A Financial Education Event
 

Your Money Buddy

BGadmin

As we are on our Heroes at Home Financial Event tour (at 17 bases in 5 countries) we often talk about how to follow through on our good intentions when it comes to money matters. The best way to do this is to have a regular money workout with an accountability partner.

A great example of this is these Newlyweds, who just finished their first Sixty Minute Money Workout and they loved it!

They did the “Money Personality” workout and discovered what personality each of them has and how they relate to money.

The number one reason marriages fail is because of arguments about money so if you can learn how to have a good workout, then you can get fiscally fit. You don’t have to be married either, you can have a “money buddy” just as you have a workout partner to help spot you when it comes to lifting weights or kicking it in cross fit.

But it begins with setting proper boundaries, so you can learn to get along and not digress into arguments. This is the same technique I shared on Nightline as I coached a couple on how to fight fair.

Boundaries:

First of all, people need to understand that you don’t have to be a couple in order to do the workout. You can do it by yourself, or with a trusted friend, or even a family member who isn’t your spouse if you are single. But whoever you do the workout with, it’s important to set some boundaries to prepare:
• no condescension or negativity
• no interrupting your workout partner when they are talking
• no name calling
• no throwing food –
• start by saying one positive thing to each other
• end by saying one positive thing to each other
• create an environment that encourages comfort and success
• have a timer on hand (the one on your phone works well)

Step 1 – 5 Minutes – Make Up Your Mind Warm-Up
Here is where you set your timer for each section. When the timer goes off, then move on! In this section, you set the topic for the hour and begin with a “can do” attitude. It’s important to begin by saying or doing something positive. If you’re working out with a spouse, then begin by taking your spouses hands, looking into their eyes and saying something affirming.

Step 2 – 10 minutes – Strength Training
While step one was to start with affirming words and decide on your money topic, this next section is a time to write down goals on paper so that you will have a tangible and objective standard to work toward. Decide how you would like to see the topic resolved today, in six months and what the outcome of your goals will be in the long run. For example, if your topic is setting up a spend plan, you can also access tools like Mint that will help you in the workout.

Discuss obstacles that have kept you from reaching your goals in the past. If spending too much money on Amazon is slipping you up, then regulate that habit. Or if eating out too often gets you offline, then discuss ways to eliminate that obstacle.

Step 3 – 20 Minutes – Cardio Burn

In this step, you give feet to your goals. If you’re setting up a budget, then you write down the specifics and course of action for your topic of the day. This may not seem like a lot of time on this section, but realize that you may not get it resolved during the first workout. The key is to keep the discussion moving and work on what you can, whatever you missed, you can get the next time around. For example, if you’re looking to pay down debt, then go to Annual Credit Report to order free copies of your credit report. If your topic is improving your credit score, then go to Credit.com to discover where your score is weak and how to improve it. Or listen to a Periscope #CreditChat from@Experian_US. This show is hosted by Rod Griffin, our credit speaker on the Heroes at Home Financial Event tour.
Step 4 – 20 Minutes – Taking Your Heart Rate

If you are making progress on your goal, then continue to do the work. If you have gotten bogged down or you’ve reached a standstill, then use this time to redirect.

For example, if you’re developing a spend plan, and realize you are spending too much in an area, then you could redirect at this time to review this blog and learn quick ways that will help you save money in a variety of categories.
For instance, how to save on groceries.  We’ve saved over $160,000 in the last 20 years by employing a variety of tips I discuss in my books and blog.

Step 5 – 5 Minutes – Congratulations Cool Down
The workout has gone by quickly and now the last 5 minutes are dedicated to the “Congratulations Cool Down.” End your workout and sit back, grab a glass of something cool to drink and reflect on all you’ve accomplished in just one hour! You started on a positive note and you’re going to end positive as well. Take this time to tell your partner one thing that you appreciate about today’s workout in order to end the discussion well.

Keep in mind that just as you don’t get physically buff in just one workout, your finances aren’t going to get in shape after the first try either. But after you and your mate have exercised with this money workout a half a dozen times you’ll find you are making progress that can revolutionize your finances in only an hour a week!

For a free “Sixty Money Workout” review sheet, just email assistant@elliekay.com and ask for this resource.

Ellie Kay
America’s Family Financial Expert (R)

Spring Savings – Five Ways to Save $500 or More

When I was a gangly seven year old with braids that were too tight and freckles that looked better on a cheetah, I used to dislike the spring. In my Latino family, spring meant two things: 1) my mom would dress us in flamenco dresses to go to the fair and 2) I would have to participate in spring cleaning.

My Spanish mother and my Abuela would put on their work clothes, tie their hair in a scarf and attack the house with a vengeance that would make the mighty 300 run in sheer panic all the way back to Sparta. Never get between a Latina woman and her spring cleaning. I was conscripted into forced servitude while all my freckleless girlfriends got to go play kick the can in our street circle.

