Monday, April 30, 2012

The Buffett Rule Why the 1 Percent Should Pay

Yes, I support the Buffet Rule.  The 99% pay most of the taxes in the country.  Many low-to-middle income families pay too much in taxes.  The 99% pay taxes based on their earnings and assets therefore the 1% should be required to follow the same guidelines.

The Buffett Rule is named after investor Warren Buffett who stated in 2011 that he opposed rich people paying less in federal taxes, as a portion of income, than the middle class, and voiced his support for increasing income taxes on the wealthy. 

The Buffett Rule is a tax plan that was proposed in 2011 by President Obama. The tax plan would apply a minimum tax rate of 30% on individuals making more than a million dollars a year to ensure that they do not pay a smaller percentage of income in taxes than non-wealthy Americans.  If enacted, the rule change would result in approximately $36.7 billion per year in additional tax revenue and would help to slightly reduce the country’s deficit.

Some of the reasons for the disparity in taxing wealthy Americans are due to the fact that revenue from long-term capital gains is taxed at a maximum rate of 15%, tax breaks for corporations and the wealthy such as estate taxes, tax deferred investments and off-shore investments.

Senator Harry Reid stated “7,000 millionaires paid no federal income taxes in 2011” and approximately 250,000 taxpayers file income taxes with adjusted gross income of $1 million or more. According to the Tax Policy Center by 2015, approximately 2,000 – 3,000 taxpayers with an adjusted gross income of more than $1 million would pay a tax of 15% or less. Here are 6 ways to make the 1% pay.
  1. Call.  Call your local television and radio stations and newspapers and demand additional coverage on taxpayers who paid less in taxes than the 99%. 
  2. Write. Write and call your local congressman and other city and state politicians to request that the wealthy pay more in taxes.
  3. Pay.  Make sure you pay your taxes.  The lack of taxes paid also contributes to the country’s deficit.  Paying taxes owed helps to generate revenue and helps to slightly reduce the deficit.
  4. Plan for the future.  If the economy continues to improve at a slow pace, this will affect many government agencies who will continue to raise costs on city services.  Reduce your spending by 30-50% to save money and ensure you can for the increasing costs of city services and fees.
  5. Vote. Voice your concerns about issues that affect you or affect your community, family or friends.  Voice your concerns by voting at primary and general elections.  Your vote does count. Don’t complain if you don’t vote.
  6. Don’t forget. Many times taxpayers voice their concern about an issue for a week or two and then forget about it.  If this is an issue you feel strongly about voice your concern until you see a change or at least until the next presidential election.

Friday, April 27, 2012

9 Ways to Protect Your Money

Whether you retire, get an inheritance, get a bonus, life insurance proceeds, get proceeds from a divorce settlement or win the lottery, have children, siblings or work a 9-5 you need to protect your money. Basically, no matter how much money you have you need to protect it.

It is important to protect your money because it provides many benefits: provides security for you, your family and your heirs; makes funeral preparations easier, reduces tax liability, prevents the government from taking you to probate court and reduces estate taxes.  

Life is full of surprises but minimize surprises to your family by protecting your money and making your wishes known.  Here are some instances when you need to protect your money:  if you own a business, if you are single, if you have children, if you get married, if your spouse has a lot of debt or bad spending habits or if you get divorced or are planning a divorce.  Here are 9 ways to protect your money.

  1. Get a prenup.  If you have things of value or are concerned if you get divorced your spouse will get half of your assets consider getting a prenup.
  2. Stay informed.  Call your mortgage company to find out what would happen if the business went under and what are your options. Develop a plan to protect your mortgage.
  3. Diversify. Make sure your bank is FDIC insured. If not, move your money to a bank that is. If you have more than $100,000 in your bank, split the account into multiple accounts.  Open additional accounts at others banks and keep the balances below $100,000.
  4. Plan.  Consider buying a safe for your home or apartment and keeping some money in your safe in the event your bank goes bankrupt and you need to access money quickly.
  5. Insurance. Buy auto, health, homeowners, life, disability and long-term care insurance. At a minimum have adequate auto, health, homeowners and life insurance.
  6. Backup. Make copies of all of your financial statements, bank cards and legal paperwork and store in a waterproof fire proof safe in your home and store a second copy at a secure location away from your home.
  7. Review. Review paperwork yearly to ensure beneficiary information is up-to-date.  Add statements in the will and/or trust in the event an unexpected death to ensure your wishes are included in all legal documents.
  8. Estate Planning. Create a will, living trust, tax deferred investments, etc. to protect your money and reduce tax liability.
  9. Know the laws. Know the laws in your state regarding estates and protect your money.

