Say No to New Year's Resolutions

Everyone tries to make a New Year’s Resolution including myself. Somewhere around February we forget about that New Year’s Resolution and go back to whatever it was we were doing before the New Year. This year I am saying no to New Year’s Resolutions. This year I am creating a goals list of all the things I want to accomplish in 2012 with a target date and action steps for each. Your goals should include at a minimum health, finances, family, career, spirituality and relationships

This year make a decision to make at least one permanent change to become better in one area of your life. The key is to keep moving forward and practice that habit every day. Don’t beat yourself up too much if you forget to practice your new habit. If you forget one day, don’t worry, tomorrow is available for you to get back on track. Don’t look at your goals as negative; view them as positive things to improve your life.

Ask friends or relatives to provide support and encouragement for your new goals. Purchase self-help motivation books or practice meditation or positive affirmations to help strengthen your confidence to ensure you achieve your goals.

Look at the big picture and how your goals will help you, your family or your overall life. Examine the long-terms benefits of your goals and focus on the benefits to increase your motivation.

Don’t make unrealistic goals, however believe in yourself and write down all of your dreams and goals. If you believe you can achieve a goal you will. The only thing stopping your from achieving your goal is you. Wishing you much success in 2012!

End of Year Tax Deductions

On December 23, 2011, President Obama signed the Social Security Payroll Tax Holiday extension through February 29, 2012. The payroll tax temporarily extends the 2% payroll tax cut for employees, reducing their Social Security tax withholding rate from 6.2% to 4.2% of wages paid through February 29, 2012 for those who make $110,100 or less. This also prevents many Americans from losing their unemployment benefits.

Medicare will continue paying doctors at the current rate through February 29, 2012. The reduced Social Security withholding will have no effect on employees’ future Social Security benefits. Congress reconvenes in January 2012 to determine if the payroll tax holiday will be extended. If not, employees will pay the 6.2% social security tax for the remainder of 2012.

Some people dread the end of the year because it is a reminder that you have to file your taxes. However, if you file taxes you are one of the lucky ones who has a job whether you like it or not or whether it pays enough, you have one. That is a blessing. Over 9 million people are still unemployed.

Before you prepare to file your taxes gather all of your receipts and write down all of your expenses for the year. This will be difficult if you can’t find your receipts or don’t have all of them. If that is the case then estimate your expenses. If you hire a tax preparer having receipts and documentation will be very helpful and will reduce your chances or getting audited because you have proof of your spending.

If you know you will owe taxes for 2011 request an extension no later than April 16, 2012 or setup a payment plan. There are tons of tax credits and deductions you can claim for 2011. Here are 33 ways to reduce your taxable income and increase your chances of getting a refund.

1. Uniforms, job supplies.
2. Tax preparation fees.
3. Job related training.
4. Job search expenses.
5. Home office business expenses.
6. Mortgage refinance fees.
7. Charitable donations (cash and non-cash).
8. State Sales Tax.
9. Property and estate tax deductions.
10. Foreclosure tax relief.
11. Casualty Loss (Disaster Area).
12. Reinvested Dividends (DRIP).
13. Mileage Deduction.
14. Earned Income Tax Credit (EITC).
15. Energy Credit.
16. Car Credit.
17. Home Buyer Credit for Military Personnel.
18. Capital Gains.
19. Child Tax Credit.
20. American Opportunity Tax Credit.
21. Personal Exemption Phase Out.
22. Increases in Standard Deductions.
23. Marriage Penalty Relief.
24. Dependent Care Credit.
25. Adoption Tax Credit and Adoption Assistance Programs.
26. Coverdell Account.
27. Student Loan Interest Deduction.
28. Above the Line Deductions for School Teachers.
29. Business Incentives and Credits.

How to Get In Debt

Most Americans have had or currently have at least one bad spending habit. Bad spending habits are just that habits and habit can be broken. It takes 23 days to develop a habit. Habits can be good or bad. Habits that are bad should be broken.

You should always try to become a better at everything you do and this includes breaking bad financial habits and replacing them with good ones. Stop doing at least one of these things to help you get out of debt and say no to debt. Then gradually make another step a habit and keep repeating. The following is a list of some things that can lead to being in debt.

