Turns Out You Might Get Taxed, After All…

“Morale is when your hands and feet keep on working when your head says it can’t be done.”
- Benjamin Morrell

As you know, from previous notes we’ve exchanged, I really do try to steer clear of political disputes. My clients hail from all sides of the political spectrum, and it does me no good to tick off a bunch of friends to somehow “prove” my bona fides to another.

But I think we can all agree that our political system isn’t what it should be. That said, I still believe we live in the best country on the planet–despite how disappointed we can be with individual politicians. And with these individuals, I think it’s fair and appropriate to point out that “promises” made on the campaign trail sometimes must bow to facts on the ground.

Why do I write about this?

Well, it’s now in the news that President Obama may indeed be contemplating a tax increase on middle-class families, despite his promises to the contrary: http://finance.yahoo.com/news/2-Obama-officials-No-apf-2491158742.html?x=0&.v=7 . Again, people may (vigorously) disagree about the particular economic strategy of raising taxes in the midst of a downturn, but after working with the IRS for years, I’ve discovered this unassailable truth…

The government really likes to have your money.

And sure–putting yourself in their shoes, it’s hard to blame them! Of COURSE individual bureaucrats and politicians believe that THEIR particular initiatives deserve funding–it’s normal human nature, right? It’s just that the funding comes in the form of being taken from your and my paycheck.

Which is why we do what we do here.

I’m all for paying my fair share–I just hate when I see families hit with a “stupid tax” because they didn’t know all the relevant tax code…or because they worked with somebody who didn’t take the kind of time we take.

On to this week’s Personal Strategy Note: now’s a great time to get the education you’ve been putting off to advance your career. Once you’re done (hopefully) the job market will be MUCH better than it is now! I’ve got some money-saving tips for you this week…

“Real World” Personal Strategy
Go Back To School…At No Charge!

Recessions often see a “boom” in adult education, and this one’s no different. But if you’re seriously considering how to get ahead, do NOT leave behind these strategies to get the thing paid for!

Scholarships
Many scholarships don’t have age limits, which makes anyone eligible to apply. Check out www.Fastweb.com  and www.SuperCollege.com  to search for available scholarships.

Professional and Trade Organizations
Local and national professional and trade organizations often offer grants and scholarships. For instance, The San Diego Foundation (http://www.sdfoundation.org/grant/ ) has several scholarships for adults. Begin by doing an Internet search for your particular locale and specialty. You can also contact your local Chamber of Commerce to see if they have any information on local grants and scholarships.

Colleges and Universities
Many schools offer scholarships created especially for adults who are returning to school. Check a school’s individual Web site or contact the admissions office for details.

The Government
Individual states may also provide grants to help people attend re-training programs that they sponsor. Information and links can be found at www.careeronestop.org . In addition, the Obama administration has launched www.opportunity.gov  to help unemployed adults return to college. The site includes information on a variety of federal student aid programs.

Employers
A large number of employers still offer tuition assistance, especially if you can show how the educational program will help your job performance. For adults who want to return to school while they are still working, this is another avenue to consider.

The Bottom Line
With a little research and a little effort, returning to school may be a whole lot easier…and a whole lot cheaper…than you think!

Hope this helps!

There ARE Some Shady Tax Pros Out There

“A lot of people like to do certain things, but they’re not that good at it. Keep going through the things that you like to do, until you find something that you actually seem to be extremely good at. It can be anything.”
- George Lucas

This subject came up in a note I wrote in mid-June, and the topic is back in the news.

You see, unlike my clients, there is a growing number of individuals and families who feel like they get a bit taken advantage by unethical and poorly-trained tax preparers and professionals. Families get sold on promises of fat refunds and excellent service…and then reality sets in. Errors, unfulfilled promises and worse–audits (!) come down the pike, and these families are left hanging in the lurch.

Well, the federal government is considering requiring a license for *anyone* who prepares taxes on another’s behalf. And yes…you might think I’d be opposed to these additional standards and licenses, but, in fact, legitimate businesses generally welcome higher standards as a way of announcing to our clients that we meet those standards! The American Bar Association and H&R Block are just two of the organizations that have announced they support the IRS effort.

Further, you can add your own comments for the IRS here: http://www.irs.gov/newsroom/article/0,,id=211141,00.html . Feel free to add your thoughts–it will NOT increase your likelihood of an audit .

