Apr 24 2014

A Couple of Simple Ways to Spring Clean Your Credit

By |April 24th, 2014|General Personal Finance|Comments Off|

The days are becoming sunnier and warmer. And with this time of the year, many people see it as the perfect opportunity to spring clean their houses. They might go through their closets, basement, and attic and toss items that they don’t need. Or they might head outdoors and give their back and front yard a complete makeover in preparation for spring and summer.

But although spring signals clean up time for the home, it’s also a good time to clean up your credit. If you’re fortunate enough to have excellent credit and no debt, this article might not apply to you. However, if your credit is less-than-perfect, or if you’re struggling with credit card debt, the following tips can point you in the right direction.

Some people with credit issues and debt know that they need to fix the situation, yet they don’t always know where to start. Since credit and debt influences just about every aspect of life, educating yourself is the best way to build a strong credit history — and it’s key to getting loans, credit cards and even certain jobs.

Fortunately, spring cleaning your credit is much easier than you might think. Here’s a look at a couple of possible solutions to get on the right path.

1. Use your tax refund to pay off debt

I recently heard a news report that the average person will receive a tax refund between $2,300 and $2,500 this year. Now, you can probably think of a million things to do with this money; and some people will take their refund and go shopping or buy electronics.

It’s your money, therefore, you can do whatever you please. However, if you want to spring clean your credit this year, using your tax refund to pay off debt is a good start. Let’s be honest, credit card debt hanging over your head isn’t fun. Also, if you’re behind on some of your bills, creditors may harass you day and night.

Using your tax refund not only gets creditors off your back, you’ll save a ton on interest and the less you owe, the higher your credit score. Debt amounts make up approximately 30% of your credit score. Therefore, if you take your tax refund and pay down a credit card or pay off some of your other debts, you’ll ultimately add points to your FICO rating.

2. Use a credit repair company

You can repair credit on your own. Unfortunately, it’s a lengthy and often stressful process. You’ll have to contact the creditor bureaus to dispute erroneous items on your report, and you’ll have to follow up with the bureaus to ensure that they’re actually investigating your claim. This takes a lot of time and energy.

There’s an easier way to do this. If you’re looking to spring clean your credit this season, you’re better off working with a service like CreditRepair.com, a credit repair company.

These services don’t work if there are legitimate negative items on your credit report. However, if there are questionable items on your report, a credit repair company will investigate these items on your behalf and remove any erroneous information from your credit file.

There is a monthly fee for the service. But it’s affordable and there is no contract, therefore you can cancel at anytime. Also, there are other services you can utilize, such as credit education. You’ll learn about your rights as a consumer, and receive tools and resources that’ll  help you make wiser credit decisions in the future.

Repairing your credit and paying off debt is important if you’re looking to save money. Your score and the amount you owe creditors influences your interest rate on loans. Therefore, if you have a low credit score and tons of debt, you’ll pay more when you’re ready to buy a house or a car. But if you can give both an overhaul, you’ll qualify for the best financing rates — a key way to save.

Apr 23 2014

I Lost 10 Pounds During Lent By Drinking Water

By |April 23rd, 2014|Blog, Life|3 Comments|

At the beginning of lent almost 2 months ago, I decided to stop drinking soda, chocolate milk, and anything else that wasn’t water. I laid out four goals for this adventure, and now that lent has ended I am happy to report on my success!

soda

photo credit: poolie

Here are the four goals I was hoping to achieve by drinking only water:

  1. Be More Mindful of Jesus
  2. Lose Weight
  3. Become Healthier
  4. Save Money

Be More Mindful of Jesus – Moderate Success

The goal is to give up something you love or enjoy, and every time you want it and choose not to have it, it reminds you of the sacrifice Jesus made for all of us.

In general I tried to keep this in mind, and I was successful at times. However, there are other times where I just avoided soda and juice because “that’s the rule”. I realize it’s a pretty insignificant sacrifice, but it did make me feel a little closer to God.

In the future, if I can think of a more spiritual Lenten sacrifice, I think I can improve in this area.

Lose Weight and Become Healthier – Great Success!

At the beginning of Lent I weighed 183 pounds. As a 5’11″ male, that makes me just slightly overweight according to BMI. I know I have more muscle than a lot of people so I’m not worried about being “overweight” but I also knew I could stand to lose a few pounds.

I got on the scale yesterday and I weighed 174.5 pounds! Over the course of about 7 weeks I lost 8.5 pounds (which is basically 10). I’m now firmly in the healthy weight range for someone my height, and my pants are fitting a lot better.

On a side note, Tag gave up sweets for Lent and she also lost somewhere between 5-10 pounds. We are both going to look great for the wedding!

Save Money – About $100

Of course I probably saved money on this whole exercise. It’s about $2-3 for a soda when you go out to eat, and $1-2 at a fast food place. One drink from the grocery store if you buy in bulk is anywhere from $0.25 to a dollar.

Let’s say I saved an average of $2.50 a day on drinks, which I think is about right. I occasionally get a drink from Starbucks which costs about $4, which sometimes I just drink some milk or cans of soda at home. If I saved $2.50 a day for 40 days, that means I saved $100.