1. No Budget
2. No Health Insurance
3. No Savings or Emergency Fund
4. Stop overextending yourself at Christmas
5. Stop Living Above Your Means
6. Don’t use credit cards for everyday purchases
7. Don’t use credit instead pay with cash
8. Stop Impulse Shopping
9. Avoid Cash Advances/Pay Day Loans
10. “Robbing Peter to Pay Paul" – using money for one bill to pay another bill and still having one bill unpaid
11. Balance Transfers - using credit cards to pay off other debt
12. No retirement account
13. Borrowing from your 401K
14. Co-signing for a loan
15. Having a joint account with someone other than a spouse
16. Deferring student loans or filing forbearance
17. Getting student loans for more than the cost of your college tuition
18. Using check cashing businesses or a liquor store to cash paychecks
19. Doing business with "bad credit no problem" companies
20. Not contacting companies regarding delinquent accounts
21. Repeating the same financial mistakes over and over

Avoiding these bad spending habits can help you say no to debt and say yes to savings and being debt free. Say yes to having a better financial life. Money can generate wealth or generate debt, you make the choice.

Is Skip a Payment a Bad Idea?

I received my December credit card monthly statement and the minimum monthly amount due displayed zero. I read further down the statement and noticed there was a note that offered me the option of skipping my December monthly payment. This is a trick. Don’t fall for it. You have to ask yourself, why are they offering me this? Is it because I am a good customer. No! It is because they want to make more money.

The Skip a Payment option is usually offered by mortgage or credit card companies at the end of each year. It can be difficult to resist this temptation. The offer usually comes during the holiday season when most families are struggling to make end meet or need extra money to buy holiday gifts.

Here’s the trick. If you didn't charge anything else on your credit card for the rest of the month, you would still owe more money due to the accrued interest added in at the end of the month on what you already owed. Some companies charge a fee for using the skip a payment option which is added to the total balance.

Using a skip a payment option, your January statement you require you to pay two months’ worth of interest plus whatever items you purchase in January. Skipping a payment reinforces bad spending habits. It seems easy and convenient but costs you more in the long run. The longer it takes to pay off a credit card bill, the more interest and finance charges accrue and the more debt you owe. The only one benefiting is the credit card company. If you are offered a "skip a payment" option here are some things to consider:

1. Avoid using it more than once
2. Don't use it if your credit card balance is 50% or above the credit limit
3. Avoid using it as a solution to a financial problem
4. Only use it if you cannot afford to make the minimum monthly payment and will end up missing a payment
5. Don’t use it if your credit card is maxed out or you are close to maxing out your credit card because the missed payment may put your over the limit and cause you to be charged an over-the-limit fee or late fee
6. Don’t use it as an excuse to buy something
7. It does not lower your credit score
8. You must be in good standing with the company

I am sending in my payment for my December statement. Stop making credit card companies rich. Remember, if something sounds too good to be true, it usually is.

10 Tips for Holiday Shopping

Each year Americans accumulate the largest amount of debt during the holiday season. If you don't have money to buy holidays gifts be honest with yourself, don’t go into debt to please someone else. January and February have the highest number of bankruptcies and divorces filed.

Christmas is not about how much money you spend or about giving gifts, it is about celebrating the birth of Christ and spending time with family and friends. Most times people buy holiday gifts for someone they don’t like or buy gifts that are returned. Don’t go into debt again. If you spent money you don’t have, take the gifts back to the store and save yourself the heartache of getting a big credit card bill in January. Here are 10 tips for holiday shopping.

1. Buy gifts during store sales. You can save anywhere from 20-70% off the original price.
2. Visit local vendors, you can probably haggle to good a good deal on the same items you find in the department store.
3. If you are good with arts and craft, think of creative gifts to give that you can make yourself.
4. Visit the dollar store to look for children's gifts.
5. If you have to buy gifts for several family members suggest a "Secret Santa" so only one person has to buy a gift for one person and set a limit on the amount spent.
6. Avoid buying gifts on Christmas Eve or the day before Christmas Eve. Selection is limited and lines at the register are longer. Out of desperation you may make bad choices and spend more spend than you have to.
7. Shop online, some companies waive shipping and handling fees during the holiday season.
8. Spend less money on gifts this year than you did the previous year.
9. If you have money after the holiday season and have paid all of your bills, buy gifts the day after Christmas. Department stores have great deals the day after Christmas and you may even get better deals than those offered during the Black Friday sales.
10. Make getting out of debt one of your new year's resolutions.