Moving on to the subject of this week’s Strategy Note, we’ll be talking CARS. Specifically, of the “clunker” variety, as the new federal program started on Friday. Plus, there’s some other ways you can save on your taxes through qualifying vehicle purchases, which I lay out in this week’s note.

Oh, but before I go there, let me remind you of our “Independence Month Special”, esp. for your friends who may want the peace-of-mind from having some REAL professionals review their previous years’ returns–up to three years previous can still trigger an amendment which can save on taxes!

“Real World” Personal Strategy
Cars, Cars and CARS…

Two items today, re: vehicle purchases…

There’s been a bit of controversy surrounding the new program for trading in low-mileage vehicles (see here: http://abcnews.go.com/Business/story?id=8154897&page=1) , but regardless of your opinion on the program, it started on Friday.

To recap…

*Trade-ins must be 1984 models or newer, get no better than 18 miles per gallon, and have been registered and insured for the past year. (An interesting note is that buyers’ trades will actually be completely scrapped and have no value to the dealership above the amount of the voucher. A 10-year-old Lexus might qualify for the biggest ($4,500) voucher, but it’s almost certainly worth more than that on the open market, so you should keep that in mind.)

* The mileage you get in your daily driving does not matter one bit. What matters is what’s on record with the government; its source of data is www.fueleconomy.gov. A muffler-dragging 23-year-old Honda may meet the popular definition of “clunker”, but if the government’s estimates show it should get more than 18 mpg combined new, it’s not a clunker. You’ll see two sets of fuel-economy numbers for most cars: one calculated under an older EPA system, the other recalculated to reflect a new formula. Use the new one.

*The numbers:
- New passenger vehicles must have a combined mpg of 22mpg; “Light duty” trucks must be 18 mpg; and trucks over 6,000 lbs. must get 15mpg

- To qualify for the program, the “old” vehicle must get…

>Passenger vehicles– 4 mpg LESS than the new for $3500 credit; 10 mpg LESS than the new for $4500 credit

>”Light duty” trucks– 2 mpg LESS than the new for $3500; 5 mpg LESS for $4500

>Trucks over 6K lbs– 1 mpg LESS than the new for $3500; 2 mpg LESS for $4500

Let us know if we can help…

SEPARATELY from “Cash for Clunkers”…

A special deduction will be available on your 2009 individual tax return, next year, whether you itemize deductions or not.

If you purchase a new passenger vehicle between February 16, 2009 and before January 1, 2010, you may qualify for the deduction. There are income limitations after which a phase-out will occur. For example, if your modified adjusted gross income is between $125,000 and $135,000 for individual filers, or between $250,000 and $260,000 for joint filers, the deduction may be discounted or disallowed.

No matter whether you purchase a new car, light truck, motor home or motorcycle, this deduction will be limited to the state and local sales and excise taxes paid on up to $49,500 of the original purchase price of the vehicle. According to the IRS, this deduction will enable you to buy now and get cash back later on your 2009 tax return.

Hope this helps!

Summer Time is Tax Cutting Time!

No life ever grows great until it is focused, dedicated, disciplined. - Harry Emerson Fosdick

It’s pretty crazy that we’re already nearing the end of July! Is it just me, or is time really flying by? More than halfway through 2009…

Well, I often try to avoid discussing taxes with you in these personal notes. I find that too many tax professionals and accountants are so full of tax jargon, that the regular family just ends up buried in a blizzard of gobbledy-gook.

I hope you can already tell that I take a different approach . And, of course, it’s our JOB (and our true pleasure at my firm) to take care of most of that stuff on your behalf in the first place!

But I did want to make some suggestions this week for how you can plan ahead NOW to avoid getting nailed next tax season.

That’s my subject for this week’s Personal Strategy Note…read on, and leave your feedback or questions!

“Real World” Personal Strategy

Tax Cutting Tips For The Summer

Here are just a few summertime tax-saving ideas to consider:

* If spring cleaning left you with outgrown clothing and household items you no longer use, donate them to charity. Items in good used condition qualify for a tax deduction.

* If you and your spouse work, consider sending your children to a summer day camp. The cost may qualify for the dependent care tax credit.

* If you operate an unincorporated business, consider hiring your children to work for you this summer. You can deduct reasonable wages paid to them for the work they perform, and there’s no social security tax on their wages if they are under age 18.