Now that I’m an adult, every spring, I engage in a different type of practice that gets our finances in tip top shape. Instead of a broom, I use a smart phone. Instead of a vacuum cleaner, I have a computer. I like to engage in spring savings. The bonus for this formerly freckled girl is that I usually save more than enough money to hire someone else to do my spring cleaning.  Here are some ways that you can get out of spring cleaning and into spring savings:

Property Tax Challenge – As many as 30% of homeowners may be overtaxed, according to the National Taxpayers Union. First, study your property card for errors in your home’s specs. Next, compare your home’s value and taxes with other nearby homes (go to Valueappeal.com). Third, go to ntu.org/tax-basics to learn how to build your case before the tax assessor. Fourth, challenge the amount and win and save hundreds or even thousands of dollars!

Prepare for Warm Weather – Invest in a thermal leak detector to find and fix drafts around windows, outlets and walls to save as much as 20% on cooling bills. Also invest in a programmable thermostat to adjust your home about 10 degrees while you’re at work and at night to save another 15%.


Pull the Plug on Entertainment
– There’s no need to pay for pricey cable or satellite when you have less expensive options. Before we had Apple TV, we invested in a streaming player called Roku that cost about $100 and connected the internet to our TV. We currently use Netflix ($8/month) for movies and TV shows and then Hulu Plus ($8/month) for new TV episodes that we can watch right after they’ve aired. Plus, I’m a Prime member on Amazon, so I get to watch scores of shows for free on Amazon Instant Video. I’ve discovered all kinds of Downton-like British TV shows that are delightful (I’m currently hooked on Lark Rise to Candleford).  These options save $750 a year over cable.

Put off the Oil Change – My girlfriend Audrey has a fairly new Lincoln and the dealership told her to only go 3000 miles between oil changes. But her car light comes on at 7800 miles, so she listens to the car instead. Actually, the newest studies indicate that my girlfriend is right! The quality of oil has improved dramatically over the last 25 years. Follow the owners manual and the car’s oil-life-monitoring system instead of the dealer who wants that extra service fee. I change the oil in my car once a year!

Put it on Ice – To save on food and spoilage, freeze hard cheeses, most fruits and vegetables, meat, poultry, bread and other baked goods. You can use ice trays to freeze baby food, sauce or stock, and chopped fresh herbs in water. Not only will you never have to dig a moldy hunk of something you don’t recognize out of the back of the fridge, you’ll also find dinner prep is quicker and easier by using these kinds of frozen items.

Once you’ve finished your spring savings, then sit back, pour a cool glass of tea (with mint infused ice cubes) and watch Lark Rise to Candleford—you deserve the rest!

Ellie Kay

America’s Family Financial Expert (R) 

Five Top Money Moves for 2013

This month I’ll be on over 25 television and radio stations talking about the Top Five Money Moves for 2013. So look and listen for yours truly in the media. My long time stylist, Ricardo, saw me on a national show and said, “You looked and sounded just like you do when you sit in my chair!”  My daughter, Bethany, was in the salon with me and piped in with, “That’s what happens when you’ve been on television as much as my mom has.” I could have sworn she rolled her eyes when she said it, but she insists she didn’t. I really do loving helping families do money matters smarter and media helps me get the good word out to these people across the country.

According to a recent survey, 40 to 45% of American adults make one or more resolutions each year. Among the top new year’s decisions are resolutions about weight loss, exercise, and money management or/ debt reduction. While a lot of people who make decisions during the new year do break them, research shows that making a decision to change is useful. People who explicitly make resolutions are 10 times more likely to attain their goals than people who don’t explicitly make resolutions.

If one of your resolutions involve getting fiscally fit, then there are five things individuals, couples and families should do every January, year in and year out, to help their financial picture. These five money moves will help you pay down debt, save more in your emergency fund and be prepared for possible financial setbacks in 2013. They include:

 

1) CUT COSTS ON FIXED EXPENSES – there are some expenses that people rarely check, but they could be missing out on hundreds of dollars of savings.

  • For one thing, it’s important to call your homeowners insurance provider and ask about getting a better rate. Oftentimes, you don’t think about this policy because the bank may cover this premium and you put that renewal to the side—wrong answer. The other biggie in fixed expenses is auto insurance.
  • If you drive less, in safer ways, and during safer times of the day you can save money on your car insurance. If you are military or a military legacy (child of someone who served), be sure to compare prices at USAA for car, home and other benefits to members.
  •  One final, quick tip to cut costs by shopping around, is for groceries. Go to couponmom.com where the site will tell you what’s on sale in your neighborhood, which items have coupons, double coupons and store coupons. Using this layered savings approach in the store helped our large family save $160,000 over the course of twenty  year!  (Yes, you read that right, it’s not a typo).