Limit for No Signature Purchases Increases Again

You may have noticed recently merchants are allowing credit card or debit card purchases under $50 to be approved without a signature and in some cases without providing a receipt. I previously used my check card for most purchases but recently started using cash more often.

I went to the grocery store today and was shocked to learn that my debit card purchase which was under $50 did not require my signature. I looked puzzled and the cashier told me that I didn’t need to sign for purchases under $50. This left me feeling uncomfortable.

Merchants should post a sign in the stores informing consumers that purchases under $50 do not require a signature, include this in the consumer disclosure agreement and post it in an easily accessible section on their website.

Credit card and debit card companies feel that no-signature transactions speed up checkout and encourage consumers to make more purchases. However, this only put consumers at a higher risk for identity theft which could go undetected and cost a consumer from $50 up to thousands of dollars.

American Express has a No Signature program that allows certain merchants to process credit card transactions without a signature for purchases of $25 or less. HSBC has a Premier MasterCard with PayPass that uses Tap and Go technology with no signature required for purchase under $50. PayPass will work with Google Wallet and the Android application that makes your phone a wallet. Subway will begin accepting the MasterCard contactless payments at some of its locations by the end of the March 2012. For purchases under $50 no signature will be required. I discussed the contactless feature in my March 3, 2007 blog post, “Why You Shouldn’t Get a Contact Less Credit Card.

Merchants claims it meets customer needs but I disagree. My need is to use my credit card or debit card and feel safe knowing that my transaction is secure and I have proof that I made the transaction if the need arises in the future. Without a signature the process to investigate will take longer and the consumer suffers the most. Without a signature the cashier cannot verify the signature on the back of the card with the receipt signature. If a consumer loses their wallet or leaves their credit card or debit card at a store, transactions will add up quickly. Merchants claim that there has been no increase in fraud since using the no signature programs but I find that hard to believe. The FTC received over 1.3 million complaints regarding identity theft.

Chargebacks (money paid back to a consumer for a fraudulent charge) can cost a merchant up to $25 per transaction and for a $25 purchase a merchant barely breaks even. So to ensure merchants continue to make money the limit has been increased to $50. Here are 6 ways to protect yourself against No Signature programs:

1. Use cash more often.
2. Ask for a receipt.
3. Use a credit card or debit card for purchases over $50.
4. Verify your monthly statements and verify your account balances at least once a week.
5. Contact companies where you shop and express your opinion about their No Signature program.
6. Ask for a signature comparison if you are a victim of fraud.

Are CDs A Good Savings Option

Certificate of Deposits (CDs) are available at most banks and credit unions. Some banks offer high interest rates for CDs than checking accounts such as Doral Bank, Discover Bank and MetLife Bank. Most CDs require a minimum balance of $1,000. A few banks require lower minimum balances such as Astoria Federal Savings and Citizens Trust banks however, they offer lower interest rates.

Banks make money with deposits from customers for savings and checking accounts, CDs, money market accounts, etc. and use that money to offer loans to individuals or businesses.

When you commit to a savings period of months or years, the bank loans your money since you don’t need it right away. Customers benefit from opening a CD account by earning more money from a higher interest rate. Customers who need to quickly access money do not benefit from opening a CD account. The pros of opening a CD account are:

1. The higher your deposit the higher interest rate you qualify for.
2. FDIC or NCUA insured.
3. Easy to open with usually a small amount, i.e. $500.
4. Offer different terms and interest rates.
5. Receive 100% of your initial investment plus interest earned.
6. Fixed interest rate.
7. Low to no risk.
8. You know how much you will earn.
9. Maturity periods range from 3 months to 5 years or longer.
10. Offers multiple savings methods such as laddering, step up and bump up.
11. Variable CDs have an interest rate that is tied to the stock indexes, if the indexes rise your interest rate increases.

The cons of opening a CD account are:
1. Interest rates may change.
2. If you need your money before the CD matures you will have to pay a penalty fee.
3. If you withdraw money before the CD matures your interest rate may be reduced.
4. Treated as a taxable investment so you pay taxes when the CD matures. You will pay federal, state and local taxes when the CD matures. For longer term CDs with higher interest rates you could pay more in taxes.
5. Interest rate may not keep up with inflation.
6. Earns less than the stock market.
7. Is not an investment vehicle.
8. If you choose a longer maturity and higher interest rate for a variable CD, you will lose access to funds and alternative uses of funds.
9. Interest rates are usually lower than a checking account but higher than a savings account.
10. You can’t make transactions.
11. You have to wait a specific time period to earn interest on your money.