* Summer is great for entertaining customers or clients.  Keep records of the cost, the date, who was entertained, and what the business purpose was. However, your tax deduction is limited to 50% of your cost.

* Combine business with your summer travel, and you may be able to take a tax deduction for the business portion of your costs.

Need To Make Some Home Improvements?

Make energy efficiency changes and you might be able to cut your 2009 tax bill at the same time.

The 2009 tax law signed in February expanded energy tax credits in order to encourage homeowners to make improvements that will make their homes more energy-efficient and save money over the long run.

Qualifying improvements – such as adding insulation, energy-efficient exterior windows, and energy-efficient heating and air conditioning systems – could cut your taxes. Previously the credit for energy improvements was 10% of the cost, with a $500 lifetime limit. The new law increases the credit to 30%, with a $1,500 limit.

The new law also eliminates the cap on the 30% tax credit for alternative energy equipment, such as solar water heaters and geothermal heat pumps installed in homes.

For details and guidance in maximizing the enhanced energy credits for your home improvement projects, give us a call. We’re here to help you benefit from every available tax break!

Hope this helps!

To a LOW tax bill for you!

More on Achieving Financial Independence

“A true conservationist is a man who knows that the world is not given by his fathers, but borrowed from his children.” – John James Audubon

Thanks for your responses  from last week’s Strategy Note on achieving financial independence. It was so well-received, that I thought I would spend a bit more time on that subject in this weeks’ note for you.

But, before I get there, I’d like to speak some encouragement to you. A few people wrote to me saying that they were feeling pretty dispirited about their personal situation…and that anything discussing “financial independence” really seemed like a pipe dream, and unrealistic for them.

As usual, I know that when a few people write about it, there’s many more that think it, and I’d like to speak a word to you, if you’re in that category.

Don’t give up.

Yes, simplistic perhaps–but with all of the folks in this economy who are going through hard times, it’s easy for them to believe that there isn’t a light at the end of the tunnel. Did you know that most millionaires have previously been bankrupt at some point? In fact, it’s often the “fire” of these times of trouble which serve to clarify things–and get you making smart decisions, perhaps for the first time.

So, if you’re feeling the financial heat right now, look out for the blessings in the midst of pain. I know it’s hard–but chances are, you’re being reminded of what’s REALLY important…and often, seeing this again can be a launch pad for living the kind of life that you really want to live.

So go for it!

Well, I’ve got some additional thoughts for you about what I wrote in last week’s Personal Strategy Note…

“Real World” Personal Strategy

How To Achieve Financial Independence (Part 2)

Money has no value unless you’ve got the time and good health to enjoy it. In fact, if you have to be poor, would you rather be poor now or at retirement? By planning carefully and investing wisely, you shouldn’t have to make this choice.

Planning for Financial Independence

I believe that you ought to save early and often, making regular scheduled investments in the stock market through the use of mutual funds.

Over the long term, the U.S. stock market yields an annualized return of about 10% (assuming dividends are reinvested). Yes, things are volatile right now…but “market risk” is not the greatest danger to your savings – inflation is the greatest danger. The value of your retirement erodes at a rate of roughly three or four percent every year.

But the stock market has always recovered from even the steepest declines.

Here’s an historical note for you (pertinent now): the worst one-year period for the Dow ran from 01 July 1931 to 30 June 1932. It lost 68.92% of its value. Would you have bought stock then? If your goals were long term, that’s exactly what you should have done. The best 30-year period for the Dow ran from 01 July 1932 to 30 June 1962, during which time it offered an average annual return of 14.34%.

Becoming Financially Independent

Reaching financial independence isn’t always easy. It takes time and work. You cannot accomplish your goal of achieving it by wishing. It takes doing. It takes being committed to and being absolutely determined to act.

One way you can act now, is to take a look at your personal expenses. Here’s some tips to cut them…

    * If you and your partner both work, try to live on only one income. Invest the other.

    * Save an emergency fund, but don’t make it too large. I like a small (one-month of expenses) emergency reserve, with everything else invested in mutual funds.

    * Never borrow money, except to buy a home. If you use credit cards, use them only as a convenience, not to borrow.

    * Pay yourself first. Every month, invest some portion of your income for your future.

Finding more money to actually invest is the best way for you to reach financial independence. And one great way to find extra money is to cut back on your existing expenses.

Yes, you can achieve financial independence, but you can’t get there overnight, and you can’t get there without setting goals and making sacrifices.