2) COMPLETE TAXES EARLY & FREE– The sooner you file, the sooner you’ll get your refund.  Even as this year’s tax laws get settled, you can still get your return started online.  I recommend the online TaxACT Free Edition has everything you need to prepare, print and e-file your federal return free.  TaxACT and I have worked together to help American families and specifically military families, because their tax solution guides you step by step through your return and guarantees your biggest refund. It’s fast, easy and even offers free help. Remember that the fastest way to get your refund is to do your taxes online,  e-file and choose direct deposit .  And once you have that refund, put the money to smart use like paying down consumer debt, bolstering your savings or saving to pay cash for your next car. Or, if you are a Kay kid, then you can use it to buy your Mama a really nice present!

3) CATCH UP ON SAVINGS – In money moves one and two, you freed up extra money by cutting costs and getting your refund back early. I recommend that you take a hard look at your emergency fund. If you are a single income family, you should have twelve to fifteen months of living expenses in this fund. If you are a dual income family, you need six to nine months of living expenses. With uncertain employment situations, it’s important that you save for a rainy day. Use 50% of that tax refund and money saved from cutting fixed expenses to help build up your emergency fund. Then every time you save money on expenses, write a check or transfer those funds into this important account. It will become a habit and you’ll build that account up more quickly.

4) CUT OUT DEBT – If you took 50% of the money you gained from steps one and two and put it in your emergency fund—good job! Now it’s time to use the other 50% to pay down credit card debt and get started on the “snowball effect” of getting rid of consumer debt. This snowball plan works by paying off the credit card with the highest rate first. Then you take the payment you would have made on that first card and put it toward the next card on your list, thus doubling up on that payment. Each time you pay off a card, you keep taking what would have been that minimum payments on paid off cards and put them toward the next credit card balance. You will eventually find yourself making triple, quadruple payments and you can see why we call it the “snowball effect,” thus getting ahead of interest charges and paying your debt down more quickly.

5) CARE AND SHARE MORE – This is a good time of the year to map out a strategy to give more and get more out of your giving so that you can itemize your deductions. Go through closets and donate clothing and furniture to IRS- approved charities, but keep track of your donations. Go to the giving arm of the Better Business Bureau to check out the status of charities before you give. Ask charities for receipts. You usually get more for each item than you would selling it at a yard sale.  Remember, monetary donations and certain expenses for volunteering are also deductible.

Happy 2013
Ellie Kay

Debt and Taxes (Plus a Free Giveaway!)

 

When my son, Jonathan, was seven years old, we went to his favorite toy store to spend his allowance. He had $5 saved and the item he wanted was $4.99. Already a math whiz, he exclaimed, “Wow, Mama, I can buy this and have a penny leftover!” Then I told him about taxes, and his face fell as he realized he couldn’t get the toy airplane. All of the sudden, his eyes brightened with an idea, “I know, Mama, why don’t YOU just pay the taxes and I’ll owe you the money?”  Since we “don’t do debt” in the Kay house, I had to explain how I didn’t want him to go into debt to me and he would have to wait another week for his next allowance. Jonathan learned, the hard way, about debt and taxes.

     I’ve been doing a lot of research on taxes and my best tips are listed below, courtesy of TaxACT. They’ve partnered with me today so be sure you go to the end of this post to see how my peeps can WIN a free copy of  TaxACT Deluxe ($12.95 value) in my giveaway!

  •  Get Organized Ahead of Time – I recommend my “Sixty Minute Tax Workout” where you whittle down the tax task a bit at a time. Get organized before you sit down by gathering all your W-2s, 1099s, and other tax documents. TaxACT offers a free interactive checklist here (http://www.taxact.com/reference/what-do-i-need.asp) and on TaxACT Central, TaxACT’s free companion mobile app available for download here (http://www.taxact.com/mobile/taxact-central/).
  • Get Smart – Familiarize yourself with the new tax  law changes by going to IRS.gov and look at Publication 17, the first few pages summarize the major changes. You can also go to taxact.com/taxinfo.
  •  E-file – For the fastest refund (in as few as 7 days with direct deposit). Unlike paper filers, e-filers receive notification as soon as the IRS has processed your return.
  •  Get it Free– Use a free tax preparation solution, but beware – free solutions are not created equal. I recommend TaxACT Free Federal Edition because it’s truly free for everyone, including you! Unlike other free tax preparation solutions, there are no restrictions or gimmicks. TaxACT includes forms for simple and complex tax returns, plus unlimited free tax and technical help by email. Your return is backed by TaxACT’s Maximum Refund Pledge and Accuracy Guarantee. TaxACT Quick Convert makes it easy to switch to TaxACT by bringing in info from last year’s return. It’s fast, easy and convenient – you can even use TaxACT Online on your iPad! With your free e-file and direct deposit, you could have your federal refund as fast as 7 days. After you e-file, check the status of your return on TaxACT Central, the free companion mobile app.
    •  Pay What You Can – If you cannot pay your entire tax balance, file and pay as much as you can by the April 17th deadline to avoid penalties and interest. Call the IRS to discuss payment options, including installments.

