Jan 27 2014

How to Save Money on Last Year’s Taxes (And Save for Retirement)

By |January 27th, 2014|Blog, Personal Finance Tips|8 Comments|

As we approach the end of January you’ve probably gotten your W2s in the mail and are thinking about filing your tax return. If you are expecting a refund, you might even be well on your way towards completing it by now.

Do you want to save money on taxes? Of course you do! If you contribute to your traditional IRA or HSA from last year, you can decrease your tax burden this April. Find out more.But what if you feel like you are paying too much in taxes you might want to consult with professionals, like Manchester accountants. Maybe your refund isn’t as big as you were hoping. Or maybe your tax return says you have to write Uncle Sam a check. Nobody likes to do that.

There are ways you can reduce last year’s tax burden, even though last year is long gone. Here are two ways that you can either decrease your tax bill or increase your tax refund immediately.

Contribute Money to a Traditional IRA

If you haven’t already maxed out your IRA contributions for 2013 then you can contribute money to a traditional IRA that will be considered a 2013 contribution. You can make 2013 contributions all the way up until April 15th, 2014.

Every dollar you contribute to a traditional IRA reduces your taxable income for that year. Lower taxable income means you pay less in taxes. Let’s look at an example to clarify:

Pretend you make $70,000 a year (as a married couple), which probably places you in the 25% tax bracket. Let’s also pretend that you’ve looked at your taxes and you are supposed to pay the federal government $250.

You could write a check for $250 and move on with your life. However, you could also contribute $1,000 to a traditional IRA and put that money away for your retirement.

This would reduce your taxable income by $1,000, which would decrease your tax bill by $250. Now you don’t have to write anyone a check.

So basically you can either pay the government $250 or pay yourself $1,000 (which will be taxed later once you reach retirement age).

It is very important when you are adding funds to an IRA that you make sure to specify that the contribution is for the 2013 tax year. If you don’t specify the year, you could end up contributing towards your 2014 IRA, which will decrease your tax bill a year from now but won’t do anything for your current tax bill.

Also, it’s important to talk with a tax professional (that’s not me). Depending on whether you are single or married, if you have a retirement plan at work, and/or how much money you make during the year, you may or may not be eligible to take a deduction on IRA contributions.

Contribute Money to an HSA

Another option that may be available to you is contributing money to a health savings account. This is available to fewer people because you must have had a HSA last year and it is only available to people with high deductible insurance policies.

However, if you are like me and have an HSA then you can do the same thing here. Every dollar you put in the HSA for the 2013 tax year will reduce your taxable income, and therefore, your tax bill.

I might want to put $1k or so in there to pay myself back for my root canals and crowns. I actually prefer the money in my HSA because it’s like a retirement account that can also pay for medical bills today.

Again, I’m not a tax advisor and this may not apply to your situation. Please consult with a tax professional if you want to explore this option.

Pay Yourself to Lower Your Tax Burden

You can use one of these two methods to lower your tax burden. That means either writing a smaller check to the government or increasing your refund.

Oh, and you’re also saving money for retirement, health care expenses, or both. Sweet!

Readers: Do you have any other tips for decreasing last year’s tax burden?

Jan 27 2014

Most Wanted Jobs in 2014: Pennsylvania Career Market

By |January 27th, 2014|General Personal Finance|2 Comments|

According to LinkedIn professional survey of 2013, experts from content marketing and mobile development industries were in the biggest demand in 2013. So which industries will be the most active in hiring in the coming year?

To answer this question, it would be relevant to narrow down search criteria, focusing on local markets rather than on a global one. The situation in Pennsylvania, for instance, is quite different as most hired professionals are healthcare specialists and trade/service assistants. Additional information about job searches in Pennsylvania can be found at http://pennsylvania.jobtonic.com/.

Currently nurses are in the biggest demand. The Pennsylvania job market also lacks office workers and retail/service specialists. The demand for social media, programming and design experts is significantly lower; yet rapid technological development is still influencing the market. This means that IT-experts will be unlikely to find themselves out of work any time soon.

Oracle, .net, SQL, Android and iOS experts are in the biggest demand. C++, Java and other desktop developers are going to be much less popular in 2014, which is not surprising considering that mobile devices play a very important role in our everyday life.

Apart from medical, service, and software engineering sectors, the Pennsylvanian job market is in need of financial experts including accountants, financial analysts, and banking consultants. Overall the job situation for white-collar workers is very promising. 2014 has only begun, yet already plenty of large and mid-size companies are actively looking for a wide range of cubicle dwellers.