So start now.

Hope this helps…

To your greater independence!

How to Achieve Financial Independence

No bird soars too high, if he soars with his own wings. - William Blake

I truly hope you enjoyed your Independence Day festivities.

Interestingly, did you know that the Declaration of Independence was actually approved on July 2nd, and most of the delegates didn’t sign it until August 2nd? While John Adams expected Americans would celebrate July 2, the date on the publicized copies of the document was July 4th…so that’s why we celebrate it then!

Some other facts you may not know about our just-passed holiday…

* Three presidents died on July 4th: Thomas Jefferson and John Adams in 1826, and James Monroe, in 1831. Calvin Coolidge was the only president born on July 4th, in 1872.

* The Massachusetts General Court was the first state legislature to recognize July 4th as a state celebration, in 1781.

* The first recorded use of the name “Independence Day” occurred in 1791.

* The U.S. Congress established Independence Day as an unpaid holiday for federal employees in 1870. They changed it to a federal paid holiday in 1931.

For those of you who enjoyed a paid holiday on Friday–thank the Great Depression-era Congress!

So…all of this about “independence” got me thinking about YOUR *financial* independence. Are you on track for it?

I’ve got some thoughts for you about how to get there in this week’s Personal Strategy Note…

“Real World” Personal Strategy

How To Achieve Financial Independence

Often, as we strive to keep our heads above water in these financially crazy times, it’s easy to lose sight of why we’re doing this. What is the goal? What is it we’re trying to accomplish by earning wealth? For me – and for many others – the answer is Financial Independence.

I would define this as “having an income sufficient for your basic needs and comforts from sources other than paid employment”. Financial independence implies freedom. It’s the condition of having saved enough money that you can do whatever you choose. Whether you elect to keep working doesn’t matter – you have enough saved and invested to follow your dreams.

But is financial independence just a pipe dream? Is it something only for the lucky and the strong? No, it’s a goal that anyone can fulfill as long as they’re armed with some basic knowledge, as long as you make smart choices.

As I see it, there are four keys to accumulating wealth:

1. Start investing as early as possible. It takes significantly less money to accomplish what you want, and you have more time working for you.

2. Be determined to save on a regular basis. It is an easy way to accumulate wealth.

3. Begin investing with the largest possible sum you can. You will have more money working for you over a longer period of time.

4. Reach for the highest rate of return you believe you can safely receive on your money over time. Each additional percent is important. The higher the rate, the less money it takes to accomplish what you want.

Financial independence is built upon these four guidelines.

Confronting your financial challenges

In order to save money, you must fight to keep from spending it. I encourage you to set goals, to prioritize wants. Since money can be spent only once, you need to decide which wants are most important. To do this, it may be helpful to place a value on each of your wants.

So…here’s an exercise for the week: Pull out a piece of paper and list your wants.

These can range from a new house to a hot tub to a trip to London to a new blender for the kitchen. Next to each item, write why you want it. (You might want a hot tub, for example, because it would allow you to relax with family and friends.)

When you’ve finished, take another piece of paper and re-order the list based on how important each want is to you. If a trip to London tops the list, are you still willing to delay it by spending $40/month for that gym membership you rarely use?

Confront this issue first (keeping in mind those four keys mentioned above), and I’ll be back with more thoughts for you next week.

Hope this helps!

To your greater independence…

All This Debt Can Get You Down…What To Do?

“For beautiful eyes, look for the good in others; for beautiful lips, speak only words of kindness; and for poise, walk with the knowledge that you are never alone.” - Audrey Hepburn

Well there’s potentially depressing news all over the place these days. The loss of an American Icon (two, if you include Farrah Fawcett), unrest around the world and all of the political developments can leave your head spinning, I bet!

Further, if you do follow the news, we continue to get barraged with stories like this:

http://www.istockanalyst.com/article/viewiStockNews/articleid/3317499

Essentially, not only are many Americans falling into debt…but so is the country! It would be even worse were it not for the fact that many other established countries are in even worse shape (UK, Germany, etc.).

But here’s my advice on this: Enlightened Ignorance. By “enlightened”, I mean that it’s not a bad thing to be aware of the fact that our national money situation ain’t great. But by “ignorance” (despite the negative implications of that word), I mean that you CANNOT waste your time worrying about things you can’t control (outside of the ballot box).

