing likelihood that some lawyers may be practicing in less than ideal conditions for their clients, beyond a reasonable ‘brain age’.”
“In effect, the idea would turn lawyers into auditors. The would have to be independent, sceptical and their first duty would be to investors.”
Samuel Peery presents Applying GTD principles to your personal finances – Part 1 posted at Getting Finances Done.
Steve Faber presents - How to Save Money Everyday – A Different Perspective posted at DebtBlog.
FIRE Getters presents Experiences – Availability of Funds After Cashing a Big Check posted at FIRE Finance.
Thanks for reading! You can submit your article to the next edition of Ethics, Values & Personal Finance using this carnival submission form. Have an ethical day
When I first read the article, 10 Baby Items You Think You Need, But Really Don’t, I thought it was a delayed April Fools joke. I kept waiting for the part where they said just kidding but it never came! Below are the items I disagreed with the author on. As a parent of a nine-month old baby, I’ve found these things to be great tools in our parenting toolkit. They may have cost us some money but we’re sure glad we have them.
The author argues that most people don’t need bottles. I think most parents will need a few bottles at some point in their parenting career. I agree that nursing is great for the mom and baby. However, my wife works all day. She and many other working mothers need a way to store the milk they pump at work, not sure how they’d do this without bottles.
What do you do when your kid is screaming in the middle of the grocery store? Our first line of defense is to pop in the pacifier. Well worth the cost.
When you have a newborn baby and you can’t remember the last time you had decent sleep you’ll do anything to get that kid to take a nap. A good baby swing will put them to sleep so it’s worth its weight in gold.
As working parents, we take our son to child care at a women’s home every day. She puts him down for naps in his portable playpen. His pack and play provides a safe and comforting place for him to sleep. Again, worth the money.
After being cooped up all day at work or at the babysitter, our family is ready to get out in the evenings. We take our son for a walk as often as we can, without a stroller this wouldn’t be possible.
I agree there are many things that Babies”R”Us will tell you to buy as a new parent that you don’t really need. In my opinion, the items above are not on that list. They will make life happier and easier for you and your baby.
Deal, or No Deal! That’s the million dollar question that contestants must answer on the TV game show hosted by Howie Mandel. How you play along with this game might be a good indication of how you view the risks and rewards of investing.
Financial Risk Tolerance
If you’ve ever done any type of financial planning you’ve probably filled out a questionnaire about how much risk you can tolerate. These types of questions are difficult for me to answer because they’re so general, so impersonal, and the questions often seem out of context with life situations. Deal or No Deal on the other hand breaks it down to a basic decision where your answer might tell you a little about your risk style.
The contestants on the game show are faced with a set of cases, each containing a dollar amount they can win, ranging from $1 up to $1 million. They randomly open the cases one at a time, once they’ve opened a case the contestant cannot win the amount of money the case holds.
As the game goes on, the number of cases shrinks and how much they can still win depends on which dollar amounts they have not opened. At several intervals the contestants are offered a certain sum of money to walk away from the contest. For example, late in one game there were four cases unopened. The dollar amounts in the cases were $1,000, $5,000, $20K, and $100K. The lady was offered $24,000 to walk away. What would you do in that situation?
In another scenario the four cases held $75, $750, $500K and $750K. The offer to walk away was $291K. Would you hold out for the chance to win $750K or would you settle for $291K. What captivates you, the potential of winning threes quarters of a million dollars or the fear of losing one quarter of a million? What would you do with that money if you won? How would it change your life? Are you willing to risk a lot of money to make a lot of money?
Find Your Sweet Spot
Obviously this is just an initial screen, to determine what types of investments suit you best would require research and planning on your own or with a professional. However, it does help you understand how you react to the financial pressures of risk and how much you’re willing to lose in return for the potential of a big reward.