 REMEMBER:

  • Don’t Forget to Import – Save time and aggravation by importing key data from a PDF copy of last year’s return. If you have multiple W-2s, a 1099 or investment data, use the quick entry features available on TaxACT Free Federal Edition at taxact.com.  
  • Don’t Procrastinate – Although this year’s filing deadline is April 17, 2012, don’t procrastinate because rushing can result in errors.
  • Don’t Get a Cash Advance On Your Refund – When you can get your refund in as little as 7 days by e-filing with direct deposit, it’s a dumb money move to pay all kinds of interest to get your cash a few days earlier. You need that extra money, don’t throw it away!
  • Don’t pay more than $15 to e-file State Taxes – If your state charges income tax, then all your federal info transfers to your state forms when you use TaxACT. The federal solution is free and the state solution costs less than $15 –less than half the price of others.
  • Debt and Taxes – Don’t spend your refund on Disneyland or a new TV  if you have credit card debt.  Instead, use 50% of the refund to pay down consumer debt and the other 50% to build up your emergency fund. You may not get the mouse ears this year, but you’ll be in better financial shape!

 WIN A FREE COPY OF TAXACT DELUXE EDITION – (Value $12.95)

 

     TaxACT is giving away 10 free copies of Deluxe to my peeps!  Your name can be entered in any of the following ways: email assistant@elliekay.com and put “TaxACT Giveaway” on the subject line (feel free to drop me a note with your own money tips), or you can “like” this post on Facebook or Twitter, you can retweet it, or leave a comment on my blog. (Be sure to enter by Feb 15th, and we’ll draw names and notify you if you won.)

After you enter the giveaway, visit www.free.taxact.com  for a sneak peak of TaxACT’s commercial airing on Feb. 5 during the football game and enter Feel the Free Fridays sweepstakes to win a tech prize!

 Here’s what you’ll win in my giveaway: TaxACT Deluxe Step-by-step guidance through your guaranteed accurate return, plus free tax and technical help in the Answer Center, online, by email, AND by phone

 Biggest guaranteed refund in as few as 7 days. With free federal e-file and direct deposit, you can have your refund in as fast as 7 days.

  • Donation Assistant – maximize your deduction for non-cash donations with audit-backed values for more than 1,300 items
  • TaxACT Life Events breaks down the tax implications of major life changes, such as getting married, having children or selling your home
  • Tax Guides with money-saving tax information about  college, education and retirement
  • Other tools and guidance, including Stock Import, TaxWatch 2012, calculators and reports

I hope you win!

Ellie Kay

America’s Family Financial Expert (R)

 

 

 

 

Don’t Get Scammed When Giving to Japan

The tragedy in Japan is one that makes us want to open our wallets and help in a practical way. But with every tragedy there arises a new crop of scamsters, out to make a profit off of someone else’s sorrow. How do you give smart and make sure your dollars go to the people who need it most? Follow these tips:

Email Scams

McAfee recently reported a significant increase in the amount of spam being generated by “Japanese Earthquake Relief” scams. So NEVER respond to an email, even if you suspect it is legit. Do not link to the link provided in such an email. Instead, go directly to your browser and type in the link to investigate–even if it’s a charity you recognize. Some criminals are linking to sites like the Red Cross but the link will actually take you to a false site where they skim your money and your credit card number.

Don’t Fund Overhead or Fund Raising

You don’t want your dollars going to pay fat salaries, fancy overhead, or excessive fundraising expenses. The Better Business Bureau’s (BBB) Wise Giving Alliance offers guidance to donors on making informed giving decisions through their charity evaluations, various “tips” publications, and the quarterly “Better Business Bureau Wise Giving Guide.” You can access this information by calling (703) 276-0100, going to www.give.org

You can ask them to mail you the various tip guides or read them online. These guides include information on:

Charitable Giving

Police and Firefighter Organizations

Handling Unwanted Direct Mail From Charitable Organizations

Child Sponsorship Organizations

Direct Mail Sweepstakes and Charities

Contributing Used Cars to Charities

Tax Deductions for Charitable Contributions

Record Keeping

If you itemize, you’ll need all receipts for donations of $250 or more. If you give away more than $250 worth of clothing throughout the year, you should have saved all receipts for tax purposes. The money donated directly to a needy person is not deductible. It would be better to donate the amount, anonymously, to your church and have them send the donation to the family in need. Check with your tax specialist every year for your state and federal tax laws.