It doesn’t help you to spin your wheels in worry and frustration over our national debt. In many ways, it’s just like how it doesn’t serve your peace-of-mind (or even your wallet), to be endlessly spinning about your own personal situation. In fact, debt and financial unrest can be a cleansing process–it can help you remember what’s MOST important in your life (and it’s not money). Embrace the clarification which your situation is bringing.

Perhaps our country can have a similar, national epiphany. We’ll see.

But speaking of our nation, there’s a new law coming, and we’re starting to get questions around here about it: “Cash for Clunkers”.

In this week’s Personal Strategy Note, I break down what you need to know about this new bill, and what it could mean for your wallet.

Enjoy, and leave your feedback and questions!

“Real World” Personal Strategy

The Truth About “Cash for Clunkers”

The new law, which offers owners of older vehicles up to $4,500 to trade them for brand-new vehicles, came into law this week…but beware!

Official-looking sites have sprung up, offering information on the program and asking for personal data or preregistration. Here’s a quick way to know if it’s not official: If it uses the term: “cash for clunkers,” it’s not official at all. The program’s *official* name is the Car Allowance Rebate System.

All the details aren’t yet in stone–regulators have 30 days to set up the details and a system for distributing and collecting vouchers, making late July or early August the soonest the incentives could be available.

But the bill does provide $1 billion for the program through November, 2009. An estimated 250,000 vouchers will be issued on a first-come, first-served basis.

Here’s how it’s likely to go down: Dealers will let you know that your trade qualifies, credit the amount to your down payment, then apply on your behalf for the voucher. Only new vehicles qualify — domestic or imported, purchased or leased — and they must have sticker prices under $45,000.

IMPORTANT: Buyers do not have to register or apply for any part of the program. Dealers do.

Some other guidelines for you:

* Trade-ins must be 1984 models or newer, get no better than 18 miles per gallon, and have been registered and insured for the past year.

(An interesting note is that buyers’ trades will actually be completely scrapped and have no value to the dealership above the amount of the voucher. A 10-year-old Lexus might qualify for the biggest ($4,500) voucher, but it’s almost certainly worth more than that on the open market, so you should keep that in mind.)

* The mileage you get in your daily driving does not matter one bit. What matters is what’s on record with the government; its source of data is www.fueleconomy.gov . A muffler-dragging 23-year-old Honda may meet the popular definition of “clunker”, but if the government’s estimates show it should get more than 18 mpg combined new, it’s not a clunker. You’ll see two sets of fuel-economy numbers for most cars: one calculated under an older EPA system, the other recalculated to reflect a new formula. Use the new one.

* The numbers:

- New passenger vehicles must have a combined mpg of 22mpg; “Light duty” trucks must be 18 mpg; and trucks over 6,000 lbs. must get 15mpg

- To qualify for the program, the “old” vehicle must get…

>Passenger vehicles– 4 mpg LESS than the new for $3500 credit; 10 mpg LESS than the new for $4500 credit

>”Light duty” trucks– 2 mpg LESS than the new for $3500; 5 mpg LESS for $4500

>Trucks over 6K lbs– 1 mpg LESS than the new for $3500; 2 mpg LESS for $4500

Finally, don’t let the ring of “$4,500 in free money” hitting the table distract you. Negotiate on a new car the same way you always would. The only thing different is that all the parties involved know exactly what the trade is worth upfront.

Hope this helps!

To a contented summer!

We All Get Taxed!

“If you want a happy ending, that depends, of course, on where you stop your story.” – Orson Welles

I hope your Father’s Day was special…that you took the time to thank (or remember) your father, wherever he may be.

On to the subject of my note: You know, I deal with taxes all the time of course…it’s my job, right?

But that still doesn’t mean I like paying taxes–who does? Certainly none of us are opposed to contributing to the necessary functions of our government–police, roads, fire, administration, etc.

Yet I must say that I really do take a special pleasure in helping my clients keep their tax obligations to a minimum. Dave Ramsey calls the unnecessary fees and payments we make when we don’t make wise financial decisions the “stupid tax”.

Well, I won’t be so blunt perhaps–but the unnecessary taxes which many families pay because they just don’t have the time to follow all the changes and updates to our gargantuan tax code…well, that’s another kind of “stupid tax.”

A couple items from last week really brought this to my mind, the first I’ll just mention briefly and the second will be the subject of my full Personal Strategy Note.