Comparison shop to find the best deal for you at sites like www.bankrate.com/cd.aspx.

Should You Help Adult Children Financially

According to NEFE: 50% of parents are providing housing, 48% are helping with living expenses, 29% of giving money and 28% are helping with medical bills. Moving back home is the only affordable option for many adults. Some adult children are moving back home due to unemployment, debt or divorce.

It is important to clarify expectations when helping adult children financially. Parents should make it clear to their children what they expect and set a time frame to move out or stop financial dependence. Some parents don’t want to see their children suffer but in some cases parents are hindering instead of helping their children. This is especially true if children mismanage their money or make bad life decisions.

Show and give adult children effective tools to improve their financial situation. Parents have to be cautious and prevent taking on their children’s problems and making them their own. Parents also have to take care of themselves first before they can help their children. Here are 14 ways for parents to financially support adult children.

1. See where you are. Determine if you can afford to help financially, if not, provide your children with other alternatives.
2. Charge rent. If you are not a position to incur the extra costs charge rent enough to cover groceries and increased utility usage to prevent going into debt and getting behind on your bills.
3. Pay yourself first. Pay your bills first to keep a roof over your head. If you have any additional money left over you can use a portion of that to help your children.
4. Set rules. Set ground rules for how your household is run and discuss them.
5. Save. Continue to save money while you are helping your children.
6. Don’t dip. Don’t dip into your retirement or take out a loan to help children. Don’t co-sign for a loan or open joint credit card accounts.
7. Debt. Don’t go further into debt helping your children.
8. Give advice. Give advice on how to manage finances and deal with problems.
9. Be supportive. Be as supportive as possible and try to see your children’s point of view.
10. Provide resources. Provide resources such as social organizations that can help.
11. Set a limit. Set a limit on how much you will help and stick to it.
12. Loaning. If you loan money to your children, don’t expect to get it back. If you want to get the money back write a formal letter stating the terms of the loan and when the loan must be paid back.
13. Move out. Set a date when your children have to move out and don’t change it.
14. Don’t give money. Don’t give money directly. If your children need money to pay bills send the money directly to the company. If your children need spending they should find ways to generate income.

When Will They Learn

The NBA locked has ended. The day after the NBA lockout ended, some NBA players were partying at nightclubs and some were partying before the lockout ended. Some NBA players were experiencing financial issues during the lockout. Those who weren’t, partying is just a slap in the face to players struggling to pay their bills. No matter what your financial status, nothing last forever so it’s best to plan ahead and plan for the future. The NBA will probably experience another lockout so players you better be prepared. Here are 8 tips on how to lose your NBA salary:

1. Buy more than 1 car with a price tag of $300,000 or more.
2. Spend money on women, sneakers for everyone in your old neighborhood, buy drinks for everyone in the club or buy clothes for all your friends on a regular basis.
3. Blame everyone else except yourself for your financial problems.
4. Let someone else sign your checks.
5. Buy a home the size of Texas.
6. Spend your yearly salary in three montha.
7. Buy a plane, jet, yacht or something else equally as expensive.
8. Hire underhanded staff who steal all of your money.

Some NBA players make millions a year, some make over $200,000 a year which is enough to prevent filing for bankruptcy and more than enough to be considered above middle class. Unfortunately, many NBA players don’t know how to manage their money and don’t take the time to learn how. Many live paycheck to paycheck like some Americans, except their paycheck is larger. Here are 12 financial tips to ensure that you don’t file for bankruptcy, lose your home to foreclosure or have to work at Regency Furniture Showroom.