The overall situation for an average job seeker in Pennsylvania seems to be quite favorable. Those who are still out of work may want to reconsider their job seeking approach. One way to improve the chances of finding a job is to be more active with online listings. Plenty of sites, including Jobtonic.com, offer amazing career opportunities. This site shows you a long list of open vacancies in the US. Simply choose your state, city, and industry, and you are ready to get started. The site has a nice user interface, it is easy to navigate, and it offers e-mail subscription for the most determined candidates.

No matter how long you’ve been looking for a job, increasing your online presence could be what it takes to find your next career.

Jan 23 2014

Why You Shouldn’t Go to College

By |January 23rd, 2014|Blog, Personal Finance Tips|20 Comments|

There are too many college graduates and not enough jobs for college educated people. Save yourself the student loans and don't go to college.President Barack Obama has been in the news recently as he invited more than 100 college presidents to DC in an attempt to expand college access, especially to low income students.

“More than ever a college degree is the surest path to a stable middle class life,” Obama stated.

I have a few problems with this. First, when did the American dream change from “becoming a self-made millionaire” to having a “stable middle class life”? If he’s trying to sell college to 18 year old kids, dangling a “stable middle class life” in front of their nose isn’t much of a carrot.

Second, putting more kids in college doesn’t make sense. Either he’s not reading the numbers provided by the Bureau of Labor Statistics, or he’s just flat out ignoring them.

Here comes the research!

Job Growth by Education Level

Using data from the US Bureau of Labor Statistics, here is a table showing projected job growth between 2010 and 2020 by education level.

Stats

Source: edsoup

So we expect 20,460,800 new jobs in the next 10 years. Fantastic! And how many of those jobs require someone to finish a bachelor’s degree or higher? The answer is exactly 4,964,900, or just 24.3%. Hmmmmmm.

If you include the Associate’s Degree and the “some college” jobs (which are really weird to me. It’s hard to imagine an employer who is not willing to hire a high school graduate, but is willing to hire a college dropout), then you’re up to 7,648,000 jobs, or 37.4%. Still not very high.

In 2012, 2.1 million high school graduates enrolled in college. Again, this is all data provided by our benevolent government. So if we have 2.1 million kids starting college each year from 2010 to 2020, we are going to have 21 million people ranging anywhere from college dropout to PhD, and only 7,648,000 new jobs. Not good.

Also keep in mind that 2.1 million per year is only high school graduates. There’s actually going to be quite a bit more college educated people when you include the non-traditional students.

So we are expecting under 8 million new jobs for college educated people, and a low estimate of 20 million newly minted college graduates and attendees. It looks like we are set up to have a preponderance of over-educated individuals.

Except we have that already. How many more reports do we need telling us that Twice as Many College Grads in Minimum Wage Jobs as 5 Years Ago, 53% of Recent College Grads are Jobless or Underemployed, and the Job Picture Looks Bleak for 2013 College Grads.

There Just Aren’t Enough Jobs for College Grads

If we think back to that table of jobs by education level in 2020, we expect 12,782,800 new jobs in the next 10 years for people with a high school diploma or less education. That number jumps to 14,025,900 jobs when you include those who attended college but never receive an Associate’s Degree or higher.

Why borrow tens of thousands of dollars if you will just end up graduating from school and getting a job that doesn’t require a degree?

Even when you account for all the baby boomers retiring (although many aren’t in a financial position to retire even if they want to), there just aren’t enough jobs for all the currently unemployed college grads and all the new ones we’ll be churning out in the future.

Maybe Barack Obama hasn’t seen these numbers. Or maybe he’s not very good at math. Or, maybe he has seen these numbers, he is good at math, AND he still wants to get as many people into college as possible.

But why would anybody want to do that?

College (And Student Loans) are Big Business

Have you been on a college campus recently? If so, you’ve probably seen a construction site. It doesn’t matter which college you go to; pretty much all of them are getting brand spankin’ new buildings. Why? Because enrollment keeps going up. People still believe you need a degree to get a good job, which is not surprising when people like the president are screaming it from the mountaintops.

If people start paying attention to the numbers and look at all the unemployed college grads, they might decide to skip college. If enough people do that, colleges start losing money. That means no more new construction. That means college professors getting laid off. That means bad news for the education business.

And then there’s student loans.

Why would the government want people taking out student loans, even if there’s a good chance they are going to default on those loans? Because even in default, student loans are insanely profitable for the US Government.

The government loans the money, they make money on the interest.

They also act as the collections agency, so loans in default are charged fees that make even more profit for the government.