Tuesday, April 24, 2012

Last Minute Tax Tips

Even though the deadline for filing taxes has passed, many taxpayers have not filed their taxes. If you are getting a refund you have to file within 3 years from the current tax year but you do not need to file an extension. After that, the penalty for not filing your taxes is forfeiture of your tax refund.

If you don’t file and you are getting a refund will receive a letter from the IRS reminding you to file your tax return, especially if W-2 or 1099 forms were reported to the IRS by your employer.  If you owe taxes and don’t file you will get a letter from the IRS reminding you to pay.

To determine if you have to file taxes 3 things are considered:  your filing status, your age and your income.  Once you reach a certain income level, the law requires you to file. Older individuals and blind individuals must determine if they need to file a Form 1040.

Children file when taxes when: they earned income as a salary, wages or tips or earned a taxable scholarship or fellowship grant; or earned income from investment interest or dividends, capital gains, unemployment benefits and some distribution of a trust fund.

For 2011, if you are under 65: single and earned $9,500, head of household and earned $12,200, married filing jointly and earned $19,000, widow/widower and earned $15,300 or married filing separately and earned $3,700, sold your home or are self-employed you have to file taxes. For more information review the 2011 IRS Publication 17.

Here are 3 tips if you can’t pay your taxes:
  1. You can setup an installment agreement and pay the amount owed in 3 years. 
  2. Request an extension and request the maximum extension time of 6 months.
  3. Request an Offer in Compromise.  An offer in compromise allows you to settle your tax debt for less than the full amount if you meet certain requirements.
Here are 4 ways to file your taxes for free:
  1. Free Software.  If your adjusted gross income is $57,000 or less you can use free tax software such as:  Turbo Tax, Free TaxAct, Tax Slayer or H&R Block’s Free File.
  2. Use Free Forms.  Anyone can use free file fillable forms from  The site provides online versions of paper federal tax forms.
  3. File Electronically. Efile (electronically) your tax return for free by using direct deposit or pay your taxes online for free.
  4. Paper forms.  Use paper tax forms to file your taxes and mail them to the IRS.  The only cost is postage.
 Legal action can be taken against you by the IRS if you owe taxes and don’t pay: it will be reported on your credit report, you can receive a tax lien, garnishment, judgment, lose your property at a tax auction or other means. Therefore, it is best file your taxes every year.

Saturday, April 21, 2012

I Won A Windfall Now What

If you have watched the news you heard that 3 people won the lottery for a total of $613 million dollars a few weeks ago. Everyone thinks to themselves, wow I wish that was me. I said the same thing; the only problem is I don’t play the lottery.

 Another name for winning the lottery is getting a windfall. A windfall could also be: getting an inheritance or life insurance settlement, winning a court case or settlement of a legal matter, getting a bonus or pay raise, receiving back taxes, stock options, or any other good fortune.

When you have a new experience or are suddenly thrust into a new situation – family, finances, health, employment, you must seek advice. If the case of receiving millions, you may have experience in your current job but you don’t have experience being a millionaire.

When you start a job you get training, ask questions, read book, and gain knowledge to learn the skills you need to master your job. The same thing is required if you get a windfall. Read books on how to effectively manage money from those who do it well – Bill Gates, Warren Buffet, Oprah Winfrey, Paul Allen (co-founder of Microsoft), Mark Zuckerberg and Larry Ellison to name a few. Here are 16 tips to help you handle managing a windfall.