1. Create a support network. Hire an accountant, lawyer and financial advisor. Develop a great relationship with a banker and loan officer.
2. Learn about finances. Take a personal finance course, reach a book on personal finance or watch a television show to learn the basics about finances: learn how to invest, how to make your money grow, how to read financial statements, etc.
3. Know your worth. Know your net worth every year. Subtract your total liabilities from your total assets to determine your net worth. If the value is negative, you need to adjust your spending.
4. Reconcile. Reconcile your financial statements monthly but no less than every 3 months. Verify your account to ensure there are no errors and verify all your money is accounted for.
5. Set a signing limit. Set a signing limit for someone on your staff to sign checks for you if you don’t want to sign checks for small amounts. However, the advice Bill Cosby gave to Oprah was to sign your own checks and Oprah said she still signs most of hers.
6. Reduce spending. Reduce monthly expenses by 30% – 50%. Try to live off 60-70% of your yearly salary and save the rest of the money.
7. Unexpected. Create an emergency fund that has enough money to cover all of your monthly expenses for 9-12 months including child support.
8. Grow your money: Invest at least 20% of your monthly income after taxes, start a business or invest in a profitable business to grow your money.
9. Branding. Get as many endorsements as possible; create a website or blog or social media profile, create a logo, slogan, nickname or motto to establish a brand. Once you establish a brand it opens the doors to many other opportunities for generating income.
10. Get sponsors. Instead of throwing parties and paying for them yourself, get sponsors to pay for a portion or pay for the entire party. You can also have sponsor product giveaways for attendees. This saves you money and helps promote the sponsor’s products.
11. Inner Circle. Surround yourself with friends who having good spending habits who can provide advice on how to manage your money and help your money grow.
12. Think about tomorrow. Don’t live your life day to day, think about how you want to live your life in the next 5 - 10 years: where do you want to live, what lifestyle do you want to have, how will you earn money when your career is over, how will you pay child support, etc.

How to Get an A Plus Credit Score

Many Americans have bad credit but more people have received bad credit ratings due to the recession. Bad credit can prevent you from getting hired for a job, or getting approved for a loan or credit card. You may be provided explanations of why you have bad credit but still may not understand what it means. One of the major factors in understanding your credit report and your credit score are the reason codes listed on your report. Some reason codes that may appear on your credit report are:

• Length of credit history – how long you have had credit, either a loan or credit card.
• Too many inquiries – you have had more than 1 or 2 companies pull your credit report within the last 24 months which lowers your credit score. You should have no more than 1 inquiry every 12 months if needed.
• Too many new accounts – you are considered a risk because you opened more than 1-2 new accounts within the last 24 months which lowers your credit score.
• Account balances too high – your credit cards are maxed out or the balances on your credit cards are above 50% of the credit card limit.
• Number of revolving and installment accounts – you need to have a mix of revolving (credit cards, line of credit) and installment accounts (loans).
• Recent delinquency – you had one or more accounts that were paid late in the past 0-3 years.

Your credit score consists of 5 factors which determines if you have good or bad credit: your payment history (35%), the total amount of debt owed (30%), length of your credit history (15%), new credit (10%), and the types of credit used (10%). A credit score ranges from 300-850 with 850 being the highest score. Your credit score is viewed as an indication of your trustworthiness and your ability to pay your bills on time.

Common myths about your credit score: paying a late account automatically increases your credit score, ignoring older accounts means you no longer have to pay them, if an account that is 7 years old is removed from your credit report you don’t have to pay it, medical bills don’t have to be paid, only loans and credit cards are reported on your credit report, and if you pull your credit report yourself this lowers your credit score. Here are 8 ways to get an “A” plus credit score.

1. Order your credit report and credit score from the 3 major credit bureaus, Experian, Equifax and TransUnion online at annualcreditreport.com or by phone at 877-322-8228. If you find any errors on your credit report dispute the information online for a quicker turnaround time. Mail any supporting documentation.
2. Pay off collection accounts, judgments, and tax liens as soon as possible. Each account paid can increase your credit score by 20-25 points.
3. Prior to paying a delinquent debt ask the company to remove it from your credit report. It is easier to negotiate prior to sending in your payment.
4. If you have been 30 days or more late on a credit card bill get current. Getting current on your credit card bills can increase your credit score by 20-30 points.
5. If your credit card balance is 50% or more over the credit card limit send your payment so that it arrives 5 to 7 days before the due date. This will ensure the most recent balance is updated to the credit bureaus each month.
6. Negotiate. Ask creditors to settle an account for 50%-70% of the total amount owed. In exchange for payment ask the creditor to remove the account from your credit report and request a confirmation letter stating the account will be removed prior to making a payment. If the creditor refuses ask the creditor to report the account as “paid” or “paid in full” on your credit report.
7. Pay balances in full at the end of each month.
8. Call your credit card company and tell them you would like to increase your credit score and ask them for some tips.