Monthly Archives: January 2013

Tips for a First Time Home Buyer

Purchasing your own home is a big life decision, and should never be taken lightly. This is an experience that can be nail-biting and stimulating all at the same time. With that being said, you should always look into a few things before actually deciding to make the plunge. Here are some tips for first time home buyers to create a learning curve and smooth the overall process of buying your first home:
buying a house
1. Examine Your Debt (And Pay It Off!) – Ask any homeowner and most of them will tell you that they spent time saving money to make a down payment on a home rather than paying off debts, which are now causing them to struggle to make their monthly mortgage payment. You don’t want this to be you. So, instead of saving money for the down payment, pay off your debts. At the very least, pay them down significantly, so they won’t be such a burden once you do purchase that new house of yours.

2. Determine What You Can Afford – You need to have a long, hard look at your finances before making any significant purchase, such as a home. You need to also see how much you can borrow from the bank for such a purchase. In addition, you need to determine how much you realistically save for a down payment. When figuring up your down payment, make sure that you’ll have enough left over to cover any closing costs that may be necessary on your part. Keep in mind that your home insurance, mortgage payment and home taxes should not exceed 30% of your home’s gross income.

3. Examine Your Credit Report – It is important that before you purchase a house that you fully examine your credit report to find any discrepancies and have them taken care of immediately. Discrepancies can hurt your credit a little or a lot and it is a chance you aren’t willing to take when you start searching for your dream home.

4. Bad Credit? – Not everyone has perfect credit, but that doesn’t mean you can’t buy a home. There are programs set into place to help those in such a predicament in their lives. These are government insured loans that are provided by the FHA, Federal Housing Administration. With an FHA loan, you may only have to put down around 3.5 percent, which is great for lower income families; however, more and more individuals are being required to put down 10 percent, especially with a credit score lower than 580.

5. Consider Foreclosures – As a general rule, there is nothing at all wrong with a foreclosure. It is simply a home that someone was unable to continue making payments on and the bank took it as their collateral. You can usually purchase these at a discounted rate, but you must act fast! Plus, you might want to make sure your real estate broker specializes in foreclosures, as it will make the process a lot easier.

6. Tax Credit – Be sure to claim that tax credit on next year’s tax return!

Now that you know a little bit about it, start planning and searching for your new home. Don’t expect to come across your dream home on the first day of home searching. It will likely take time, but after all, time is something you have, as you don’t want to rush into anything. Happy home searching!

How Much do I Need to Save for Retirement?

A 45 year old man working a typical 9-5 job might be thinking more intensely about saving for retirement than a 21 year old that just landed his first full time job with benefits. At the age of 21, he might start contributing 4% of his income to his 401k with a more aggressive market approach. His 45 year old neighbor is struggling tirelessly to contribute 10% of his pay with a much more conservative approach. They both share one common interest: saving for retirement.
retirment saving
How much should an individual really save for retirement, and what is the ideal contribution to a company match plan? Many people have relied on and researched retirement planning calculators on the internet for years. The majority of these will calculate a percentage of income that one should be saving and deliver a figure that will support his/her lifestyle in 40 years. The calculator doesn’t take into consideration what everyone’s standard of living will amount to then. The sum of money that an individual should save for retirement doesn’t rely on income; it relies on money spent. A man could make $60,000 a year, but his current lifestyle requires an annual spending figure of $80,000. Another might bring home $80,000 a year, and his current lifestyle requires only $40,000. Should they both contribute the same amount to their 401k? Not likely.

Calculating a substantial amount of savings for retirement relies on evaluating an individual’s current spending and determining the standard of living he/she wishes to uphold at retirement. The retirement calculators that are based on income are not completely worthless. They provide a valuable resource for determining a figure of funds that will be saved after a number of years. Before utilizing these calculators, the individual must determine the ideal amount to save. This number will be derived from deciding how much to spend at retirement. Will they live lavishly, or will they live comfortably? Once a decision has been made on how much they want to spend in 40 years, then they can decide what to save. If the current budget does not allow for that level of spending, then they must discover other ways to save.

