Book Giveaway!

Posted on Monday 30 March 2009

I recently read the book Living Rich for Less.  It was a quick read and had many useful tips for those still trying to pare down their budgets.  Therefore, instead of letting the book collect dust on my bookshelf, I’ve decided to give it away to one of my fabulous readers.  Simply leave a comment detailing one of your own budget tips and you’ll be entered.  You can leave as many tips as you want but only one entry per person.  I will announce the winner on Saturday morning.

savvy @ 8:00 AM
Filed under: Budgeting andContests andFrugality andSaving
Suze Orman’s Save Yourself

Posted on Wednesday 25 March 2009

$1000 CA
Creative Commons License photo credit: feverblue

Last year, Suze Orman and TD Ameritrade sponsored a Save Yourself promotion.  You would receive a $100 bonus for opening an IRA at TD Ameritrade and automatically funding it with at least $50/month for twelve months.  I signed up and last week, I received my bonus.  It’s nice to receive a 16% return (on the $600 total that I contributed) for doing nothing.

This year, TD Ameritrade is offering a similiar promotion.  However, this time you must open a NON-retirement account and save at least $100/month.  These terms aren’t as good as the previous offer’s but an 8% return is still nothing to sneeze at.   I’m debating signing up for this promo too.  Anyone else receive a bonus?

Go to Suze’s site to learn more.

savvy @ 10:58 AM
Filed under: Investing andIRA andRetirement andSaving
‘Making Work Pay’ Tax Credit Effective This Week

Posted on Tuesday 24 March 2009

Creative Commons License photo credit: AMagill

The American Recovery and Reinvestment Act of 2009—the new economic stimulus law signed on Feb.17—includes a key provision that impacts tax withholding amounts in employee paychecks. This provision, the “Making Work Pay” tax credit, requires employers to implement the new tax withholding changes by April 1.  So look for a few extra dollars in your next paycheck.  However, I challenge you all NOT to spend it but to SAVE it.  If your check increases by $68/month, setup an automatic withdrawal of $65/month to your e-fund or other savings account.  If your savings account is flush, consider increasing your 401k or IRA contributions.  You won’t miss what you never had.

Here are a few key points regarding this credit –

• New withholding tables may reduce the amount of income tax withheld from your wages. Many higher-income taxpayers will see little or no change in their take-home pay. That’s because the “Making Work Pay” credit is phased out for a married couple filing a joint return whose modified adjusted gross income (AGI) is between $150,000 and $190,000 and other taxpayers whose modified AGI is between $75,000 and $95,000.
• The new tables, prescribed by the Department of the Treasury, reflect the Making Work Pay credit and other changes resulting from the American Recovery and Reinvestment Act of 2009.
• You do not have to submit a Form W-4, Employee’s Withholding Allowance Certificate, to get the automatic withholding change. However, if you do not want to have your withholding reduced (because, for example, you have more than one job or you are married and your combined income places you in a higher tax bracket), you may want to file a new Form W-4. You may claim fewer withholding allowances on line 5 or request additional amounts to be withheld on line 6.
• Taxpayers will not get a separate, special check mailed to them from the IRS like last year’s economic stimulus payment.

savvy @ 8:17 AM
Filed under: Saving andTaxes
Top Ten facts about the Tuition and Fees Deduction

Posted on Wednesday 18 March 2009

The Tuition and Fees deduction of up to $4,000 is available to help parents and students pay for post-secondary education. Below are ten important facts about this deduction every student and parent should know.

  1. You do not have to itemize to take the Tuition and Fees deduction. You claim a tuition and fees deduction by completing Form 8917 and submitting it with your Form 1040 or Form 1040A.
  2. You may be able to claim qualified tuition and fees expenses as either an adjustment to income, a Hope or Lifetime Learning credit, or – if applicable – as a business expense.
  3. You cannot take the tuition and fees deduction on your income tax return if your filing status is married filing separately.
  4. You cannot take the deduction if you are claimed, or can be claimed, as a dependent on someone else’s return.
  5. The deduction is reduced or eliminated if your modified adjusted gross income exceeds certain limits, based on your filing status.
  6. You cannot claim the tuition and fees deduction if you or anyone else claims the Hope or Lifetime Learning credit for the same student in the same year.
  7. If the educational expenses are also allowable as a business expense, the tuition and fees deduction may be claimed in conjunction with a business expense deduction, but the same expenses cannot be deducted twice.
  8. You cannot claim a deduction or credit based on expenses paid with tax-free scholarship, fellowship, grant, or education savings account funds such as a Coverdell education savings account, tax-free savings bond interest or employer-provided education assistance.
  9. The same rule applies to expenses you pay with a tax-exempt distribution from a qualified tuition plan, except that you can deduct qualified expenses you pay only with that part of the distribution that is a return of your contribution to the plan.
  10. IRS Publication 970, Tax Benefits for Education, can help eligible parents and students understand the special rules that apply and decide which tax break to claim. The publication is available at
savvy @ 7:01 PM
Filed under: Taxes
Super Saturday!

