Financial Tips for Teachers

                                                               

There are approximately 4 million teachers in the United States. There are over 50 million students being taught in the United States plus.  Becoming is a huge sacrifice and teacher requires specialized education, certification and continuing education for elementary, middle school and high school levels.  Many teachers are committed to educating their students despite political, state and local roadblocks. In addition, teachers are not provided with adequate resources, tools and supplies for their students. 

According to research by the National School Supply and Equipment Association public school teachers in the US spent more than $1.33 billion out of pocket on school supplies and instructional materials in the 2009-2010 school year. 

According to a nationwide survey conducted by AdoptAClassroom.org, “This survey of our teachers makes one thing abundantly clear: teachers are not only educating students, but through their out-of-pocket purchases, teachers are tackling major social issues such as homelessness, poverty, hunger and teaching students basic life skills,” said James Rosenberg, founder of AdoptAClassroom.org. 

Many teachers spend money to buy their students necessary supplies such: pencils, papers, pens, glue, arts and crafts, snacks, clothing, toothbrushes, hygiene products, field trip fees, toys, and alarm clocks and spend on average $444 a year. However, they not receive reimbursements and only receive a small tax credit.

The average starting teacher salary is $35,672. Some teachers are forced to obtain part-time jobs to make ends meet and to help cover costs for out-of-pocket expenses for students.  Here are some financial tips to help teachers stretch their paychecks.

Deals for Teachers to Stretch their paycheck

1. Shop online for bargains. Use comparison shopping websites to find bargains at sites like Amazon, eBay or Bizrate.com.
2. Used vs. New.  Buy used vs. new items or use recycled items on sites like freecyle.com. You can find many great items still in good condition.
3. Downsize.  Trade in your expensive car for a cheaper used car with no note.  Downgrade your home to a smaller one to have a cheaper mortgage payment or refinance to get a lower interest rate.
4. Coupons. Use coupons to save money when shopping. Also shop at discount or wholesale stores such as Costco, Sam's Club or Target. Research days when stores have sales and take advantage of the sale along with coupons to get a better value.
5. Barter.  Barter services with friends, co-workers or family members who have businesses or who can provide a skill, produce or service that you need.

Student Loan Repayment Assistance

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. Do extensive research before consolidating your student loans. In addition, you may not be eligible for various student loan forgiveness programs if you consolidate your student loans.
2. Student loan forgiveness programs. Teachers who work in low-income elementary or secondary schools may be able to cancel a portion or all of their federal loan debt.
3. Make payment arrangements. Contact your loan servicer and make payment arrangements such as forbearance, deferment or economic hardship to assist with paying back student loan debt.
4. Use discounts and benefits. Use discounts or benefits to pay back student loan.  You can lower your monthly payments for Sallie Mae loans, pay online or through automatic deduction to get a possible interest rate reduction, or link your Sallie Mae account to an Upromise account.

Budgeting/Saving

1. Reduce Expenses - Find ways to reduce expenses. Catch public transportation or carpool to work. Shop at discount or wholesales stores.  This will help you to stick to a budget and allow you to have money to pay down debts.
2. Pay Down Debt - Don't ignore overdue bills. Pay more than the minimum monthly payment to pay down debt faster.
3. Create a Budget - A budget will help determine what you owe, what you earn and what you spend.  A budget will also help you to quickly see what areas you need to make adjustments and reduce expenses.
4. Consult a professional – ask questions before opening an account and set financial goals with your financial advisor because you will need at least 70% of your income during your retirement years.

16 Ways to Pay Your Taxes if You are Unemployed

There are over 10 million Americans are still unemployed. Many unemployed Americans end up owing taxes because they are not aware that unemployment compensation or unemployment benefits are taxable.  State unemployment insurance benefits up to 26 weeks and extended benefits, up to an additional 13 weeks are also taxable. Seven states fully exempt unemployment benefits: Montana, New Jersey, Alabama, Pennsylvania, Arkansas, California, and Virginia.  Wisconsin and Indiana offer partially exempt unemployment benefits. All other states that offer unemployment benefits tax them in full.

When you apply for unemployment you have the option to have income tax withheld. If you do not choose this option you will be required to pay taxes on the money received when you file taxes for the current year and could end up owning thousands of dollars. You will receive a Form 1099-G of the following year which will show your total unemployment compensation and the amount of federal income tax and state taxes that were withheld if you choose those options.