Starting Your Own Foundation

If you are fortunate enough to have a large gain from a stock or mutual fund that you have held for over a year, consider using it to become what is essentially your own “foundation.” For example, if you own $5,000 worth of stock that you bought years ago for only $1,000, then you can donate the stock by setting up a Fidelity Charitable Gift Fund account (call 1-800-682-4438 or go to www.charitablegift.org ) By doing this, you get an immediate $5,000 tax deduction and save having to pay taxes on the $4,000 gain. In the years to come, as that $5,000 grows, you instruct the company that manages your “foundation” where to donate the proceeds. Besides Fidelity, there are also charitable gift funds available thorough Vanguard at 1-888-383-4483 or www.vanguardcharitable.org or Schwab at 1-800-746-6216 or www.schwabcharitable.org .

Kid Philanthropists

You may want to allow your children to manage a donation in a predetermined amount $25, $50, or whatever you have budgeted.) They get to research a variety of non-profit organizations and decide which one will receive their donation. Then donate the amount in your child’s name. You get the tax benefit, your child gets the thank you note—you both feel good about giving.

Ellie Kay
America’s Family Financial Expert (R)

The Sixty Minute Money Workout

Today’s blog is a test: do my kids read my blog or not? For example, here’s a pic of my son , from a few years ago, making a New Year’s resolution to be more buff. He’s now a senior, how long will it be before I’m forced to remove the photo.

According to a recent survey (Source: Auld Lang Syne) 40 to 45% of American make one or more resolutions each year. Among the top new year’s decisions are resolutions about weight loss, exercise, and money management or/ debt reduction.
The following shows how many of these resolutions are maintained as time goes on:
– past the first week: 75%
– past 2 weeks: 71%
– after one month: 64%
– after 6 months: 46%
While a lot of people who make decisions during the new year do break them, research shows that making a decision to change is useful. People who explicitly make resolutions are 10 times more likely to attain their goals than people who don’t explicitly make resolutions.
If you are wanting to make a decision to get fiscally fit in the new year, then take a look at my newest book, The Sixty Minute Money Workout (Waterbrook, 2011) Let’s go through each part of the workout:

Boundaries:
As people prepare for the workout, it’s important to establish boundaries, here are some of the things that you need to know before you begin.
First of all, people need to understand that you don’t have to be a couple in order to do the workout. You can do it by yourself, or with a trusted friend, or even a family member who isn’t your spouse if you are single. But whoever you do the workout with, it’s important to set some boundaries to prepare:
• no condescension or negativity
• no interrupting your workout partner when they are talking
• no name calling
• no throwing food –
• start by saying one positive thing to each other
• end by saying one positive thing to each other
• create an environment that encourages comfort and success
• have a timer on hand
• Do the pretest to prepare you for the work. Each pretest will vary according to the chapter or topic you choose.

Part 1 – 5 Minutes – Make Up Your Mind Warm-Up
Here is where you set your timer for each section. When the timer goes off, then move on! In this section, you set the topic for the hour and begin with a “can do” attitude. It’s important to begin by saying or doing something positive. If you’re working out with a spouse, then begin by taking your spouses hands, looking into their eyes and saying something affirming.

Part 2 – 10 minutes – Strength Training
While step one was to start with affirming words and decide on your money topic, this next section is a time to write down goals on paper so that you will have a tangible and objective standard to work toward. Decide how you would like to see the topic resolved today, in six months and what the outcome of your goals will be in the long run. This gives you both a temporary focus (for today) and a long term focus (for the next few months) as well as a big world picture (for the long term.) Your goals will depend on your topic of the day. For example, if you are discussing a budget your goals might include: a) to set up a budget that is real and workable, b) to stay on that budget for the next six months in order to learn how to spend less than what you make, c) to have a budget become such a habit that it is a financial vehicle that will get your family out of consumer debt, help you pay for your kid’s college and fund your retirement.

Part 3 – 20 Minutes – Cardio Burn

In this step, you give feet to your goals. If you’re setting up a budget, then you write down the specifics and course of action for your topic of the day. This may not seem like a lot of time on this section, but realize that you may not get it resolved during the first workout. The key is to keep the discussion moving and work on what you can, whatever you missed, you can get the next time around. Go to my tool section for free online financial tools, http://elliekay.com/financial-resource-center.php

Part 4 – 20 Minutes – Taking Your Heart Rate
This is the point where you do any “work” that needs to be done after you’ve written a step by step plan from the previous section. For example, if you need to save money on your expenses in order to live on the new spending plan you set up, then you could spending this time on quick ways that will save you hundreds of dollars:

1) Save on Tax Preparation – Go to www.TaxAct.com in order to prepare and file your federal income tax return for free. This free software asks you all the right questions to make sure you are getting every deduction that you have coming your way.

