Lessons Learned From Filing My Taxes Last Night

So, I buckled down last night and busted out my taxes.  Mine aren’t that complicated, but they seem to get progressively more complicated each year.  If I ever start a business full-time, I’ll definitely be hiring an accountant to file them.  I used Tax Act Online, and I highly recommend this service.  First of all, if you’re taxes are fairly simple, you can use their free service and file electronically for free.  If you want direct deposit, they’ll charge you $14.95, but not bad for the convenience.  If you want the deluxe package, it’s $9.95.  I opted to get the deluxe package, because it helps explain a lot of the deductions and credits to layman such as me when it comes to taxes.  While I was pulling my hair out trying to find all of the information that I needed,  I learned something about the education credits and mortgage interest/real estate tax deductions while filing my taxes this year. 

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So You Are Out of Debt, Now What?

You’ve been killing it.  You finally said to yourself, I am tired of being swamped in debt and you did something about it.  Congratulations if that is you!  I’d like to hear your success story of how you got out of debt or what kind of stuff you did to help pay off your debts.  Now the question is, what do I do with the new found money that is in my pocket since I’m not paying payments anymore?  The best thing to do is build up a big, fat emergency fund.  The reason for this is to help prevent from getting back into debt.  For those of you who have ever lost a substantial amount of weight, you know how hard it is to keep the weight off.  You have to keep the same diet and exercise habits that you formed to get the weight off, or else the weight will come back with a vengence.  Debt acts the same way.  If you don’t keep the same spending habits that got you out of debt and buiild up a reserve of cash for unexpected expenses, then the debt will come back and could become worse than it was before. 

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My Opinion On 0% Home Financing

I was browsing Free Money Finance and I came across this article that gives his opinion about getting a “no money down” home mortgage.  Read that article, because I share the same opinion as free money finance.  I just bought my first home 8 months ago, and it was a nerve racking experience.  You feel like you are signing your life away with all of the paper work.  We were able to get a conventional 30 year mortgage with 20% down.  We paid some of the down payment and my wife’s parents paid some as a loan.  Even though I normally advise to shy away from family loans, this works out for both parties.  They will get their money back when we sell the condo in a year, and they have the satisfaction of knowing they helped their kids get their feet off the ground.  It helped us, because we were able to avoid private mortgage insurance which can increase your monthly payment by $40 to $75 per month.  Most conventional loan lenders will make you purchase PMI if you do not put down 20%, because it protects them if you default on your loan. 

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Don’t Bother With Certificates of Deposit

I don’t think I have ever talked about CDs on this blog in the psat, and that is for a reason.  I don’t like them.  With the advent of online savings accounts and well-performing mutual funds, CDs do not offer many advantages over other financial products.  Basically, they are a financial product that banks use in order to keep your money for longer than you want.  They may have been a good short-term financial investment product before the internet and the rise in popularity of mutual funds, but now they are outdated, in my mind. 

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Credit Cards Are NOT Looking Out For You – Here’s Proof

Many of you like to disagree and mock my disgust for credit cards.  I will face the facts that I am still well in the minority of people who think that credit cards are a horrible financial tool and they only do more harm than good.  But, I’m okay with being in the minority on this one.  The first time that you get screwed over by Capital One or Chase, you’ll come back to my site and say, “maybe you were right”.

Here’s a great example of credit cards only making changes to help their bottom line and NOT their customers.  http://www.smartmoney.com/consumer/index.cfm?story=20061226&”>Click Here for the article.

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Teens Are Optimistic About Their Financial Futures

I was reading the local newspaperr, the Gainesville Sun, and it showed a poll given to teens about how many of them thought that they would be wealthy when they were older. Their biggest dreams were to be rich as the number one reason, famous as the number two answer, and then helping others in need came after that. This is what our culture helps our young people believe. They force the youth to be believe that every one of them can or will be rich and famous. However, what our culture fails to do is teach them how to do it. Kids don’t understand the hard work that goes into building wealth. They don’t realize that 99% of millionaires are self-made millionaires who worked very hard to get where they are today.

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A Look Into My 401(k) Plan

I started investing in my 401(k) plan about 14 months ago.  In 2006, my portfolio earned about 11% which is outstanding, well, good enough for me to be happy.  Some of you might think that’s a waste.  But, this is a retirement account, so if it averages 11%, i’ll be very happy.  I invest in 5 different mutual funds.  They are listed below:

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  1. American Capital World Growth and Income (CWGIX)
  2. American Growth Fund A (AGTHX)
  3. Calamos Growth Fund A (CVGRX)
  4. American Europacific Fund (AEPGX)
  5. Davis – New York Venture A (NYVTX)

Don’t Get Too Excited About Your Tax Refund

Around this time of year, I usually hear people boasting about how much money they are going to get back from their tax refund.  The problem with this is that you shouldn’t be getting back a huge refund if you are properly withholding your federal taxes.  Do you really want to give Uncle Sam a free loan on your money for an entire year?  Because that is what you are doing if you are letting the government take more taxes than are owed.  If you are getting back a big refund this year, make sure you readjust your W-4 with your HR department.  It’s much better to have that money go into your pocket every paycheck than let the government hold it for a year.  I understand that some credits and deductions aren’t factored into the W-4 deductions which allow you to receive a refund back, but if you’re getting a couple grand back from your refund this year, there is a problem.

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Starbucks Is Not Making You Poor

If you’ve read enough personal finance blogs, then you’ve probably read enough scenarios about giving up your grande mocha-chino in order to save more money.  I understand the reasoning for being more conscious about controlling the spending on life’s smaller luxuries.  I tend to think in bigger terms when it comes to saving money.  There are a handful of large purchases that you will make many times in your lifetime, and you can save a chunk of money if you control these expenditures rather than how many times you rent a movie in a month.


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