Savings

Not Cashing Savings Bonds to Avoid Taxes

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taxes on savings bonds

There is a common misconception about avoiding taxes by not cashing savings bonds. While there are no penalties for not cashing mature savings bonds, there is no benefit to holding them for tax purposes, either. Sometimes people wonder, “Do savings bonds expire?” For the most part, I typically assume that people who have misinformation came by it honestly. Usually, they didn’t quite understand fully what they read or were told. After all, one of the trickiest things about achieving financial independence and personal finance is that there are so many exceptions and nuances. In a lot of cases, what is absolutely true for one person is not true for someone else because of their individual circumstances. Tax Consequences of Cashing In Savings Bonds Unfortunately, while the internet has given people easy access to vast amounts of information, it does so without any verification that the information published is true. The problem is compounded by those who read something inaccurate and then repeat it elsewhere. This makes the false information seem more valid because it is corroborated by another source, which, in fact, is just repeating something that was wrong. That is why it is so important to verify financial planning …

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What Is The Difference Between UTMA and UGMA?

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utma-ugma-trust

How Are UTMA and UGMA Alike? UTMA and UGMA are very similar. Both are uniform code proposals adopted by the individual states. Like other uniform codes (the uniform building code is a common one, for example) these work by proposing a common framework for states to use in order to prevent a hard to use patchwork of laws in each state. The uniform code did not prevent one important variation. The UTMA or UGMA account comes under the control of the beneficiary when he reaches the age of maturity. However, that age varies from state to state. Typically, the beneficiary assumes control of the UGMA or UTMA at age 18 or 21. The UTMA and UGMA are two different uniform codes, but they are more alike than they are different. What Is UTMA? UTMA is the Uniform Transfer to Minors Act. People say, “ut-mah” when they talk about them. What Is UGMA? UGMA is the Uniform Gifts to Minors Act. People say “ug-mah” when they talk about these. Both UTMA and UGMA were created to allow adults, usually parents, to transfer assets to minors without the need to establish a special trust to enable such ownership. Both UTMA and UGMA …

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US Savings Bonds Series E Savings Bonds

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e bonds

US Saving Bonds and World War II Bonds issued by the US Government are low-risk investments issued in order to finance the national debt. There are numerous types of Government bonds. Each bond has specific features that determine how much interest is paid to the bond holder, how long the bond’s term is, and how the bond is purchased. The different kinds of bonds are known by their “series” letters. Series E bonds are one of the kinds of US Savings Bonds. The last of the Series E Savings Bonds stops earning interest in 2010, which means that anyone still holding Series E Bonds is losing out on interest payments. Series EE Savings Bonds replace the retired Series E Savings Bonds. Smart financial planning tips from many experts suggest re-evaluating Savings Bond advantages and disadvantages before automatically rolling them over into new Savings Bonds like the current Series EE Savings Bonds. Remember, although there is no time when savings bonds expire, taxes are due on interest paid when the savings bond matures. History of Series E Savings Bonds Series E bonds, or Government E Bonds, were first issued to fund World War II efforts. The bonds were commonly known as …

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Safely Earn More Interest on Your Money

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I am always a bit curious when I read a cover story headline like the one on Kiplinger Magazine this month. It says 18 Ways To Earn 5% or More On Your Money. A lot of readers will make an assumption that goes along with that headline that they are talking about low-risk investments or no-risk savings products. After all, it doesn’t take a degree in advanced personal finance to know that there are literally thousands of ways to earn 5% or more on your money. Of course, most of those also come with a way to lose 5% or more on your money too. That is not what the article is about. Instead, this particular article, whose article title inside the magazine is, “Great Rates In A Low-Yield World” manages to give a better clue. The article is NOT about where to open a savings account to earn 5% or more. It is about how to get 5% YIELD on your investment. That is, 5+ percent as income, and not counting losses on invested capital. Real Earnings Are About More Than Dividends and Interest Unfortunately, while the article does indeed uncover available investments earning a 5% or higher yield, …

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Printing Tax Returns TurboTax or TaxCut