First–did you see this? http://money.cnn.com/2009/06/12/technology/irs_cellphones/index.htm?postversion=2009061215 Looks like in their never-ending search for new sources of revenue, the IRS is considering taxing usage of an employee cell phone for non-work purposes. Watch this space…I’ll let you know if they end up following through.

But the bigger news is the health care debate, and how to pay for all of the changes which are being considered. Whatever they decide may affect you, so read on… and let me know if I can help!

“Real World” Personal Strategy

Taxing Health Care…and What It Could Mean For You

I pay attention to Washington politicians and their tax tendencies so you don’t have to!

You see, President Obama has announced he is open to the idea of taxing Americans on the value of their employer-provided health benefits. Right now, benefits are not taxed, but the congressional Joint Economic Committee estimates that this tax “break” costs the Treasury $226 billion per year in revenue.

The goal, here, would be to raise revenue to thereby pay for coverage for those who currently have no insurance, those who can’t afford the insurance they do have, and those struggling to pay for continued health insurance in the wake of losing their job.

It’s a new proposal, and the details aren’t all out there. However, what I think is the most likely scenario, is that they would seek to tax coverage above a certain ceiling. If Congress sets that ceiling at $1,000 per month, and your employer pays $1,250 per month for your coverage, you would be taxed on the extra $250 per month.

Taxing benefits would reverse decades of tax-free treatment dating all the way back to World War II. It’s a thorny issue for Obama because of promises he made on the campaign trail not to tax these items…but they seem to be pretty serious about getting something done on the health care front.

Unfortunately, the proposal would likely mean substantial middle-income tax increases. That’s because the extra tax is tied to the value of health care benefits, not income. Many middle-income earners with comprehensive benefit packages, like teachers and other municipal employees, could see their tax obligation shoot up.

Health care reform has been a consistent issue in Washington. Back in 1984, President Reagan proposed taxing benefits above $2,100 per year. Back then, strong opposition, especially from labor unions, torpedoed the idea. But healthcare costs have soared to the point where the average family’s health insurance premium is often more than the average family’s mortgage. So while this latest proposal is no sure thing, we all have to take it seriously.

Fortunately, there are strategies that employers and families can use to cut the overall cost of health care. And many of them rely on the tax code–and it’s something we can help you with. Flexible-spending accounts, Health Savings Account plans, and Section 105 Medical Expense Reimbursement Plans can all help beat the high cost of health care.

So…if you’re worried about your health care costs, call us or drop me an email to see how we can help. We can take you by the hand and walk you through this stuff. We can even give you ideas to take to your employer!

When it comes to rising health care costs–and the taxes which may accrue–don’t ever believe you don’t have anybody on YOUR side!

To your family’s financial health!

Here’s How Not to Worry About $

“There are people who make things happen, there are people who watch things happen, and there are people who wonder what happened. To be successful, you need to be a person who makes things happen.” - Jim Lovell

So there’s been a bit of a flurry recently in the tax professional community about some proposals to further regulate our profession. Specifically, the federal government is looking at licensing anyone who prepares taxes on others’ behalf (this is already the case, essentially, in California and Oregon). The goal is to nab the people who are helping others cheat on their taxes…and get the IRS more revenue, of course.

So what do I think about this?

Well, you might think I’d be opposed to it… but, in fact, legitimate preparers generally welcome higher standards as a way of announcing to our clients that we meet those standards! The American Bar Association and H&R Block are just two of the organizations that have announced they support the IRS effort.

How will this all affect you?

In the end, it will actually make your life easier. I’ll still focus my time and attention on helping you cut your taxes to the legal minimum. I just won’t have to help you carry the weight of so many fellow Americans who don’t pay their share.

So when you read or hear that the IRS is regulating tax preparers, don’t think it means a harder hit to your wallet…we’ve got you covered!

Moving on, as much as I write about keeping your head up about money, I still get notes and questions from my clients and friends who find themselves falling into a pit of worry.

So, I’ve got some additional thoughts about how to free yourself from the morass of money worries in this week’s Personal Strategy Note.

“Real World” Personal Strategy

How Not To Worry About Money

With all of the news about spiraling federal debt, it’s natural that Americans are taking a hard look at their own situation, and it sometimes leads to worry–even for those who are relatively secure.

Interestingly, my clients who have MORE cash in the bank often worry more! Funny, right? But it’s normal human nature…

You see, under all guidelines and measures, my finances are very solid. I’ve got a thriving business which is more secure than most people’s jobs. I work with numbers and am very good at taming balance sheets.