So $100 isn’t much, but it’s better than nothing.

I’m Making Life Changes

Now that I can drink whatever I want again, I’m choosing to continue drinking a lot of water. I certainly don’t want to gain back those 10 pounds I lost, and I like saving a bit of money too.

From now on, I’ll drink whatever I want on Sundays, but be mindful to not have more than one non-water drink per day. I hope to go at least 3-4 days a week drinking only water, and reserve the sodas and juices for “special occasions”.

My goal is to drop another 4.5 pounds before the wedding and get married at a healthy weight of 170 pounds, and I’m going to keep drinking water to help me get there! Wish me luck.

Apr 23 2014

Saving Your Credit After a Job Loss

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

If your boss calls you into his office, you might believe that he has good news to share. This is especially true if you’re doing a stellar job at work and he’s pleased with your performance.

But given present economic conditions in the world, being called into your bosses office doesn’t always suggest a pay increase or a promotion. The truth is, many companies are struggling; and in order to keep their heads above water, many have had to lay off some of their personnel — including a few top players.

There’s nothing fun about losing your job, and you may immediately think about all of your monthly financial obligations — perhaps your mortgage, an auto loan, student loans and other living expenses. In all likelihood you’ll qualify for unemployment, and depending on your company, you might receive a severance package. However, the money received may not be enough to cover living expenses. To stay financially afloat, you might use your credit card to pay bills and purchase the things you need.

If you’re able to secure another job quickly, using credit may only be a temporary annoyance. But since it can take on average 7 to 12 months to find a job when unemployed, using your credit card to cover living expenses can dig a deep hole. As you watch your debt balance increase each month, you may stress about your credit score and wonder whether you’ll be able to make your payments.

Credit and financial problems are two of the biggest consequences of losing your job. But rather than become discouraged and frustrated, explore different solutions to reverse your situation. Here are four practical way to deal with credit issues after a job loss.

1. Discuss the situation with your creditors

Notify creditors of your job loss to protect your credit score. If you feel that you might fall behind on your payments, speaking with your creditors and explaining the situation helps. If they’re aware of your present economic situation, they may offer provisions to keep your account in good standing. For example, your creditors may lower your interest rate to reduce your minimum payments, or offer forbearance and suspend payments for a specified number of months.

2. Sacrifice and pay the minimum

If your credit card debt steadily increases, paying just your minimums will only put a small dent in your balance. However, paying your minimum is better than paying nothing.

Minimum payments are typically 2% to 3% of the outstanding balance. It’s always smart to pay credit card balances in full each month to avoid debt; yet, paying the minimum is enough to keep creditors off your back and maintain an acceptable credit score.

Depending on your cash flow, affording your minimum payment might require sacrifice on your part. For example, you may have to give up cable, cancel your landline phone, or even reduce your transportation and grocery budget to ensure there’s enough money to pay bills.

3. Work with a credit repair company

If you credit score takes a serious hit after a job loss, working with a credit repair company like Lexington Law can get you back on track. Understand, however, that these companies cannot remove legitimate negative items from your credit report. However, if your credit report has costly errors, such as late payments or a collection account, credit repair companies are highly successful with getting questionable items off credit reports.

4. Use your tax refund

It’s tax season and if you anticipate a sizable refund, there are ways to put this money to good use. You can use this money to cover some of your living expenses while you’re out of work. But if your unemployment check and severance covers the majority of your household expenses, use your refund to pay off debt accumulated while unemployed.

This is undoubtedly a scary, frustrating time. However, panicking will only worsen the situation. If you notify creditors of your situation and adjust your spending accordingly, you can survive this temporary financial setback.

Apr 15 2014

Six Essential Business Plan Components

By |April 15th, 2014|General Personal Finance|Comments Off|

If you are writing a business plan, you should know that a good business plan has several components. Professional business schools teach their students how to write a good business plan in extensive detail. However, small-business owners may not have the degree and experience to create their own business plan. As a result, they usually use online resources to learn about the different parts of a business plan and to write their own business plan. There are several websites offering detailed help on writing a good business plan, but here is a short guide that should prove helpful.

business plan

Executive Summary

The goal of an executive summary is to cover the entire business plan in one page. This single page will describe the entire business, its financial backing, investors, product, product manufacturing, etc. Although this section appears in the beginning, it is usually written in the end, as it is essentially a recap and guide to the entire policy.

Company Description

As the name suggests, the company description section provides information about the company. As a business, you are trying to sell a product to consumers. However, you have to justify to the reader why your business can be successful, and what gave you the idea for setting up the business. The company description will also include the legal form of the business, nature of your business, what you need to set up the business, a brief history of the company, a summary of company growth, short term and long-term business goals, overview or products, customers and suppliers, manufacturing process, etc. Try to keep this section as relevant as possible and try to draw in the reader to be interested in your company.

Services

For a company to succeed and grow, it should provide a product that is clearly going to sell at a profit. In this case, the product/services description should provide a complete guide to the product and how it can benefit the consumer. You should identify the target market and show how the consumer will use your service to fulfill a valuable need in the market. Sometimes, investors want to see essential research and development information about the service and its cost and the profit potential associated with the product after removing R&D costs.