Even if you stopped receiving unemployment compensation it is to your advantage to file a return. You may be entitled to a tax refund if you income is lower for the year.

If you took early withdrawals from a pension plan or retirement account such as a 401k, the withdrawals are taxable unless they are rolled over into another qualified retirement plan or IRA within 60 days. If the withdrawal is used to pay for living expenses while you are unemployed the withdrawals are taxable. In addition, if you are under age 59 ½ you may also be subject to an additional 10% tax on early withdrawals unless your money is stored in a 457 plan. 

If you sold assets or property that you own, such as investments you may be subject to income tax if you had a gain on the sale. If you start a business or have other income on which federal income tax is not withheld, you may need to make estimated tax payments during the year. You should expect to owe taxes of $1,000 or more when you file your annual income return.

Filing bankruptcy does not discharge federal taxes owed.  Here are 16 options if you owe taxes and are unemployed.

1. Apply for a loan from a bank or credit union. The interest rate is much cheaper than setting up a payment plan with the IRS or a state taxing authority.
2. Apply for a private loan from a friend or relative or from a peer-to-peer lending company such as Zopa or Prosper.
3. Apply for a home equity loan or sell some assets.
4. Apply for a hardship withdrawal from a retirement plan or pension plan to pay for expenses including medical insurance expenses, facing foreclosure or considering bankruptcy. 
5. Apply for an installment plan and setup an IRS payment schedule by filing IRS Form 1127. If you can pay the amount owed in 3 years.  The IRS will charge a one-time fee of $105. The fee will be added to the total amount of back taxes, penalties, and interest that you owe. You may be eligible for reduced penalties.
6. Extend. Request an extension and request the maximum extension time of 6 months.
7. Pay by credit card.  Pay by credit card if you don’t have the money when the bill is due.
8. Use savings.  Use money in savings or checking accounts, savings bonds, stocks, mutual funds, etc. to pay the taxes.
9. Life Insurance. Take out a loan from your life insurance policy.
10. Borrow. Borrow money from family or friends.
11. Earn extra money. Consider getting a part-time job or work overtime at your existing job to earn money to pay back your taxes.
12. Pay.  Even if you can’t pay the required payment, pay something and pay what you can afford. Interest is charged on unpaid taxes from Tax Day until the day you make the final payment.
13. Short-Term.  If you can pay the taxes owed within 120 days contact the IRS to see if you can qualify for a short-term extension.
14. Streamline agreement. If you own less than $25,000 and can pay the amount within six years, ask the IRS for a streamlined payment agreement using IRS Form 9465 for an application fee of $102.
15. Ask the IRS. Go to an IRS office to get advice on the best option to handle your tax situation.
16. Offer in Compromise.  Request an Offer in Compromise if you cannot pay the total amount owed. This allows you to settle your tax debt for a smaller amount than you owe if you will be unable to pay back the amount owed within 10 years. The application fee is $150. 

13 Marvelous Ways to Save Money on Valentine's Day

According to the Greeting Card Association Americans will spend over $150 million on greeting cards for Valentine’s Day this year. According to calling services provider VIP Communications Inc. long-distance calls from overseas will triple in volume during Valentine’s Day.  Fifty-one percent of Americans will buy candy, over 30% will buy flowers, and others will purchase reasonable gifts such as sweaters, coats and winter accessories.

Valentine's Day is so commercialized these days. Advertisers show commercials that focus mainly on buying women gifts.  They also make women believe that the only time a man should show affection is on Valentine's Day.  I believe if you show affection all year long you won't have to dash at the last minute to buy an expensive gift.  If couples treat each other with respect, communicate with each other and live in love, Valentine's Day will not seem as one the biggest holidays of the year.

Valentine's Day gifts and memories should be a bonus to a healthy relationship not a chore or ultimatum of "he or she better get me something nice or else".  Gifts should not be a measure of how much someone loves and you should not fall in love or like with someone because of the gifts they buy.

If you know your significant other is financially strapped don't be selfish and ask for or expect an expensive gift for Valentine’s Day.  Be realistic and understanding and know that sometimes men need a little help with gift ideas.  Be appreciative of whatever you get, it’s the thought that counts, unless you get a letter opener.  Here are 13 fabulous ways to celebrate Valentine's Day and save money.