2) Save on insurance – Go to www.progressive.com to compare auto insurance. It only takes a few minutes to get several quotes from different companies. You can save as much as $500 by shopping around.

3) Save on groceries – When you can combine sales, coupons, double coupons and store coupons, then you can save thousands of dollars every year on your grocery bill. We’ve saved over $160,000 in the last 20 years by doing this. Go to www.couponmom.com and enter your zip code they will show you what is on sale and what coupons match up with the sales items to get things for pennies or free.

4) Save with Social Media – By going to the www.facebook.com page of your favorite retailer or signing up to follow a beloved restaurant on www.twitter.com, your savings can add up to hundreds of dollars every year. Social media followers are often the first to know about limited offers or free items. For example, my college student daughter, in Chicago follows her favorite cupcake store and by saying the word of the day, she gets a $5 cupcake free. That’s a savings of $1865 every year! Somedays, she gives the cupcake away—so she saves and shares!

Part 5 – 5 Minutes – Congratulations Cool Down
The workout has gone by quickly and now the last 5 minutes are dedicated to the “Congratulations Cool Down.” End your workout and sit back, grab a glass of something cool to drink and reflect on all you’ve accomplished in just one hour! You started on a positive note and you’re going to end positive as well. Take this time to tell your partner one thing that you appreciate about today’s workout in order to end the discussion well.

Keep in mind that just as you don’t get physically buff in just one workout, your finances aren’t going to get in shape after the first try either. But after you and your mate have exercised with this money workout a half a dozen times you’ll find you are making progress that can revolutionize your finances in only an hour a week!

Ellie Kay
America’s Family Financial Expert (R)

Give the Gift of Education

Christmas is one of my most favorite times of the year and this year, more people are getting into the idea of gifting than last year. In fact, according to a recent survey, 73% of consumers say that they will spend the same as last year during the fourth quarter, and 18% of consumers report that they will spend more. So spending is back up again, but I think that strategic spending is more important now than ever.
It’s important for consumers to be careful and thoughtful in the decisions they make when it comes to buying gifts this holiday. That’s why I’ve partnered with Upromise to tell my friends about the gift of education. So while parents and grandparents (even favorite aunties) are splurging on kids, why not work on saving for kids, too by providing for that cute kid’s college education?

You can open a 529 account for any beneficiary, or gift money using Ugift into an Upromise Investments 529 plan. If you don’t already have a 529 plan, then you are really missing out because the contributions can benefit from tax deferred growth. Also, gifting into one of these plans this time of year also means that you can possibly take advantage of year end tax deductions. Just check to see if you are eligible for states income tax deductions or credits for saving for college. For example, parents and grandparents can contribute as much as $13,000 ($26,000 if married filing jointly) into a 529 plan without incurring gift taxes. A special rule allows married couples to gift up to $130,000 ($65,000 if single) as long as no additional gifts are made to that beneficiary over a five year period. This also applies to recent college grads who might appreciate a meaningful gift to help pay a student loan payment. Plus, you don’t have to be a parent or grandparent to participate, other friends and family can make contributions to your child’s 529 plan by gifting money or by buying gifts, which brings me to my next point—how to save money by spending money.

Most people, know about Upromise from signing up for their buying program. I’ve been participating for years by going to Upromise.com and then purchasing through participating online retailers. These are stores where I would shop anyway and I get anywhere from 1% to 25% back for the purchases I make. And our family isn’t the only one doing this. Last year, during the holiday season Upromise members received $12 million in college savings rewards from eligible holiday spending. Because membership is free and members have collectively earned $575 million in college savings from purchasing items online or even by buying gas or groceries. I book a lot of travel for my business and often find myself eating out—all these are also included toward my children’s 529 plans.

So consider giving the gift of education to a child you love—either by saving or spending, and the world will be a much smarter place!

Happy Holidays!

Ellie Kay
America’s Family Financial Expert ®
www.elliekay.com

Prioritize Your Debt – What to do With Unpaid Bills

Recently, on ABC NEWS, I talked about the fact that some parts of the country still have unemployment in the double digits while other employees are facing cutbacks in hours and salaries. More and more people are having a hard time paying their bills in these economically challenging times. If you only have a certain amount of money available and you know you won’t be able to pay all the bills, you need to know that not all bills are created equal. There are certain bills that have greater penalties than others. Today, I want to help you look at how to tackle those unpaid bills as well as grace periods and the variable consequences for not paying bills on time.
**********
Q. Are people still having a harder time paying their bills? I mean, we hear about new jobs being created and the recession is officially over. Why are some families susceptible to continued financial difficulty?