1. Consult an accountant, lawyer and financial advisor to develop a plan to get advice on how to maximize tax deductions, set aside money to pay taxes at the end of the year, protect your money, how to grow your money while enjoying your money.
2. Create a safety net. If possible, set aside a portion of money enough to cover your monthly expenses and bills for one year.
3. Avoid lavish or unnecessary spending such as buying sneakers for all the children in the neighborhood or buying your family members all new cars.
4. If you loan a friend or relative money make it official by having a lawyer create a contact on the terms of the loan, loan amount, when and how the loan should be paid back.
5. If you wish to give money to a friend or relative consult a lawyer and accountant to document the gift and ensure that the money is properly accounted for on your taxes.
6. Consider purchasing an item that will appreciate over time such as an investment property.
7. Pay off all debt. If the only debt you have is your mortgage consult a financial advisor to discuss the advantages and disadvantages of paying off your mortgage early.
8. Contribute more to your retirement account if your balance is not on target to meet your retirement goal.
9. Setup estate planning including a will and living trust.
10. Set aside money for your children’s or grandchildren’s college education.
11. Perform standard home repairs, avoid lavish repairs such as adding marble floors, etc. which will not add enough value to your home to recoup the costs of making the upgrades.
12. Donate a portion of your money to charity to help those less fortunate which also serves as a write-off on your taxes.
13. Make it difficult to access your money such as putting a portion in an online account or account in another city or state to reduce the temptation to spend the money.
14. Diversify. Don’t put all of your money in one area, diversify to minimize losses.
15. Set Financial Goals. Set financial goals with target dates on how to grow and spend your money.
16. Review your account yearly to make any necessary adjustments and to ensure that your money continues to grow.

Thursday, April 19, 2012

Do You Save

Are you s aver? Don’t feel bad. Many Americans today don't have a savings account. I have been a saver for years but it takes practice and discipline. Your savings account is your safety net if case you get sick or lose your job you can use your savings to hold you for a few months until you can find a new job.

You should have enough in your savings account to pay your bills and monthly expenses for at least 9 to 12 months. Money should be readily accessible and stored in a checking or savings account, preferably a high interest savings account such as Emigrant Direct or ING or a money market account where you can make money while saving money.

You can start by contributing small amounts to until you are able to contribute more even if it is just $5 a week. Once you are able to contribute more do so. Make several short-term goals.

Once you have reached your first goal start developing some long-term goals such as planning for retirement or paying for your children’s college education. A great site to learn about retirement planning is the investing tutoring.

A savings account will ensure that you are on the road to becoming financially secure and will prevent you from going into debt when an unexpected expense arises. You may not know what the future holds but if you prepare your finances now, it will ease the burden of what tomorrow holds. Here are 17 tips to save money.

1. Pack your lunch for work every day. Buy drinks from the grocery store and skip the Starbucks.
2. Reduce spending by 30-50%.
3. Use direct deposit to send your paycheck directly to your bank.
4. If you get a raise, save most of the money received from the raise or use a portion of it to pay down debt.
5. Buy what you can on sale, use coupons or shop at a wholesale store such as Sam’s Club or Costco.
6. Buy whole foods, such as vegetables, grains, beans and fruits, instead of processed foods.
7. Check your local health food store or farmer’s market to buy grains, seeds, nuts, spices and legumes, in bulk.
8. Carpool or use public transportation.
9. Cancel your cable service or cell phone service or get the cheapest plan possible.
10. Use your cell phone to make long distance calls.
11. Shop around with various banks to find a checking account with no monthly fees.
12. Downgrade or downsize, buy a cheaper car or move into a smaller home.
13. Buy energy efficient appliances, ceiling fans, programmable thermostats, fluorescent light bulbs and lamps, or hot water insulator jackets.
14. Donate items not being used to a charity and write off on your taxes.
15. Rent movies instead of going to the movie theater.
16. Turn the lights out when you are not in a room for 20 minutes or more.
17. Turn the heat and/or air conditioner off when you are not at home or set at a low energy saving temperature.

Sunday, April 15, 2012

Financial Know How for Recent College Grads

There are approximately 1,750,000 college graduates every year. According to, the number of college student bankruptcies filed each year is 9,300 and the average college student’s debt after graduating is $23,700.