1. Know your partner. If your partner or spouse gets very excited about Valentine’s Day and wants a big gift, then you better get out your wallet and spend accordingly.  If your partner or spouse likes simple gifts or gifts from the heart then buy that.  Not everyone likes chocolate, teddy bears or flowers so know who you are shopping for.
2. Ask. Don’t be afraid to get gift suggestions from your partner or spouse. Ask them what they need or would like to do for Valentine’s Day.  If they don’t tell you ask their best friend, sibling or mother for gift suggestions.
3. Avoid going into debt.  If you can’t afford to buy a gift or spend money be honest.  Don’t wait until the last minute and buy a cheap gift or grab something without putting any thought into the gift, it will show.  Find inexpensive ways to show your love. Next year plan ahead and save up to buy a gift.
4. Going out. If you suspect your date feels uncomfortable or is short on cash offer to split the bill and don't get upset about it. Things happen. At least he or she was thoughtful enough to want to spend time with you. He or she may just be afraid to admit he or she is having financial problems.
5. Be creative. Write a love letter or love note. If you aren't in love yet, write a note expressing how you feel and what you like about your significant other. However, don’t use this in lieu or a gif.  It may not go over too well and you may be in the doghouse for a few days.

6.      Be different. Everyone buys roses on Valentine's Day.  Find out what her favorite flower is and buy that instead of roses.  It will show her that you are thoughtful, a leader not a follower and that you really care.

7.      Give from the heart. If you get a balloon or chocolate get your significant other's name on it or get personalized chocolates or baked goods. 

8.      Purchase a quick getaway. Check online for specials for bed and breakfast inns that are inexpensive or stay overnight in a local hotel room.

9.      Do a staycation.  Send the children out overnight.  Clean the house.  Cook a meal, draw a bubble bath and enjoy each other’s company if you can’t afford to buy each other gifts.

10.   Be romantic. Give each other massages with scented massage oils, read love poetry, watch romantic movies, slow dance, gaze into each other's eyes, and then have "desert".

11.   Free.  Check your local newspaper for free events during Valentine's Day weekend.

12.   Be a chef.  If your significant other likes baked goods. Bake their favorite baked good and feed it to them or fix breakfast in bed.

13.   Work. Offer to clean the house, do chores or complete your “honey do list”.

A Hidden Credit Score Booster

                                                             

Account re-aging can help you get back in good standing with your creditors and increase your credit score. Account re-aging means the creditor will no longer consider an account late and will no longer be reported on your credit report. 

Creditors will re-age your account once you have established a history of making payments on time.  A creditor may re-age a past-due account if you agree to enter a debt management plan. The revised payment plan can be negotiated between you and your creditor or with the help of a credit counseling service or a debt management company.  If you use a debt management or debt consolidation program make sure they are a reputable company and get the agreement in writing.  

An account is legally considered delinquent if a payment has not been received 30 days after the due date. Banks have 2 methods for reestablishing delinquent accounts: re-aging and a financial hardship program.  In the financial hardship program, you are given a fixed payment amount, and reduced interest rate for a year.  This helps reestablish trust with the bank. Re-aging helps you because:

1. It stops late fees and over limit fees and allows more of your monthly payment to go towards the principal. This shortens the time it takes to pay off your debt.
2. The creditor reports your account as current with the credit bureaus.  
3. Although you still owe the debt you are no longer delinquent on the account.

For mortgage accounts that were previously late, if you have been current for the last 12 months, ask the lender to re-age your account. By doing this all the late payments over 12 months old will be removed from your credit report.

Federal regulations and creditor policies limit the number of times an account can be re-aged, so once you have re-aged an account continue making your payments on time. A creditor may only re-age an account once in a 12 month period and twice in a five year period for credit card accounts, and once in a five year period for other types of accounts. In June 2000, the Federal Financial Institutions Examination Council established new guidelines for issuers to follow when re-aging credit card accounts. To be considered for re-aging:

1.      The borrower should demonstrate a willingness and ability to pay.

2.      The credit card account should be at least 9 months old.

3.      The borrower should make at least 3 consecutive minimum monthly payments or the equivalent amount.

If a creditor agrees to re-age an account, ask them to confirm the details in writing. If the company refuses put the details of your re-aging program in writing.  Send a copy to your creditor by certified mail with a return receipt.

By re-aging an account, the company will remove all late payments and added interest, reduce the interest rate paid on the account, and bring your payments current. They will also report the payment arrangement to the 3 credit bureaus, Equifax, Experian and TransUnion and this will increase your credit score.