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Whether you waited until the last minute or filed months ago, there is one last 2009 tax tips and tricks that you need to follow. Print out a copy of your tax return from your TurboTax software or print out your taxes from your TaxCut software, or whatever other tax software program you used to file your Federal Income Taxes. Many people have the misconception that the TurboTax file saved on their computer as they worked on their Income Taxes is a regular file that can be opened and printed with a regular software program like Microsoft Word or Adobe Acrobat Reader. Unfortunately, that is not the case. The files generated by popular tax preparation programs like TurboTax and TaxCut is a proprietary file that can only be opened in the tax program. While next year’s version of the program will most likely be able to open that tax file, you have to buy it first. That isn’t very helpful if you need to produce a copy of your taxes in September to get a small business loan or open up a bank account. There are ways to hack open TurboTax files, but why go through all that trouble? Print …

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Is Refurbished or Remanufactured a Good Deal?

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Sometimes people ask me questions that aren’t exactly my area of specialty.  While saving money by buying a refurbished or remanufactured product is technically about spending and personal finance, there is a lot of information that goes into such a decision that I have no way of knowing any better than you. With that being said, there are some common issues and concerns to watch out for when purchasing refurbished or remanufactured goods. Is It Really A Good Price? The promise of refurbished goods, particularly electronics, is getting a “good as new” product for a much lower price.  The devil, of course, is in the details.  The major concerns fall into two categories. The first is whether or not the refurbished product really IS as good as new.  And the second, is in what way the service and support of the product will be different because it is refurbished. Many refurbished products come with a much shorter warranty than their new counterparts.  This begs the question, “If the product is as good as new, then why won’t you stand behind it with a warranty that is as good as the new one?” The answer is, of course, that refurbished is …

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Quick Money Saving Tip

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home-house Christmas is over, but the bills might not all be gone.  Plus, Uncle Sam is going to want his kickback, that’s taxes to you and me, by April.  Throw in a recession, and it is probably a good idea to look at saving some money.

If you’ve been through your budget and you don’t find anything out of whack (tip: if your cell phone bill is more than $60 and you aren’t a traveling salesman, it’s time to re-evaluate) then we need to pull out some less used tips.

Homeowner’s Insurance Deductible

The dirty secret about homeowner’s insurance is that filing claims will get you and your policy dropped by the insurance company.  Those same claims will keep you from getting a new insurance policy with another company.  Sometimes, as little as 3 claims in 2 years will get you dropped like a hot potato.

Since there is nothing you can do about how insurance companies behave, the next best thing is to work smarter within their system.  Only file large claims and use your savings to pay for the nickel and dime stuff like a few shingles blown off the roof.  Of course, if you aren’t going to be filing smaller claims, then you shouldn’t be paying for the coverage.

Raise your homeowner’s insurance deductible to at least $1,000.  Chances are a $1,500 or $2,500 deductible won’t lower your rates that much more, but check anyway.  Saving $10 a year to raise your deductible $1,000 doesn’t make much sense, but if you can save $50 or $100 then that’s something to think about.

If you are the very responsible type and you have the recommended 3 to 6 months of living expenses tucked safely away in an emergency fund that you never touch, you can even consider a $5,000 deductible which could significantly lower your home insurance.  But, do the math first.  It will likely only make sense if you have a high value home.

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Also, do a homeowner’s review with your company if you have made any improvements or security upgrades.  The new alarm system might be worth a discount.  The same goes for removing anything that raised your rates.  If you don’t have a dog anymore, make sure they know that too.

Be careful that your insurance agent doesn’t use your review to sell you other insurance, or even more home insurance.  You are there for home insurance only, and you don’t want to talk about life insurance, car insurance, or any other insurance, no matter how good of time it is, or how great the deal is.  You especially don’t care if rates are going up next month (a common insurance salesman line). 

Also, there is no need to insure your home for full replacement value.  Laws very from state to state, but generally, a homeowner’s insurance policy provides for 120% or so, of coverage should your whole house need replaced.  But, that kind of event is relatively rare.  Even if you have a fire, chances are you’ll be repairing the house, not rebuilding it from scratch.

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