Posted on Monday 16 March 2009

Mr. Liberty
Creative Commons License photo credit: TheeErin

No, I’m not talking about my weekend.  On Saturday, March 21, 2009, approximately 250 IRS Taxpayer Assistance Centers and hundreds of community free tax help sites nationwide will open their doors to assist people. People who earn $42,000 or less are eligible for free tax return preparation at either the IRS TACs or the community partner sites.

People who want their tax returns prepared should bring the following information:

  • Valid driver’s license or photo identification (self and spouse, if applicable)
  • Social Security cards for all persons listed on the return
  • Dates of birth for all persons listed on the return
  • All income statements: Forms W-2, 1099, Social Security, unemployment, or other benefits statements, self-employment records and any documents showing taxes withheld
  • Dependent child care information: payee’s name, address and Social Security Number or Taxpayer Identification Number.
  • Proof of account at financial institution for direct debit or deposit (i.e. cancelled/voided check or bank statement)
  • Prior year tax return (if available)
  • Any other pertinent documents or papers

For more information, go to,,id=204165,00.html

savvy @ 8:27 AM
Filed under: Taxes
Five Important Tax Credits

Posted on Friday 13 March 2009

Check it out! You might be eligible for a tax credit. A tax credit is a dollar-for-dollar reduction of taxes owed. Some credits are even refundable. That means you might receive a refund rather than owe any taxes.

Here are five popular credits you should consider before filing your 2008 Federal Income Tax Return:

1. The Earned Income Tax Credit is a refundable credit for low-income working individuals and families.  Income and family size determine the amount of the credit.  For more information, see IRS Publication 596, Earned Income Credit.

2. The Child and Dependent Care Credit is for expenses paid for the care of your qualifying children under age 13, or for a disabled spouse or dependent, to enable you to work or look for work. For more information, see IRS Publication 503, Child and Dependent Care Expenses.

3. The Child Tax Credit is for people who have a qualifying child. The maximum amount of the credit is $1,000 for each qualifying child. This credit can be claimed in addition to the credit for child and dependent care expenses. For more information on the Child Tax Credit, see IRS Publication 972, Child Tax Credit.

4. The Retirement Savings Contributions Credit, also known as the Saver’s Credit, is designed to help low- and moderate-income workers save for retirement. You may qualify if your income is below a certain limit and you contribute to an IRA or workplace retirement plan, such as a 401(k) plan. The Saver’s Credit is available in addition to any other tax savings that apply. For more information, see IRS Publication 590, Individual Retirement Arrangements (IRAs).

5. Health Coverage Tax Credit Certain individuals, who are receiving certain Trade Adjustment Assistance, Alternative Trade Adjustment Assistance, or pension benefit payments from the Pension Benefit Guaranty Corporation, may be eligible for a Health Coverage Tax Credit when you file your 2008 tax return.

There are other credits available to eligible taxpayers. Since many qualifications and limitations apply to the various tax credits, taxpayers should carefully check their tax form instructions, the listed publications, and additional information that is available on the IRS Web site at IRS forms and publications are also available by calling 800-TAX-FORM (800-829-3676).

savvy @ 9:41 AM
Filed under: Taxes
Free Volunteer Income Tax Assistance

Posted on Wednesday 11 March 2009

Need help filing your tax return? If so, then you should look into the free, IRS-sponsored, volunteer tax return preparation programs.

Trained community volunteers can help eligible taxpayers with all special credits, such as the Child Tax Credit or the Credit for the Elderly. Also, many sites have language specialists to assist people with limited English skills.

Nearly 12,000 free tax preparation sites will be open nationwide this year as the Internal Revenue Service continues to expand its partnerships with nonprofit and community organizations performing vital tax preparation services for low-income and elderly taxpayers.

The IRS Volunteer Income Tax Assistance Program offers free tax help to people who earn less than $42,000. The Tax Counseling for the Elderly Program offers free tax help to taxpayers who are 60 and older.