Here are a few frugal tips on saving money now for the future:

Stay healthy. One of the leading money guzzlers in retirement are health expenses. Prescription medications, knee replacements, high cholesterol, and cancer all come with a hefty bill. Regular physical activity and proactive health precautions may reduce these expenses.

Make friends with the neighbors. Retirees benefit from friends and family. Several people are willing to lend a helping hand to a senior citizen; a solid relationship will open this door.

Weatherproof the home. Energy costs are rising every year, and they might only increase in 20-40 years. Visit a local home improvement shop to find sealant for windows to prevent cold winter drafts. Ask about clearance items during the contrary weather season.

Being frugal will allow the individual to contribute much more to their company match plan for retirement.

What Are the Most Commonly Missed Tax Deductions?

Every April, businessmen, entrepreneurs, and other self starters anticipate that dreaded day of filling out those familiar W-2 and 1099 workbooks. While some look forward to receiving a refund, many lack the necessary education to help them maximize their tax earnings. The following are some tax deductions that are commonly overlooked by all types of taxpayers.

Whether owning a small business or large company, keeping tight records of all business transactions is the key to a worry-free tax season. This includes keeping track of all receipts related to the business. Lunch expenses can be an acceptable write-off if it is purchased as it relates to business. If using a car to carry out business related tasks, then expenses used for the car can be deducted at the end of the year. This includes gas mileage and any other necessities to keep the car in good condition while conducting business. Oil and tire changes, tune-ups, and any other cost related to car maintenance are examples of deductions that suit independent contractor delivery jobs or sales jobs that require a great deal of independent travel.

Materials that are needed to produce sellable goods can also be deducted. This benefits artists and craftsmen who make their living selling their art and crafts. For example, if an artist sells their work for $200 and their materials needed to produce it costs $40, then the artist can write that off come tax time as long as he or she keeps all of their receipts. These are all considered business expenses that ideally should not cut into the entrepreneur’s individual profit margin.

If a business needed to close down and thus resulted in a loss of income, then the business owner can report that as a loss on their tax forms. Each individual taxpayer needs to pay attention to what amount of profit loss constitutes a “loss” because each state may have different laws regarding these specifics.

Other forms of deductions that often go unnoticed are sometimes not so obvious. Most people may not know that charitable contributions made to organizations can also be deducted. This may include foundations such as Muscular Dystrophy or non-profit agencies.

Many homeowners reap the benefits of paying those monthly mortgage payments around tax season, but renters may not know that they might benefit as well. As long as he or she is the head of household and it’s their primary residence, some states will allow them to deduct rent from their taxable income. When filing Federal tax returns, the residence must be used for a business purpose in order to qualify for deductions.

Whether a business owner or average Joe trying to make an honest living, tax deductions are not always the most obvious. By identifying commonly overlooked deductions, taxpayers can now be a little more cautious this tax season. Hopefully, this article is helpful in helping the average taxpayer determine what an appropriate deduction is and which is applicable in their individual situation.

I Love It Not…

Valentine’s Day, for some, is fondly referred to as Single’s Awareness Day. So what do all singles people do on Valentine’s Day? Well, they can wallow in self-pity or bitterness, or they can do something that shows how much they care about themselves.  What is even better is that it can be inexpensive too.

1. Polish Party.

Get a few of your single girlfriends together, bring all the nail polish you have, and take turns giving each other mani’s and pedi’s while bad mouthing all the boys who have done you wrong and what celebrity got arrested the night before.  You will not only get some polish powered confidence, but some much needed girl time therapy.  What will this cost you? Nothing, unless you need to pick up some new polish!

2. Bubble Bath… That’s Right.

Stop by your local bath and body shop and pick up some bubble bath in your favorite scent.  Nothing says relaxation more than a bubble bath.  Now light some candles, grab a book, or just turn on some soothing music and take some time for yourself.  The max this one will cost you?  $15. Try it out, you will not regret it.