Finally, the government created the laws that make student loans immune from bankruptcy, so they will literally take your tax return, garnish your wages, or even take it out of your social security check until they get their money.

The only way to get out of student loan debt is to pay them off, or die. (see the infograph at below)

College is for Some People; Not for Everyone

In general, we have too many people in college. We have too many college graduates. We have too many kids who will enter college over the next few years. Many of these people will become underemployed or unemployed, and many of those same people will be paying off their student loans for decades.

With that being said, college is EXACTLY the right choice for some people. We need college educated individuals to become the next generation of doctors, lawyers, engineers, nurses, teachers, and more.

If you are a young person and you decide to go to college, do it because you have enough money and/or scholarships to avoid student loans, or if you know what you want to be and that job requires a degree. Don’t do it because Barack Obama, your parents, or anyone else tells you that “you should”.

If “you should” is your main reason for going to college, then actually you shouldn’t.

Student Loans Scheme.

Infographic by College Scholarships.org

Jan 23 2014

Most Common Myths Prevalent in the Structured Settlement Purchasing Industry

By |January 23rd, 2014|General Personal Finance|Comments Off|

It might not be too tough for you to assume that structured settlements markets are a recent development in the financial sphere. However, you assumption would be wrong, as most of the premier players in the annuity selling and purchasing markets have almost 20 years of operational experience.

It was actually in the mid 1990s that the structured settlements purchasing industry got entrenched, in direct response to the increasing demand of annuity owners who wanted to sell off their long term cash inflows for immediate cash. However, this is nothing as compared to the gravity of other misconceptions and myths that are prevalent among people, in terms of what they think about structured settlements purchasing markets.

1. Attorneys are reluctant to suggest structured settlements to people because the latter are likely to encash them anyways

The above is a well spread myth about structured settlements. However, if one were to observe actual facts rather than assumptions, the results of the same would be that almost 95% of people having structured settlements stick to the annuity plans. The 5% who opt for immediate cash by selling off structured settlement annuities do so only because of severe changes in their financial conditions post the structured settlement scheme. In fact, the attorney ideally wants to suggest a financial recourse that can provide for the complete financial security of the client. So, a structured settlement that can be encahsed if justified by the severity of the situation proves to be the safest option from the attorney’s point of view.

2. When a person sells off his/her tax free long term annuities, he/she is bound to pay the taxes on the payment he receives from the structured settlement purchasing company

It’s sad to note how people are misled into continuing with their crawling annuities when immediate cash requirements stare them in their face, all because they are fearful of having to unnecessarily pay taxes on encashing their tax free annuities. However, it is clearly specified in the taxation laws that tax free annuities, if converted into immediate cash, will not attract any taxes.

3. All it needs to woo a person having structured settlement annuities into selling them off is a late night TV commercial!

There could hardly be anything more distant from the truth. The very nature of Structured Settlement Transfer Acts ensures that a person having structured settlement annuities has several routes to retract on his/her plans of selling the annuities. So, even if somebody makes the choice to sell instinctively, there is a lengthy period of processes, acknowledgements and approvals that provides ample opportunity to the person to retract.

Apart from the ones mentioned above, there are some other myths prevalent in the industry. It is wrongly believed that the structured settlements purchasing industry is not regulated, whereas there are several federal and state laws governing their practices. Also, the high rate of approvals from the court tends to raise suspicions among whistleblowers, something which is unfounded.

The above article is contributed by Alex H. Alex is a seasoned blogger who covers range of topics from personal finance to sports fitness.

Jan 21 2014

Welcome to the New Thousandaire

By |January 21st, 2014|Blog, Life|6 Comments|

Now that I’ve been at this blogging thing for over 3.5 years, I have learned a thing or two about website design. It was painfully obvious that I needed to redesign Thousandaire, and I’ve finally done it.

The changes are substantial and yet subtle at the same time. I actually made the change last week and haven’t seen a single comment or twitter mention about the new design (except for when I asked people to go look and tell me if they notice anything).

new thousandaire designHere are a few of the changes I made, and why this new site will be much better for my readers.

The Homepage Shows Full Posts

I used to a have a big fancy slider at the top of my page, which I thought was really cool and professional looking. In reality, it just put my content one more click away from my readers. The slider is gone and now you can read the full text of my posts right on the homepage.

Research has shown that people simply ignore homepage sliders, and I personally love blogs that give me the full posts without having to click again. This was the biggest thing I wanted out of my new design.

I Have a Recommended Products Page

There are two reasons for this page. First, there are a lot of great products that I highly recommend. Some are investment products like Lending Club. Others are services like Angie’s List I use for my house when I’m hiring contractors. I also recommend the new theme I’m using on this site, and other stuff I love like my shower mirror.

