Saturday, May 31, 2008

Avoiding Life’s Worst Debt Traps

Building personal wealth is not hard if you understand math. All you have to do is take in more money than you spend. Yet, life isn't as simple as a math equation and there are various personal factors that can uproot even the best-laid plans. Cash, for instance, may be plentiful when we are single and working, and become scarcer when we are married with several children as dependents. Life also can have a way of throwing unexpected curves like layoffs, disease, divorce, and more. For those occasions, we have to turn to savings or loans to help us through the rough patches. So, how can we make the road a little smoother if we're not blessed with stunning good luck? Good financial planning can help you stay ahead of the game.

Financial Planning

The time to plan for your future is now. You may be in college, just graduated, or just divorced - it doesn't matter! There are certain milestones everyone wants to achieve and can plan ahead of time to finance. Things like a wedding, the birth of a child, or retirement are all events that can be planned ahead. Begin to learn how financial products work and how you can make your money grow. The earlier you start, the more it will grow through the power of interest. Find a financial counselor and get a financial check-up yearly.

You should review your insurance needs with them to see if you are covered enough in case of an accident, a health emergency, or the death of a spouse. Insurance is one area that many people fail to investigate until it is too late. Look ahead, and find out what insurance you should be carrying and make sure it covers you in case something unfortunate happens. This is the best way to help you smooth out the path ahead, when the future is murky and you don't know how good your luck might be.

Hire an ex-con, get a tax break

We all know our taxes help pay for necessary societal services, such as building and maintaining highways, paying the salaries of law enforcement officers and running the jails that house some of the folks lawmen catch.

And now, in addition to collecting taxes to help operate its lock-up, Philadelphia is offering a tax credit that it hopes will lessen the need for the facility.

Philly Mayor Michael Nutter
announced last month a program that gives $10,000
a year in municipal tax credits to companies that hire former prisoners
and provide them tuition support or vocational training.

"This is one of the best crime-prevention programs we'll ever have," Nutter said.

Spend some now to save more later: The reasoning is that it is more cost-effective to spend some tax money to help ex-felons find and keep jobs than to keep spending it to lock them up again if they revert to crime because they can't find any other options.

For the first time in U.S. history, more than one of every 100 adults
is in state or federal jail or prison, according to a study by the University of Pennsylvania's School of Social Policy and Practice. The study also cites federal statistics showing that nearly two-thirds of released inmates are expected to be
rearrested within three years.

"The spending on corrections is consuming a larger and larger percentage of state and local budgets," Michael Thompson, director of the Council of State Governments Justice Center, told the Associated Press. "When you're spending it on this, you're not spending it on other government priorities."

Other cities, similar approaches: In addition to Philadelphia's tax-driven efforts, Baltimore, Chicago and San Francisco have agencies dedicated to ex-offenders. Oregon and Oklahoma established statewide councils last year to study initiatives to help former prisoners re-enter society.

And on the federal level, the Second Chance Act became law in April. It authorizes more than $330 million over two years to help government agencies and nonprofit groups lower recidivism.

Friday, May 30, 2008

'Dead' taxpayer waiting for rebate check

Betty Hayes, like many senior citizens, was thrilled that this time,
unlike in 2001, retirees are eligible for some rebate money. But she
started to worry when her $300 never arrived.

The IRS thought it had a pretty good reason for not delivering Mrs.
Hayes' economic stimulus payment. "You're dead," the agency told her.

Big surprise to Betty and her friends and family. News that you're dead, she said, "makes you about about halfway sick."

You can watch her story in the MSNBC video below.

One theory is that the IRS somehow keyed in her late husband's Social Security number. As I mentioned a few days ago, a spousal tax ID issue apparently screwed up rebate calculation and delivery for one of my relatives, too.

The IRS has promised Mrs. Hayes that it's working on getting her the money ASAP. But, as I noted earlier, these types of screw-ups are making this whole rebate process a major pain, for the government, politicians and taxpayers.

Rebate update: Although missing and misdirected rebates are getting a lot of attention, as well they should, the reported problems are only a small fraction of the overall checks that have been issued.

The Treasury Department reported that it sent 6.2 million stimulus payments last week, the fourth one of the process. The checks, mostly directly deposited, accounted for $4.93 billion.

To date, 51.7 million rebate payments,
totaling $45.7 billion, have been issued.

Last week's deliveries represent the near
completion of all direct deposits. Treasury officials said that as soon as the IRS finishes the mailing of regular tax refund checks in June, the printing and mailing of stimulus checks will be done at the agency's full capacity, meaning more checks will go out each subsequent week.