ELLIE: Obviously, unemployment is a big issue as well as the fact that many workers have had to accept pay cuts or work fewer hours to keep their jobs. With these come a contagion effect in that if you are unemployed or you go part time, there’s additional costs involved such as purchasing health insurance. Even if these workers find new jobs, they still have the residual effect of having less income for many months. In other cases, some may have had homes foreclosed upon and it’s cost them a lot to get established in another place of residence, plus these individuals has tanked their credit ratings—which means that rental property will require a larger down payment. A poor credit score also means these renters have to pay more down to even get basic utilities hooked up to their rental property. All these expenses start to add up and eventually, families are finding that they don’t have enough to pay all the bills.

Q. So if someone is between jobs or had some unexpected expenses such as medical bills, then what bill should they pay first?

ELLIE: When it comes to paying the bills there are always consequences for not paying. However, it’s the severity of the consequences that people need to consider when they are rank ordering which bills they should pay first, second, and so forth. The rule of thumb is to look at how fast your creditors will be likely to move against you. Which brings us to the most important bill and first bill you should always pay—your mortgage. If you fail to pay, the bank can begin foreclosure in as little as three months. Plus, this is the most significant debt you have when it comes to influencing your credit score. And with a poor credit score, the bills will just stack up even more quickly as we know that those who have bad credit have to pay more for deposits, for auto insurance some times and a poor score can even influence whether you get a new job or a job promotion at your existing place of employment. So protect your score and your financial future by paying the mortgage first.

Q. OK, so we understand that the mortgage is the most important bill, what would come second?

ELLIE: The next most important bill to pay is your car loan. Not only because you need a car to go to and from work, but also because as the second most significant loan you have, it will also impact your credit score in a more significant way than a department store charge card or a utility bill will. As for the consequences of not paying, a lender can begin repossess your vehicle if you’re a day late, but in all actuality, most will wait about sixty days. If you are serving in the military in a combat zone, there’s a little more leeway for vehicle repossession, you should contact your base’s financial office if you’re in danger of repossession while on active duty. But for the rest of us, not paying this important bill will cripple your ability to remain gainfully employed as having a vehicle is essential in most cases.
Q. So we’ve paid the mortgage and the car loan, now we pay credit cards, right?
ELLIE: Yes, that’s right. As you know, credit cards payment are very important because if you don’t pay on time, you’ll get hit with late fees. But there are more consequences than just a late fee. You might be faced with a hike in your APR if you’re tardy and then it could spread to other cards as well. You might find your average APR going from 9% on your credit cards to 24% or more in just a month. After about six months of missed payments, credit card companies start to send your account to collections and then you have an entirely new set of headaches to contend with. Concentrate on paying bank cards first such as Visa, Mastercard and American Express. You can even go to www.bankrate.com and look for lower interest rate cards that offer a promotional for transferred balances which can help your overall liability on credit cards. A final option is to go to your local credit union to see about a consolidation loan.
Q. Let’s say you have a little bit of money left, what’s one of the lower priority bills that you can tackle?


ELLIE: The next bill to concentrate on just happened yesterday—taxes. While technically, there is no “grace period” you can ask about an installment plan. The IRS can eventually garnish your wages and seize property or bank accounts. The old saying, “death and taxes are inevitable” exists, it’s because you WILL have to pay that tax bill some day—whether you’re a celebrity dishing on talk shows and making 25 million dollars a picture or whether you dish up ice cream part time at Coldstone making $25 a day!

Q. Thus far, we haven’t mentioned student loan debt, isn’t that an essential bill as well?

ELLIE: Yes, it does seem kind of crazy that student loans haven’t made it into our priority list yet, but I think that it illustrates the fact of how quickly the money goes for more “essential” bills and how there’s often more month left at the end of the paycheck Lenders for student loans will wait about nine months before placing a federal loan in default. As of last July, graduates can opt for a loan program that bases payments on up to 15% of your annual gross income. If you have these kinds of bills, then you can go to www.IBRinfo.org for help in how to pay your student loans more efficiently.

Ellie Kay
America’s Family Financial Expert (R)
www.elliekay.com

TAX TIPS for Maximum Refunds

As seen with Ellie Kay and ABC NEWS NOW.

This year 75% of all Americans will get a tax refund. Last year’s average refund was $2,753, with 2 out of 3 taxpayers e-filing their returns. Those with direct deposit averaged a $2,997 refund.

With the economy the way it is, families need every dollar they have coming to them.