Yet, I still sometimes worry about money.

After a lengthy time of thinking and discussion and some more thoughts into the matter, below are a couple areas that can help us all reduce the worry for money.

1. Realize that It’s Exaggerated – Worry is a funny feeling – it seems to exaggerate any problem. While there are certainly many people who actually run out of money, those are usually not the people that tend to worry.

2. Spend the Same Time Making Money Instead – If you are going to spend time worrying about money, why not use that time and get a side job instead? Maybe start a website (or two, or three). I know it’s easier said than done, but the more you work at it, the easier it gets.

3. Confidence – Part of the reason why we worry about money is because of the lack of confidence in our own abilities to earn an income. How can we boost our confidence you ask? Confidence comes from success, and success starts from taking action. So try a few things. Learn from it and try again.

4. The workplace plays a big role in all this as well. Are your colleagues encouraging? Is your boss supportive? If not, then do something about it. Don’t get into the thinking of “I can’t find another job”. Yes you can. If you got this job, you can get another one.

5. Worrying A Little is Actually Good – A little worrying is actually healthy for us. It’s what drives us to be better. It’s what turns our energy switch to the on position. The right way to deal with it is to channel it into your work ethic, and your desire to be better.

How Do You Deal with It?

Of course, what I listed are just the tip of the iceberg. How do you deal with worrying about the lack of money? Or do you? What has worked for you? Let me know!

To your greater peace of mind!

Watch Out For These Online Pitfalls

“Worry a little bit every day and in a lifetime you will lose a couple of years. If something is wrong, fix it if you can. You can train yourself not to worry. Worry never fixes anything.” - Mary Hemingway

An amusing story came out just recently…apparently, there’s consequences for not being on top of your taxes!

Turns out a restaurant owner in Texas got audited, and it was discovered that he owed about $40,000 in back taxes. OUCH! This particular entrepreneur decided to, oh, find a way around it…by offering the IRS agent *pizza*–and a job.

(Full story here: http://www.webcpa.com/news/IRS-Agent-Refuses-Pizza-Bribe-50595-1.html)

Two lessons to take from this one:

1) Pizza may not be the best form of bribery

2) Always let a professional handle your books! (personal and ESPECIALLY business)

Sure, that’s a bit self-serving…but come on–pizza?

Moving on, another recent story points to a rising problem for our government–revenues are down. (http://www.usatoday.com/money/perfi/taxes/2009-05-26-irs-tax-revenue-down_N.htm) Which means, for you, that the IRS will be paying extra careful attention to every aspect of your return. Audits will surely rise, including for previous year returns.

In this week’s Personal Strategy Note, I’ve got some pointers for you about safe shopping online. In this economy, more and more families are checking for deals online. So, use these guidelines to ensure you do it right!

“Real World” Personal Strategy

How To Make Sure You Shop Safely Online (9 Ways)

Shopping online can be convenient and help you find great prices on exactly the item you’re hoping to buy. However, shopping online can also allow your personal information to be spread places that you didn’t plan it to go. These ten tips can help make sure your identity and information remains safe:

1. Keep your computer’s anti-virus, anti-virus and firewall software up to date. Use pop-up blockers to make shopping easier and also protect you from fraudulent sites that look like they are part of the legitimate site you are shopping.

2. Stick with familiar sellers. If using a company you don’t know, check for the Better Business Bureau Online or TRUSTe logo. Check online ratings companies such as http://www.epinions.com/ or http://www.bizrate.com/ to hear about other customers’ experiences. Look for a street address and working telephone number. If using an auction site, check the seller’s feedback rating.

3. Use a complicated password. Think up some way to remember them or keep them listed somewhere safe and away from your computer. Use a variety of numbers and letters, including both lower case and capitals.

4. Check policies and terms carefully before purchasing. Look especially for shipping and handling fees and return fees and procedures.

5. When giving out personal information, look for the “https” or “shttp” at the beginning of the website address. The “s” means secure. You can also look for the closed lock or unbroken key symbol at the bottom of your page. (The site probably won’t go to secure until the ordering page, so don’t be worried if it is a regular http address while you are shopping.) Don’t send payment information through email as it is not secure.

6. Be aware that personal information is collected every time you fill out a form online. If a site looks sketchy, don’t do business with them. Never enter personal information in a pop-up window or screen.