3. Need a Good Cry?

Pop in Dirty Dancing or Marley and Me and enjoy some of what I so fondly refer to as movie medication.  Get your favorite drink and snack ready. Put on those pajama pants that fit just right and those fuzzy socks that you love so much and over medicate yourself to your single heart’s content.  Using Red Box?  This one will cost you a max of $5 for the movie and $20 for your drink and snacks.  Indulge a bit.

4. Go Home!

If you are a college student like me and going home is a rare luxury, plan ahead and make the trek back home.  Be around people who truly love you, aka, your parents!  If your parents are like mine, they will smother you in hugs, candy, and free food (something every college student loves.)

 

Valentine’s Day does not have to be Single’s Awareness Day.  Make Valentine’s Day about you, and tell Single’s Awareness Day where to shove it.

Turning Hobbies into Cash

College is full of shuffling between classes, writing papers, working, spending time with friends, and trying to find time to breath amongst the hustle and bustle. Trying to get in a decent amount of hours at work during the week while still trying to get in enough time to study can drive even the sanest person to the brink of insanity. And usually, the job really is not even something you like very much. If you are not stuck behind a greasy grill all day, you could be stuck stocking shelves at some big block store. Have you ever thought, “I wish there was a way I could do something I actually like?” Or maybe, “I wish I could do something that would make me more money, but take less time?” Well, I have good news for you! Every college kid has at least one hobby that can be made into a money maker with a little work. Here are just a few ideas to get you started:

1) Write

Writing can be a huge money maker for students, especially students who are studying journalism or English. Newspaper, magazines, online blogs, and more all offer freelance writing jobs. Freelance means you are not on contract with the group, company, or organization and can write about whatever you want. You can also, however, take on a writing position in a company where you will be given assignments to write. Begin a successful blog! Once you have a loyal fan base, you can begin putting advertisements up. Every time a reader clicks the blog, you make money. Often times student newspapers on college campuses also pay for writers. Making money writing is all about how much you put into it. Plus, writing experience looks great on a resume. Writers can make anywhere from $5 to $15 dollars an article.

2) Babysitting

Do you like kids? Maybe want to own a daycare someday? Then babysitting is a great fit for you. Not only will you be gaining experience to build your resume, you will be making money. Babysitting allows you to set your own hours and your own hourly wage. Also, babysitting allows a lot of downtime, which means extra time to study or just relax. If you want to look like a real professional, take a babysitting course at your local Red Cross. This course will certify you in CPR, the use of an AED, or automatic external defibrillator, rescue breathing, and other lifesaving maneuvers that will make you look that much more appealing to any parent.

3) Crafts

Do you feel content with a needle and thread in your hand? Do you spend your free time picking out the best colors and designs for necklaces? If your passion is handmade crafts, then your passion has money value. Etsy.com is the perfect place to begin posting your crafting skills to sell to the public. EBay would also be an excellent source as well. If you are confident in your abilities as a crafter, put them to the test on Etsy or ebay. You can set your own prices and work up from there!

4) Tutor

Are you proficient in business calculus? Is sitting through Spanish class a walk in the park? Do you offer your helpful services to friends all the time? Then you may be just the help that someone needs. Better yet, you are help they are willing to pay for. Start advertising your skills and tutoring services and watch the academically in need flock to you. Schools often times will pay you to tutor for them as well. With tutoring, you are able to set your own prices either per hour, per session, or per day. Schools will usually pay minimum wage or slightly more. If you are good at what you do, your students will advertise for you by boasting about the A’s you helped them get!

5) Cooking or Catering

If you are a culinary or bakery student, or just someone who has proficient knowledge in the kitchen, cooking and catering would not only be a fun way to make some extra cash, but build your resume as well. Hold a taste testing party, offer free samples to local businesses, and send letters with your business card, price sheets, and menus. If they like what you do, you can expect calls as soon as a week later. Who knows? This could even become a future business venture. The opportunities are endless!

Hobbies can become opportunities with just a little time and effort. Opportunities that can make you money and can even make you a future career. Build your resume, build your bank account, and build onto your future goals. The opportunities are there, now go get them!