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.
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.
I’m sure that most of you have seen the show on MTV, “Pimp My Ride”. It’s a great show. Some of the stuff they do to those cars is sick. Some of my personal favorites were the waterfall/river running through the middle of the interior of the car, and another car where they turned the entire trunk into a sweet karaoke machine. Tricking out a car has become wildly popular over the past decade. Honda Civics with 22″ rims, and Eldorados with LCD monitors and playstations installed. Young people love to pour money into their cars, but is it worth it?
A good habit to get into is to check out your retirement account two or three times per year to evaluate your fund’s performance. Some geeky investors might think I am in idiot for thinking that checking your retirement account only a few times per year is a good thing. The reason that I think you should leave your retirement account alone is because I don’t want people to think they can time the market. Unless you are an expert on the market and you stay up on the countless information about the stock market, you’ll never be able to time it. In fact, most good financial professionals will tell you that you lose most of your returns when trying to time the market. If you keep shifting around your money from account to account, then you’ll hurt your investments greatly.
A good habit to establish is reviewing your credit reports at the beginning of each year. The best part is that it is now free to review your credit report from Experian, Transunion, and Equifax one time per year for free! Go to AnnualCreditReport.com to view all three of your credit reports for free. Be aware of other sites with similar domain names that claim to give you your credit report for free, but rather it is a free trial that will charge you money after 30 days if you don’t cancel the membership. The most notorious site doing this is FreeCreditReport.com. Here are three things to do when reviewing your credit report:
This week, I am going to write a five part series about organizing your finances. Many people get on the New Year’s resolution kick at the beginning of the year, so I thought this would be a good series to help people get their money in order to achieve their financial goals. In order for a goal to be achieved, there has to be a strategy. Strategies must be well-planned and organized or else the strategy is nothing but a theory. You want to start saving more money, pay down debt, invest wisely, but what is the first step? The first step is organizing your money.
Christmas is one week away, and you have probably been so busy buying gifts and going to parties that you have not had a chance to sit down and reflect on the past year. Whether you are celebrating Christmas or any other holiday, this season is all about giving. Giving gifts and giving of yourself is what matters the most for the next two weeks.
- Shop online, especially if you are buying electronics. Online retailers have less overhead, more rebate promotions, and Google Checkout will give you $20 off on your first time using Google Checkout with every purchase over $50. Many retailers offer free shipping this year as well.
- Pay Cash for your gifts. I’m talking about paying with cold, hard cash. Studies have shown a correlation with increased spending when using plastic, even if it’s your debit card. Plus, if you’re in an environment where you can negotiate price, cash speaks louder than words.
My wife and I sat down today and mapped out our expenses for the next 6 weeks based on my pay periods. We figured out which bills needed to be paid during which pay period, and took the remaining amount of money after all the bills were paid and figured out where that money needed to go. We are going skiiing in a week, then the mayhem of Christmas, and then my best friend is getting married, so we will have a busy next three weeks. Sitting down and communicating about where the money needs to go and how much we have to spend on each category will save about 10 or 12 arguments in the next three weeks. We are both on the same page now, and there will be no surprises when we are spending our money.
Unfortunately, the holidiays bring out the best and the worst of people. Scams are most commonly found around the holidays, and consumers need to be educated about what to look out for when going shopping in the stores and online this year. CNN Money has a good article about which scams to look out for this year. The elderly and young people like college students tend to be the most targeted by scammers, because they tend to be more naive and more desperate for quick cash.
The newest scam lately has been the gift card scam. Scumbag scam artists are jotting down the gift card number at the store and waitiing a few days until it is activated. Once the number has been loaded with money, the scammer goes online to use it to buy things on the store’s website. CNN Money suggests only buying gift cards behind the store counter or ones that require you to scratch off the gift card number.