As part of the IRS-sponsored TCE Program, AARP offers the Tax-Aide counseling program at nearly 7,000 sites nationwide during the filing season. Trained and certified AARP Tax-Aide volunteer counselors help people of low-to-moderate income with special attention to people age 60 and older. To locate the nearest AARP Tax-Aide site, call 1-888-227-7669 (888-AARPNOW) or visit AARP’s internet site.

The military also partners with the IRS to provide free tax assistance to military personnel and their families. The Armed Forces Tax Council oversees the operation of the military tax programs worldwide, and serves as the main conduit for outreach by the IRS to military personnel and their families. The AFTC consists of the tax program coordinators for the Army, Air Force, Navy, Marine Corps and Coast Guard. Volunteers are trained and equipped to address military specific tax issues, such as combat zone tax benefits and the effect of the new EITC guidelines.

Locations and hours of operation are often available through city information hotlines and local community organizations. Local volunteer tax preparation site information is also available by calling the IRS toll-free number 1-800-906-9887.


savvy @ 8:00 AM
Filed under: Taxes
Credit Card Limits Getting Slashed

Posted on Monday 9 March 2009

This article is a guest contribution from Steve Sildon at Steve writes frequently about credit cards, providing tips and expert advice on a variety of personal finance and credit-related topics as well.

In 2008, many credit card holders were shocked to find their credit limits getting slashed so dramatically and that trend has only continued into 2009. There is a variety of reasons why credit limits have been getting reduced, including account inactivity but also because of changes to the credit risk profiles of so many cardholders that have changed as the direct result of the dramatic downturn in the economy.

Cards that have remained inactive for long periods of time were the first to go. Michael Riley, a software engineer from Denver and a long time customer of J.P. Morgan Chase, just received his second cancellation notice. “I just got a notice from Chase last week that my platinum card was being closed because of inactivity.” Riley hadn’t used the card for over a year but was miffed at the thought of losing an account that he had held for so long. “That was one of the first credit cards that I ever got right after college.” Many cardholders have shrugged off these account closures because most people don’t believe they will be affected by a card that they never use. Out of sight, out of mind, right? But another problem has emerged from these account closures that many people are unaware of.

These sudden account closures are also negatively affecting FICO scores for countless numbers of cardholders. FICO scores are computed utilizing several factors, including payment history, credit utilization, new credit accounts, types of credit being used, as well as the length of the credit histories. When an account is closed, it can dramatically affect the credit utilization score of a user. For instance, a cardholder with a $5,000 card balance on a $12,000 card limit and a zero balance on a $13,000 card limit has a total credit utilization ratio of 20%. But if the card issuer decides to close the account with the $13,000 limit because of “account inactivity”, that cardholder’s utilization ratio will jump up to 40% – in an instant. Credit utilization accounts for roughly 30% of the total FICO score so a jump in utilization from 20% to 40% can have a devastating impact on a credit score in a very short period of time.

“My credit score went from 785 to 668 in less than 90 days and I’ve never been late with a payment,” said Craig Woodside, a plumbing contractor in Trenton, New Jersey. “The only thing that changed in those 90 days was Citibank closing one of my old credit card accounts.” Another credit scoring factor that is negatively impacted by an account closure is the length of your credit history. Cardholders with accounts they have held since college, which are being closed for inactivity, wind up losing the entire credit history on that account. Some cardholders have had accounts closed with more than 20 years of credit history. With length of credit history accounting for about 15% of a total FICO score, these types of account closures, seemingly harmless at first glance, are really hurting people’s credit scores in a big way.

So, faced with the prospect of a drastic drop in credit scores, what can you do about this particular problem?

There are a few things that you can be proactive about in order to keep your account off of a card issuer’s chopping block. First, make sure that you maintain activity on the card, even if it’s just the bare minimum. You might consider setting up an auto-payment with the card for a utility bill, magazine or newspaper subscription that you know you’re going to have to pay each and every month. You don’t have to go out and overspend frivolously with the card (like so many people do with their rewards cards) – just keep the card active.

Next, make a preemptive call to your card issuer. Be sure to indicate your desire to maintain the account and ask if there’s anything that you need to be aware of (besides making your payments on time) or other things that you should be doing to keep your account in good standing. Make sure that the customer service representative notates your desire to keep the account in your file and be sure to indicate to the representative that you will maintain activity on the card.

And finally, if you haven’t started paying down those card balances just yet, now is the time to do it. Cardholders should aim for a credit utilization ratio of no greater than 30% on any individual card and in total. Paying down those card balances aggressively and driving your utilization ratios downward will have a significantly positive effect on your credit score in a short amount of time.

savvy @ 8:00 AM
Filed under: Credit andCredit Cards andCredit Scores