Market Analysis

In the end, it all comes down to how good your product is and how well it will sell and this has to be proved by market data. Market analysis is where you will present data about a product and show how it will sell due to demand. For example, if you are promoting a window cleaner service, you have to show the reader the demand for window cleaning, current competitors already in the areas, how your services are better than other companies in the area, and what will make your business profitable.

Market Strategies

This is where you actually show how you plan to sell your products to the customer by creating brand awareness, pricing your products, setting up sales chains, advertising, packaging, sales promotions, etc.

Financial Plans and Projections

Financial plans are a complete list of how you plan to finance your business, how much you have invested in the business, how you plan to raise finances, the cost of the product, manufacturing costs, etc. According to the Houston Chronicle, this section should be the most comprehensive section of the business plan to convince investors to give funds for your company.

Although there are several components to a business plans, not all of these components will be applicable to your business. Professionally created business plans may be as much as 30 to 50 pages long, but you may not need to have such a detailed plan. Business website entrepreneur.com states that some entrepreneurs may even write a single page business plan that will cover every aspect of a business and still prove to be impressively comprehensive. As a result, much depends on the nature of your business, how you present it and the data you have placed in the business plan. A short plan is just as effective as a long plan, provided it describes all the information required.

However, if you are creating the business plan for a specific reason like financial investment, stick to the traditional format. Financial investors, banks and angel investors want a detailed breakdown of a business and they are not satisfied with single page business plans. Single page business plans will not provide detailed information about a business and a single page will not be acceptable. In this case, if you do not have the professional expertise, you may want to hire a professional writer to create the business plan or use an online generator to frame the business plan so you can make sure you don’t miss something vital.

Apr 14 2014

Save Money on Taxes by Getting Married

By |April 14th, 2014|Blog, Personal Finance Tips|3 Comments|

I’m getting married in a few months, as most of you already know. The main benefit to getting married is getting to spend the rest of my life with the woman I love most in this world.

A nice side benefit is saving a lot of money on taxes next year.

When one person makes substantially more than the other person in a relationship (which is my situation with my future wife) then getting married saves a boatload of money on taxes. Let’s run some numbers and see just how much getting married could save us next year.

Let’s Pretend We Make $73,800 Combined

I don’t discuss my annual salary on this website, but for the sake of argument let’s pretend my future wife and I make $73,801 in taxable income this year (in 2014, meaning we are using the 2015 tax brackets). That means our actual income would be higher but after things like our deduction, 401k contributions, HSA contributions, and more, we end up with $73,800 in taxable income.

Taxes

photo credit: flickr.com/donkeyhotey

If I were single with $73k of income, I’d be in the 25% tax bracket. In fact, every dollar I earn after $36,251 would be taxed at 25%, meaning the government gets a quarter for every dollar (plus 7.6% in social security and medicare, but we’ll ignore that for now).

However, as a married couple, $73k means all our income is taxes at a maximum of 15%.

A single person with $73,800 of taxable income in 2014 will pay $14,306 in federal taxes. A married couple with $73,800 of taxable income in 2014 will pay $10,162 in federal taxes. That makes the tax bill $4,144 lower for the married couple.

Of course this is an oversimplification that assumes the taxable income is the same both pre-marriage (1 income) and post marriage (potentially 2 incomes). However, the point I’m trying to make here is that getting married generally lowers you tax bill.

This situation works great for a couple where one person stays home to raise children or is in school. However, it gets much more complicated when both people work.

It’s Possible to Incur a Marriage Tax Penalty

If two high-earning individuals get married, there are situations where their combined tax bill would actually result in them paying more taxes than they would have if they remained single.

This again, is a very complicated subject due to the complex nature of our tax laws. There is an article on US News that explains the marriage tax penalty that I recommend you look at if you are about to marry someone and both of you earn a lot of money (over about $75k each).

Consult a Tax Professional

If you really want to know the impact of getting married on your taxes, there are really only 2 ways to do it. Either use the IRS tax forms and worksheets to calculate your taxes, both as single people and as a couple and compare the two, or talk to a tax professional like a CPA.

Marriage doesn’t only change a couple’s tax brackets, but also the amount of their standard deduction and other variables. Of course, if kids are in the future, those little guys and girls can significantly reduce your tax liability as well (although they also dramatically increase your household expenses).

To My Married Readers: How did your tax bills change after you tied the knot?

Mar 28 2014

11 Strange and Unusual Taxes

By |March 28th, 2014|General Personal Finance|1 Comment|

Did you know there was once a tax on windows? Sounds strange, but in fact, it made sense at the time. Though we might chuckle at the concept now, there have been a number of strange or unlikely taxes that citizens were expected to pay back in the day.

As April 15th approaches, it’s time to stop procrastinating and gather all necessary forms and financial information to ensure a successful filing. The IRS tax code is complicated. To avoid an audit, it’s best to give yourself plenty of time to organize and file.

Read on for 11 strange and unusual taxes that have come into practice over the years and be grateful that, for the most part, they no longer apply today.

Unusual Taxes Throughout History