According to the Institute for Financial Literacy’s 2010 Annual Consumer Bankruptcy Demographics Report, the percentage of college graduates filing for personal bankruptcy increased 20% during the last 5 years. A study by Twentysomething Inc. reported 85% of the graduating class in 2011 would be forced to move back home. The unemployment rate for people with a recent high school diploma is 22.9% and 31.5% among recent high school dropouts.

Many college graduates are stressed due to difficulty paying back debt, finding a job or finding a full-time job. The longer it takes to find a job the longer it takes to pay back any debt owed. Your potential salary earnings are directly proportional to your ability to pay back college debt and live a comfortable lifestyle. Here are some financial tips for recent college graduates to improve your financial outlook.

1. Stay at home for at least a year after graduation. If you have to live on your own buy efficiency, studio apartment or loft, rent a room or get a roommate. Unfortunately you have no control over whether your roommate will pay their rent or pay it on time.
2. Your housing costs should be no more than 35% of your total net income (after taxes).

1. Skip buying car your first year of employment. Catch public transportation; borrow your parents’ car or a friend’s car when needed. If you must buy a car buy a used car.

Paying Down Student Loans
1. Use caution with consolidation. Consolidating student loans combines your loans into one payment but may or may not provide you with a lower interest rate. You may not be eligible for various student loan forgiveness programs if you consolidate.
2. Your loan accrues the greatest interest in the first 2-3 years of the loan so pay more than the monthly payment.

Financial Planning
1. Start with your company's 401K. Contribute as much as you can to your retirement account. You will need at least 70-80% of your income during retirement and will need a minimum of $1,000,000 to retire.
2. Use a broker or financial advisor to help you setup your retirement account.
3. Buy health, life, disability insurance.
4. Create a will.

1. Create a budget and make it flexible to accommodate for unexpected expenses and include savings goals. Include monthly expenses and debt plus your monthly income. Create an emergency fund that is enough to pay your monthly bills and expenses for at least 9 to 12 months.
2. Reduce your credit card debt. Pay more than the minimum monthly payment.
3. Reduce spending by 30-50% each month to help pay down debt.
4. Comparison Shop. Consider quality of the product, price, warranty, and compare with stores or websites.

Managing Credit Card Debt
1. Order a copy of your credit reports at and fix any errors.
2. Get current on any delinquent accounts.
3. Don't spend money you don't have. Use your credit card for emergencies only.
4. Setup a payment plan with each of your creditors to pay off your debts.
5. Request a financial hardship if you cannot afford to send the minimum monthly payment.
6. Avoid filing for bankruptcy.
7. Setup a debt payoff plan to prioritize your bills. Start by paying off the smallest bills first, then use the money paid towards a previous bill and apply it to the next bill and continue this process until all your debts are paid.
8. Pay more than minimum monthly payment. Try to send extra towards your balance each month.

Thursday, April 12, 2012

How to Save Money During Prom Season

Prom season is here. Many parents take their children shopping for the prom and are shocked at the price tags on prom clothes. Clothes for the prom can range from $100-$1,000, not including the costs for accessories, shoes, transportation, dining, pictures, jewelry, hair, makeup and other costs.

1. Plan Ahead. Purchase all necessary items at least one month ahead of time. The ideal time would be to purchase items the day after Christmas or no later than February.
2. Be Different. Look for unique colors and styles. Shop online and on websites like Craigslist, eBay, or online consignment shops for unique pieces.
3. Create. Hire a seamstress to make a unique prom dress or tuxedo for half the price. Buy your own fabric to save even more money.
4. Comparison Shop. Use coupons or look for discounts and bargains on social media and online websites. Consider visiting thrift stores, consignment shops, outlet stores or bridal stores that to shop for a prom outfit.
5. Rent. If you can’t afford to buy a prom dress or tuxedo many stores offer rentals.
6. Ask for help. Ask friends or relatives if they have any items you can borrow such as jewelry, shoes, makeup, accessories or other items. Also ask for assistance getting ready on prom day.
7. Share. Share the costs of prom expenses such as car-pooling; renting a limo or use items from friends closets instead of buying a new item.
8. Flowers. Reserve your corsage and boutonniere at least 3 weeks ahead of time at your local florist.
9. Preparation. Go to a training school or have a friend assist with your hair or haircut, makeup, nails, etc. on the day of the prom.
10. Reuse. After the prom is over, consider letting someone else reuse your prom outfit, alter it for future use or sell it to a consignment shop.