But taxes can be sooooo incredibly complicated, especially with the recent tax laws that have passed–how can you figure it out? Help is just a click away as you follow my top tax tips for this year:

  • Procrastination Costs $$ — Just do it! Start now, the longer you procrastinate, the more likely you are to be rushed in filing your return and that translates into mistakes or missing something that could cost you money.
  • Put Off Spending — Some of you may be getting big bucks this year, but DO NOT SPEND IT UNTIL YOU HAVE IT! What if you don’t qualify for the home buyers tax break and you’ve already spent that money? This is the same problem we ran into in 2008 when the stimulus checks came out. People spent the money (via credit) before it arrived and then ended up in a pickle when the checks were late. The IRS is having to navigate the new tax credits for home buyers and trying to avoid fraud. This means they won’t even start processing those returns with the home buyers credit until mid-February. Many families are counting on these big returns, but you need to be cautious & don’t spend what you don’t have yet!
  • Professional vs. Predatory Preparers –When the economy is down, fraud is up! Don’t ever go to a tax preparer who sets up a shingle outside their door for a few months or those who claim they can get you a larger refund than another preparer. Instead go to a reputable and professional site where you can save money and file for free such as TaxAct . They can handle simple or complex returns and they are free for everyone, regardless of age or income, plus it includes the tax forms you will need.
  • Pressure Loans — Any tax preparer who pressures you to take a RAL (refund anticipation loan) is someone you need to run from! The interest rates are a rip-off and there are even big names associated with these costly practices such as H&R Block , so steer clear!
  • Put it Off! — Employers are required to have mailed W-2 forms by Feb 1, 2010. Some tax preparers say they can access W-2s for you early, but it’s really best to wait until you receive the real deal in the mail before you e-file.
  • Prepare to e-file! — If you use the TaxACT Free Federal Edition to e-file, then you have an error rate of less than 1%, compared to 20% on paper returns. If you also get direct deposit on your e-file, then you can get your money in as little as 8 days.
  • Pay Less — Some of the new tax laws, such as the ARRA (American Recovery & Reinvestment Act) give tax breaks to 95% of taxpayers, with some families saving more than 13K in home, car, college and other tax credits. Make sure you use an online tax program that is all inclusive and up to date on these tax credits.
  • Prepping Year Round — Go to the IRS website and sign up for their tax e-mail updates that can help you reduce your taxes throughout the year. While you’re there look at some of the other information on tax credits, you’ll be surprised at how easy it is to understand and that knowledge can translate into dollars in your wallet! Don’t forget to go to Ellie’s tools section for all kinds of calculators that can help your finances year round as well!
  • Print and mail — Even if you are e-filing, you still need to print your own copy of the return. If you are filing for certain tax credits, such as the Home buyer’s credit, then you are not allowed by the IRS to e-file. In which case, you can go to TaxAct, fill out all the info, print it and then mail it in with the necessary documents that aren’t available electronically.

Hope this helps!

Ellie Kay

America’s Family Financial Expert (R)

http://www.elliekay.com/

Tax Free Holidays

Consumers across the country are searching for ways to cut their spending and still buy what they need, especially when shopping for back-to-school essentials for kids. Many states offer tax free holidays during the back to school shopping season to help families purchase back to school necessities.

The tax free holidays are just around the corner and if your state offers this, it’s important to take full advantage of this holiday. Here are some tips to help:

FIND OUT THE DEALS – Take advantage of savings opportunities linked by local retailers to the upcoming Tax Free Holiday weekends. Don’t worry, there will be lots of ads in your local paper. Some stores like Sears even offer further discounts like $10 off a $50 apparel purchase just for showing your PTA or PTO card or student id. Be sure you go shopping prepared with these forms of identification to get your discounts.

FIND OUT LIMITATIONS – Each state has its limitations, so ask the cashier at your retailer what the rules are for your state. For example, some states will only allow up to $100 on any single item of clothing and only up to $750 on a computer. So know the rules by googling your state, “tax free holiday” and “2009.”

FIND LAYAWAY – Some stores such as K-mart have reinstituted layaway in direct response to the recession. This option varies from family to family but our family tries to minimize credit card debt and layaway is another option that helps avoid consumer debt.

Upcoming Tax Free Holiday Dates

STATE

Vermont 8/22
Georgia 7/30 to 8/2
Mississippi 7/31 to 8/1
D C 8/1 to 8/9
Alabama 8/7 to 8/9
Iowa 8/7 to 8/8
Louisiana 8/7 to 8/8
Missouri 8/7 to 8/9
New Mexico 8/7 to 8/9
North Carolina 8/7 to 8/9
Oklahoma 8/7 to 8/9
South Carolina 8/7 to 8/9
Tennessee 8/7 to 8/9
Virginia 8/7 to 8/9

Happy Savings!

Ellie Kay

America’s Family Financial Expert (R)

http://www.elliekay.com/

1 2