Again, if you're still waiting for your regular tax refund or stimulus payment rebate -- and can prove to the IRS that you're alive and eligible for the payment(s) -- this previous post has details on how you can check on your money's status.

Hat tip, once again, to WalletPop via Dan/

Monday, May 26, 2008

Tax tips for Indiana Jones

Thank goodness Indy is back to save us yet again.


In the almost 20 years since Harrison Ford last donned that battered
fedora, the villains in "Indiana Jones and the Kingdom of the Crystal
Skull" have changed (Cold War Ruskies instead of those evil Nazis). But
the archaeology-adventure mix is still there and Indy is still our
great academic and national hero

There is, however, one adversary that Indiana can't save us, or himself, from: the IRS.

Luckily for the dashing taxpaying professor, blogger Riding With Rickey offers tax advice in A Memo from the Office of Steven R. Lawlor, CPA, to Indiana Jones.

Indy and, of course, his accountant, face some unique challenges.

There's the 1040 entered in Aramaic (I didn't realize that lost language also had different numerals; you do learn something new every day!), unconventional dependents and distinct alternative fuel vehicles.

And you've got to have special sympathy for CPA Lawlor, who apparently has been dealing with Indy's penchant to pay for tax services with black market antiquities. Indy, you know better!

I know that, thanks to the heads-up from Lawlor (and Rickey), when the hubby and I do make it to a showing of the Crystal Skull, I'll be keeping an eye out for other possible tax break opportunities for my favorite crusading archaeologist.

Sunday, May 25, 2008

Wall Street Journal Moving To Midtown

Reporters and editors at The Wall Street Journal, Barron's, Marketwatch and Dow Jones Newswires received an email this afternoon telling them that they'll likely be moving up to the News Corp headquarters in midtown next year.

While some media watchers will no doubt bemoan the move as further endangering the independence of the Journal, our informal survey says the newsroom is divided on the move. The so-called "Park Slope lefty" contingent dreads the move, partly because it will lengthen the commute from Brooklyn. The "Westchester family" contingent welcomes it as it brings them closer to Grand Central Station.

WSJ, Dow Jones, Marketwatch, Barron's to move to Manhattan in 2009 [Talking Biz News]

Saturday, May 24, 2008

2008 Basic Allowance for Housing Rates Forthcoming

It's that time of year again! No, not the holiday season, but the month or so where military personnel and their families are anxiously tapping their toes waiting for the release of the next year's housing allowance figures. According to the Pentagon site, the 2008 BAH figures will be available in "mid-December." Historical data suggests this will probably be December 14 or December 17.
I suspect in many areas of the country, BAH rates will either level off or drop. There seems to have been a huge increase in BAH rates nationwide in 2005, and in many areas that appears to have been too much, such that rates have either flattened or fallen in the past two years. The trend will probably continue.
BAH rates are determined by an annual survey of properties in a given military housing area, and by determining the median housing costs (rent, utilities, and renters insurance) for servicemembers based on the type of housing they *should* have based on their paygrade and family size. Basically that means more modest housing for junior enlisted and more substantial housing for senior enlisted and officers, as well as more substantial housing for servicemembers with dependents. A single E3 has more modest housing needs than an E7 with a wife and three children.
What happens if you live in an area where the BAH rates will drop from 2007 to 2008? You will be covered by "rate protection." Rate protection means you will receive the higher of the BAH you are entitled to on January 1, 2008, or the BAH you were entitled to on December 31, 2007. In other words, if you see that your BAH is expected to drop $200 per month between 2007 and 2008, provided you don't lose BAH eligibility for some reason, you will keep seeing the 2007 rate. However, if you move into the area from another duty station, you will receive the new (and lower) BAH rate. If the BAH annual survey has done its job properly, though, you shouldn't be paying too much out of pocket for housing expenses.

Friday, May 23, 2008

Death Of A Salesman

Why go to the work of thinking up stuff when you can steal it? Did I say steal it? Sorry, borrow it.

The job of salesman (salesperson?) has always fascinated me because I'm not very good at it. Wish I was because it is a job you can take anywhere. I was in international finance and the smart money said you had to live in New York, London, or at worst, Chicago to make a living. I proved that wrong but the career category is not very portable.

Sales is. If you're good you can live anywhere. The guy building the million dollar house next to ours is a salesman for IBM working out of his house. And he builds houses in his spare time. What a life.

So think about it but read this by Ben Stein first.

Ten Ways to Blow a Sale

by Ben Stein

Good (599 Ratings)