Parents don’t stress your child out about the prom. Let them have the freedom to make decisions about their prom outfit. Don’t be too strict. Discuss with them your budget and ask them to contribute if the total cost exceeds your budget. Be supportive as much as possible of their decisions so they can enjoy the prom. Remind them to have fun and don’t let anyone ruin their prom experience.

Monday, April 09, 2012

Dating Tips For Men with Bad Credit

Credit affects many aspects of your life such as employment, interest rates and dating. If you have bad credit because you lost your job or home to foreclosure women will be more forgiving and understanding. However, some women may not be interested in dating a man who doesn't pay their bills or wants to wait 7 years for old debts to fall off their credit report instead of being responsible and paying the debt.

Many women are more concerned with the character of a man instead of his material possessions and it is very appealing for a woman to meet a man with an average or good credit score because it states a lot about his character: you are aware that credit affects several aspects of your life, you are accountable and responsible with your money and pay your bills on time, you may have made mistakes in the past but have learned from your mistakes, and you continually work to ensure that you maintain and/or improve your credit score.

Unfortunately men with bad credit are rated harder than women with bad credit. Some women don't date men with bad credit. If you have bad credit and are dating it is best to be upfront with women. Women want to be with a man who is responsible and accountable for his actions.

Women like a man who has a plan and knows how to solve problems and women examine how a man is solving his own problems. If a woman knows that you have bad credit and you are not doing anything to fix it you may not be considered for a possible date or a potential mate.

If you are dating and have bad credit it will force you to be accountable for your actions. Here are some tips to help you when dating:

1. Be honest about your situation, don’t lie or try to hide it.
2. Think of creative ways to increase your income since many employers are using credit as a means to hire candidates.
3. Purchase items with cash (but if you don't manage your money properly and overdraw your account it will lower your credit score).
4. Develop better money management skills to ensure that you live below your means.
5. Examine why you have and/or continue to have poor credit.
6. Be creative when dating because if you don't have a lot of cash or credit you won't be able to go to the usual places like dinner and movies, trips, etc.
7. Learn how to appreciate the simple things in life.

The bottom line is you have to find the right woman who is patient, understanding and willing to work with you doing this rough time.

Friday, April 06, 2012

Why Aren't We Mad About Gas Prices

In 2004, gas prices were $1.61, in 2006 $2.86, in 2007 $3.11, in 2008 gas prices reached $4.12. Gas prices have again increased to over $4.00 a gallon for regular gas. According to the US Energy Information Administration gas prices consists of 4 factors: crude oil 53%, federal and state taxes 22%, refining costs and profits 14%, and distribution and marketing 11%. When crude oil prices increase consumers see an at the gas pump.

U.S. oil production is the highest it has been in the past eight years. However, the U.S. has relied on the least amount of foreign oil in the last 16 years, but the media would have you believe otherwise. Gas prices do not increase or decrease based on who is elected President. Gas prices are affected by the declining value of the dollar overseas, the threats of war or fuel shortages, natural disasters and gas prices also increase due to demand. The wars in Libya, Nigeria, Afghanistan, Iraq, Hurricane Katrina and other natural disasters have also affected gas prices.

Oil production was increased worldwide. The value of the dollar continues decline. The media blames high gas prices on the greed of oil companies and lack of government programs and reform. However, the government cannot control supply and demand. There has been an increase in oil demand in India and China as well as Venezuela and the Middle East. Gas in Oslo, Norway is $9.33, in Rome, Italy it is $8.51.

Americans are partly to blame for the high gas prices. One reason demand in the U.S. remains high is due to consumers driving SUVs and large trucks. To permanently lower gas prices we must explore oil exploration and alternative oil sources. Brazil uses Ethanol and is no longer dependent on gas. Brazil is the largest exporter of ethanol. Ethanol produced from sugarcane is cheaper, provides energy that is renewable and has a lower carbon footprint. Bioethanol reduces air pollution and reduces global warming by reducing greenhouse gas emissions. Several studies have shown that sugarcane based ethanol reduces greenhouse gases by 86 - 90%.