The second reason for this is that most of these links are affiliate links, so if people click on them and buy something, I get a percentage of the sale. My goal is to be self employed one day, so I’m trying to generate a little more money from this site. Of course I only recommend products I actually believe in, so the fact that I might get a commission is just a nice bonus.

I’m Down to Just 3 Post Categories

You may notice that there are three links in the navigation bar: “Personal Finance”, “Politics”, and “Life”. When I really thought about what topics I cover on this blog, everything fit into one of those three.

If you are someone who enjoys my personal finance stuff but hates my political posts, you can just use that personal finance link to see the articles you enjoy most. I want to make it easy for people to find exactly what they are looking without sorting through 100 categories.

My Newsletter Signup Is More Prominent

The last major change I made was to make my newsletter signup much more prominent. It’s in the top right corner of the header, and I’ve also added a pop-up to ask readers to subscribe to my newsletter after they’ve read a post (don’t worry, you can turn it off).

My email newsletter is great because it lets me communicate directly with my readers. They don’t have to remember to come to the site and check for new posts; they just get it in their inbox. Sure, this might decrease the traffic actually hitting my site, but I’m more concerned with happy readers than site statistics.

If you aren’t signed up for my newsletter, you can do it right here:

Get My Email Newsletter

Look Around for More Updates

I’ve only covered the main changes to the site. There are actually quite a bit more changes if you look around.

I updated the About page to reflect my new life situation and the updated goals of the site (with a new picture of me and a really hot chick). I updated my Lending Club Profit Calculator to look a little bit more fancy. I did other stuff that I can’t think of right now, so you’ll just have to click around and see.

I hope you like it, and please give me your honest feedback. I won the Plutus Award for “Best Designed” site two years ago and I was a finalist last year, so I was a little afraid to “mess with success” but I really do feel this is a better design.

Readers: How do you like the new site? Let me know in the comments.

Jan 20 2014

4 Tips for Renting Out Spare Bedrooms

By |January 20th, 2014|General Personal Finance|Comments Off|

Renting out an unoccupied room, garage apartment or basement is a great way to generate additional income. However, leasing and managing a rental unit takes thorough preparation and administrative work.

for rentConsidering converting vacant rooms into rental units? Use these four tips to get started.

1. Research Zoning Laws

Some states place regulations on homeowners renting out “secondary suites,” otherwise known as guest houses and finished basements. Here are a few regulations homeowners must adhere to in most states:

  • One “household” maximum per unit
  • Restricted number of units
  • Limited number of residents in the rental unit
  • Required amenities (i.e. separate parking)

Consider state guidelines before making upgrades to prepare a unit for renting. A property is not worth the cost of alteration if it doesn’t adhere to the basic protocols.

2. Gauge Interest

Even if an in-home unit is legally fit to rent, it may not be appealing to the general public. Tenants have a variety of resources at their fingertips to search for rentals in any given city, under any budget and at any size. Potential leaseholders are able to compare and choose properties easily. A brand new apartment listed under the same price as a dated mother in-law suite within an occupied home is more likely to generate leads. Landlords should use the same online tools to compare their units to determine a price points or necessary upgrades prior to marketing their properties.

3. List It

Once the regulations and restorations are taken care of, property owners should advertise. Zillow allows individuals to list their rental units for free. Promoting a rental online increases the likelihood of competition and decreases the amount of time a property sits on the market. Take high-quality, bright photographs to showcase the room(s) to make an honest and welcoming impression. Keep the listing description short but detailed. Make sure to disclose any strong stipulations (i.e., no pets) on the listing, so those who aren’t a good fit don’t bother scheduling a showing.

Under federal law, property owners cannot discriminate based on race, color, disability, religion, sex, familial status or nationality. Advertisements cannot imply restrictions under any of these categories. Keep these guidelines in mind when generating an initial listing description.

4. Prepare for Management

Landlords have to be available 24/7 to deal with emergency issues. The landlord could lose valuable tenants if they don’t follow through with repairs or respond to requests in a timely fashion. With a busy job or young children, it may be best to hire a property manager to oversee the unit(s). Further, landlords must be impartial, firm and approachable. Avoid becoming too friendly with tenants, as this can make enforcing policies more difficult.

The longer a landlord is in practice, the easier the leasing process becomes. These four guidelines are a start for homeowners considering renting their spaces for the first time. With proper preparation, owners quickly gain the experience and knowledge to run smooth businesses for passive income.