Personal Finance

Right Homeowners Insurance Deductible

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Most property insurance works the same way. Therefore, if you understand your auto insurance, you understand a lot about your homeowners insurance, or house insurance. The basic moving parts of a homeowners policy are much the same as car insurance. There is a property insurance part in case something happens to your home, which is like the comprehensive or collision insurance part of your car insurance. There is a liability insurance component much like the liability part of your auto insurance. There is a premium that you have to pay in order to keep your coverage in both types of policies. And, finally, both types of insurance have a deductible, or an amount that you have to pay before your insurance kicks in. Understanding Homeowners Insurance Policies There is a thing about home insurance that some people don’t know. Insurance companies can sometimes cancel homeowners policies if there are too many claims filed for the insured property. In some cases, it only takes two or three claims over the years to get cancelled. And, almost all homeowners insurance claims lead to higher rates. Even worse, when you apply for insurance with a new company, one of the first questions is …

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Legit Free Trial Offers

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There are a lot of ways that businesses squeak through the door of legally sufficient, while staying far outside the realm of generally fair. One of the areas that comes up repeatedly as a source of customer discontent is the free trial offer tricks companies pull on unsuspecting consumers. Free Trial Offer Scam The free trial offer scam generally relies on a disconnect between what the legally agreed upon terms in the fine print state, and the general understanding that a reasonable person has about what a free trial is. For most people, a free trial means that you get to try something out for free. Everyone knows that there is no such thing as a free lunch, however. Most people understand that the point of the free trial is to get you to sign up for the paid version going forward. What most people don’t notice, is that they actually already signed up for the paid version when they agreed to the free trial. In other words, you aren’t really getting a free trial. What you are really doing is signing up for a full subscription with the first month free, and a limited free cancellation period. That doesn’t …

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Your Money AND Your Life

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I write this personal finance blog because I like writing, I have real, professional experience in finance, and I like to help people. I also know that when I read a lot of the financial advice out there, it is either, too complicated, too oversimplified, or flat out inaccurate. This isn’t too surprising, because dealing with money and all of the various things that go with it, like savings, borrowing, investing and so on can get complicated very quickly. It is also very easy to lose sight of the forest, for the trees. I thought this might be a good time to remember that your balance sheet is not how you keep score in life. Living Your Life Making Smart Financial Decisions Recently, a reader left a comment on my review of Credit Karma basically calling me a fool for leasing a car. This seemed odd. Leasing does have a lot of moving parts, but the concept itself isn’t a scam. He went on to say that the only smart thing to do was buy a used car and live debt free. Then I knew, what was going on. Some people lock into “rules” about finance and take them as the …

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Do Taxes Faster with these Tax Tips

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Doing your taxes is never fun. The potential of having to pay even more money than has already come out of your paycheck looms over your every move. The thought of missed tax deductions, or unused tax tricks makes you constantly wonder if you could have done better on your taxes. Searching for receipts and other records takes time and adds to the stress. Add to that the threat of a tax audit if you mess up, and it’s no wonder people spend hours stressing out of their taxes. How To Do Your Taxes Faster There are some tax tricks you can use to speed up doing your taxes. Mostly, it comes down to knowing when and where it is worthwhile to spend your time, and where you can just keep plunging ahead and filling out those IRS forms. Remember, not everyone qualifies for everything. In fact, most people don’t qualify for a lot of the tax deductions and credits out there. Unfortunately, some personal finance publications and websites could do a better job of letting you taxpayers know when they just won’t qualify for that really great “frequently missed tax deduction.” High Tax Deduction Floors One of the ways to waste a lot …

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Cell Phone Bills Too High for Budget

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The Wall Street Journal recently published an article about how cellphones are eating the family budget. It seems as though the idea and everything but the words were lifted from an earlier article in the Boston Globe. Whatever the source, this is something that I saw coming years ago as a financial planner, and now, it seems things are maybe worse than ever when it comes to your budget and your cell phone. Your Cell Phones, Your Budget When I was a Certified Financial Planner advising clients, one of the first steps (after signing them up as clients) was to review their budget. For the wealthy, a budget isn’t really all that useful or eye-opening, but for everyone else, a budget can reveal some very ugly truths. First, most people spend way more money each month on things than they think they do. Nothing is a bigger shocker than filling out a budget that includes everything you THINK you spend money on each month, and then sitting down with someone and matching that up to your bank and credit card statements to see what you ACTUALLY spend each month. Second, for most people, there actually isn’t much they can do …

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How Should I Invest $3,000

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A recent Money magazine tidbit on Twitter caught my eye. Someone asked how they should invest a small amount, in this case, $3,000. The response suggested a target-date retirement fund. However, I don’t think that is a very good answer in this case, or in most cases. How To Invest a Small Amount When I was a Certified Financial Planner, I would come across people all the time who wanted to know how to invest a small amount. It isn’t hard to see why. We are constantly reminded that we should be saving and investing money. Books like The Richest Man in Babylon (the single best book for beginners in personal finance) extol the virtues of investing some of everything you earn and letting the power of compound interest turn that on-going investment into millions of dollars. However, this very simple concept is actually very misunderstood. First, remember that compound interest is NOT fast. If you invested that $3,000 and were able to earn 8 percent per year you’d have just $4,408 in five years and $5,141 after a full seven years. That isn’t to say that you shouldn’t invest that money, you should just understand what your realistic expectations …

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Lower Your Taxes – Increase Tax Deductions 2010

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Here comes the end of the year! (Yikes, already?) As 2010 draws to a close, it is time for the annual publishing of the end of year tax tips articles. Or, for the mainstream media, it’s time to re-publish pretty much the same thing that was published last year, rehashing the same old annual tax savings strategies. I thought we’d go ahead and get a jump on them (Isn’t that what good personal finance blogs are for?) by pre-posting all of the standard, run of the mill, year-end tax tips before Thanksgiving. Of course, if you are serious about tax planning, you’ve already done all of this and more. Don’t worry, we’ll be publishing new, little-known, tax tips and end of year tax tricks for 2010 soon. Here they are the Common 10 Tax Reduction Strategies for 2010 (and 2011, 2012, 2013, etc…) Donate To Charity – Definitely a good write off for high-income taxpayers and everyone else. Of course, the only tax deduction more well known than donating to charity is deducting mortgage interest on your home. Deduct Your Medical Bills – This is wasteful advice for most taxpayers. The medical expenses deduction only applies to medical and dental …

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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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More Tax Deductions for Small Business Owners and Sole-Proprietorships

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A great tax saving strategy, particularly for higher-income taxpayers is to start a small business. Many expenses that are not deductible for regular Federal Income Taxes are deductible to a business. For example, the mileage deduction is not deductible for personal driving purposes, and mileage driving to work is also not deductible. However, mileage driven for business purposes is tax deductible. While starting a phony small business is not a good idea, no matter how big of tax savings can be achieved, there are many legitimate businesses that people can start. The key aspect of being legally considered a business for tax purposes is that there must be a profit motive to the activity. That profit motive must outweigh other reasons for engaging in the activity, otherwise, the enterprise could be considered a hobby instead of a business. Formally incorporate the business with the Secretary of State in your state. Set up a LLC, it makes a great business structure for single-owner small businesses and is typically cheap and easy to setup. Filling out an online form and paying a registration fee is usually all that is required. Then, get an Employee Identification Number, or EIN from the IRS. Unofficially …

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