Gas prices will continue to spike through the summer as many people drive to visit their favorite vacation spot because it some cases, driving costs less than flying a family of four. Other alternatives to high gas prices are using public transportation, walking, carpooling or telecommuting.

Do more than just complain. Complaining only has a short-term affect unless you take action. We can’t change the high gas prices if we continue to buy gas guzzlers. We can’t change gas prices if we drive one mile to go to the store instead of walking. We can’t improve the environment if we continue to drive and emit gas fumes into the air or delay getting oil changes every 3,000 miles. I used to fill up my gas tank with $12 now it takes $38.

Since this is an election year make you voice heard by asking for change. Don’t just say you don’t like the high gas prices, explain to politicians how it affects your life and provide possible suggestions for helping to lower gas prices. Here are 8 tips to save money on gas.

1. Drive the speed limit.
2. Buy a fuel-efficient car.
3. Drive with the windows down instead of using the air conditioner.
4. Combine nearby trips on the same day.
5. Buy gas early in the morning.
6. Drive 2-3 car lengths behind the car in front of you. This will require you to stop and accelerate less often.
7. Use cruise control when driving on the highway.
8. Keep tires properly inflated.

Tuesday, April 03, 2012

Use Financial Literacy Month to Jumpstart Your Finances

Today employees have a greater need to educate themselves about how to effectively manage their finances because many employers are eliminating retirement plans and offering 401K’s. In addition, financial products and services are more complex and perplexing. April is Financial Literacy Month which stresses the importance of financial literacy.

Without adequate knowledge about basic financial literacy concepts, consumers can make devastating mistakes that can take years to recover from. Regularly practicing good money management habits eliminate the needs for dependency on credit cards, payday loans or title loans and cash advances.

The financial stability of families is directly linked to economic growth in America. The economy is stronger when more Americans have jobs, increases in income and an accumulation of wealth.

Financially strong families tend to have better money management skills and are more willing to make major purchases that help advance our economy. Financially successful people save more and are more able to get approval for credit cards and loans.

The average American believes all they need to do is go to work everyday and pay their bills on time. However, being a responsible consumer requires much more. Consumers need to be able to make informed decisions about how to earn, spend and grow their money.

This is where the importance of financial literacy plays a key role. The lack of financial literacy education and effective money management skills result in mounds of debt, low credit scores, denial for approval of credit and loans, increased foreclosures and bankruptcies. These factors ultimately slow economic growth.

Financial literacy increases the awareness of the benefits and risks of consumer credit and the consequences of poor money management skills. Financial literacy benefits include: accumulating wealth, planning for retirement, planning for children’s college education, starting a business, ability to make large purchases, maintain good credit and achieve financial goals. Financially literate consumers help the banking industry by purchasing products and services which results in stable banks, better customer service, lower fees, and increases in money available for lending.

The primary benefit of financial literacy is providing an improved standard of living for students, individuals and families. Financial literacy helps individuals and families accumulate wealth and live a financially stable life. Families are also able to pass knowledge on to their children and future generations.

This month make at least one change to your spending habits to help pay down debt, create a savings account or start planning for your retirement. Make a promise to yourself and your family that starting in April you will do at least one of the following to improve your financial life.

1. Create a budget or spending plan and track spending daily, weekly or monthly.
2. Verify bank statements each month.
3. Pay bills on time or before the due date.
4. Get current on any late bills by negotiating with creditors or setup payment plans.
5. Don't buy something if you don't have the cash to pay for it.
6. Use credit cards for emergencies only.
7. Get overdraft protection to reduce bounced check fees.
8. Avoid filing for bankruptcy.
9. Order a copy of your credit report and dispute any errors,
10. Pay off at least one credit card this year.
11. Create an emergency fund to cover bills and monthly expenses for 9-12 months.
12. Reduce monthly spending by 30-50% by using coupons, buying items on sale, in bulk or shopping at discount, wholesale or outlet stores, etc.
13. Buy more of items you need instead of items you want.
14. Plan for your future by doing performing estate planning.