7. Pay carefully. Under federal law, credit cards allow you to dispute payment if you don’t receive what you’ve ordered, however, they also share your credit card details with the merchant. Services such as PayPay and Revolution Money keep your personal payment information private, but they offer less ability to dispute payments if something is wrong with the order. Debit cards and checks offer the least protection. Many sites try to retain your credit card information for future purchases – think carefully about whether this is something you want to do. Some credit card companies offer “virtual” credit card numbers, which are one time use numbers that are linked to your real credit card number.

8. Keep a printed copy of your order, and hold on to it until after you are sure that everything is OK with the purchase.

9. Keep an eye on your bank and credit card statements. Dispute unknown or unauthorized transactions immediately.

To smart shopping…and keeping your family safe!

This is for Loving Parents Only

Never work just for money or for power. They won’t save your soul or help you sleep at night. -Marian Wright Edelman

There’s just something about the advent of summer which seems to bring out parental fears. I suppose it’s all of the possibilities for injury, etc. during vacation…but I really don’t quite have an understanding of it.

One thing I KNOW is true for parents–they want their children to be well cared for, should anything ever happen to them.

You see, life can turn on a dime…and we’ve all faced our share of abrupt shifts. Some good, some … pretty rough. But I can’t tell you how good it feels to be prepared for whatever curve balls might come across the plate of your life.

For me and my family, we’ve put some simple plans in place for a VARIETY of circumstances, not just financial or legal. And it truly helps us sleep better at night, just knowing we’ve got it all covered.

So, that’s my subject for this week’s Personal Strategy Note…read on.

“Real World” Personal Strategy

3 Preparation Pointers for Parents

When I think about what frightens parents, seeing their children in a vulnerable position pretty much tops the list–whether it’s at home, at the pool, or any other place in public.

What exacerbates this is knowing the fear which children themselves feel when they are surrounded by people they don’t know and don’t know just how much love their parents have for them.

Put these steps into place…and you’ll eliminate at least some of these dangers…

#1: Identify a Clear Plan for the Care of your Children.

Did you know that 74% of parents have not named guardians? Worse, of the 26% who have, most have made 1 of 6 common mistakes that leave their kids at risk.

When you name short AND long-term guardians for the care of your children, you must give clear guidance to your caregiver and everyone you’ve named to care for your children, in written form. Just by naming these guardians (both short and long-term), your children never have to be put in a situation in which they would be taken out of your home and into the hands of strangers if something happens to you.

An even better step, if your children are old enough for this discussion, is to tell them this plan. Don’t make a big deal of it…you don’t want to frighten your kids at the prospect of your loss. But they’ll feel better knowing that you’ve selected people they can trust and love to care for them well.

#2: Properly Document Your Decisions

Parents often have discussed and agreed upon a guardian for their children and have even made their wishes known to their families; however, not documenting these decisions can result in your wishes not being followed when it really is too late.

You see, if you don’t communicate your wishes in a legally-binding document, you are placing your children in a “free for all”. Without clear, legal guidance, every family member has equal priority of guardianship and the decision about the care of your children will be left in the hands of a broken-down court system and some judge who doesn’t know you or your kids.

This legal documentation is particularly important if you intend for a friend to care for your children as courts will almost always choose a family member over a friend.

Also, don’t forget to be sure to leave behind specific guidance about how you want your children raised. Education decisions, healthcare decisions, discipline decisions … these are all things you care a lot about and would want made consistent with your opinions for how your kids are raised.

#3: Don’t Neglect Their Financial Future

Sure, there’s different schools of thought on this issue. Some parents don’t want to overwhelm their children with too much in their bank accounts at once, which is understandable.

But, regardless of how you structure this provision, providing sufficient financial resources for your children’s care is your responsibility. And, as a responsible parent, you must take steps to protect what your children will receive … whether it’s through life insurance, savings or some other means.

To do so, establish a living trust to receive any life insurance benefits your children would receive so that they don’t get access to your assets at the age of 18 and make sure your living trust holds on to the title to any assets that would go through probate in the event of your death. And, if your estate is large enough, you will want to plan to avoid estate taxes as well.

Many of these issues can be handled by an estate-planning attorney, and we’d be happy to put you in touch with somebody good. Or, there are online options as well. Either way…let me know how we can help!

To loving families, forever!

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