Express Your Opinion Regarding the National Debt

This week, the two co-chairmen of the President's deficit commission proposed some drastic measures aimed at reducing our national debt. They involved both reducing spending by the Federal Government as well as restructuring the income tax laws, resulting in more tax revenue.

I feel strongly that something significant has to be done. And there will be plenty of pain to go around. We'll all suffer in one way or the other. I don't know what the best answer is but I have expressed my opinions on this issue to my congressperson and senators - several times! You should do the same.

Since I know the pain will be there, I told my elected representatives my preferred way of sharing the pain. I want them to know that I expect them to stop be political hacks and start being patriotic Americans with backbone to do what has to be done. It's got to happen.

If you feel greater effort should be placed on spending reductions, explain exactly what you mean. Where should the cuts be? On the other hand, if you feel taxes should be increased, be as specific as possible. For example, how should the home mortgage interest deduction be handled? Or, how should we pay for the growth in entitlement programs like Social Security.

Here's your chance to affect the future. I've heard that a letter to elected officials is treated by them as representing the opinions of 100 like-minded individuals among the population. If you want the address, telephone number, FAX number and email address of your elected officials, try here: Contacting the Congress.

It's your money they will be spending or saving so let them know your preferences - NOW!

Here are the key recommendations put forth by the deficit commission co-chairmen:

• Reduce future cost of living adjustments for social security and gradually raise the retirement age to 69 by 2075
• Rein in health care spending and make Medicare recipients pay more.
• Cut $200 billion from a broad array of government programs, half from defense.
• Eliminate or scale back the home mortgage deduction and most other popular tax write offs.
• Reduce and simplify overall tax rates.
• Increase gasoline tax by 15 cents per gallon to fund highway spending.

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Pay Your Debts or Taxes for Just Pennies on the Dollar! - Not!

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Tips for End of Year Income Tax Planning

With only two months to go before the end of the year, it's time to think about short term income tax planning. Here are some things to consider, especially if you itemize deductions.

• Pay your mortgage payment due in January 2011, in December 2010. This will shift the interest tax deduction amount for that payment to be applied on your 2010 tax return rather than your 2011 return.
• Prepay local and state income taxes so you can take that deduction this year.
• Prepay charitable contributions that you would normally make in 2011 to increase your deduction in 2010.
• If you are self-employed or have some type of business, stock up in December on office supplies and equipment such as computers so you can take the business expense deduction in 2010.
• If you have had heavy medical expenses in 2010 but don't expect the same in 2011, consider prepaying things such as medical insurance in 2010 in case you qualify for a medical deduction. Visit the doctor, dentist and have those tests run in December instead of January.
• If you have a flexible health spending account with your employer, make sure to spend all that's available in the account.

If you have other suggestions, please add a comment.

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Free Checking Accounts Are Fading Away

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Are Your Donations to Charities Being Well Spent?

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Are your donations to charities being well spent?


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Free College Education - Service Academies and R.O.T.C.

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Free College Education - Service Academies and R.O.T.C.

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Are you Managing Your 401(k) Plan Properly?

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Are you managing your 401(k) properly?

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Phone Service for $40.00 per Year - magicJack Review

We recently wrote a post called Throwing Money Away, Part 2 - Home Communications which included a brief discussion about landline telephone service. That's the traditional telephone service that has been available for over 100 years. We posed a question to ponder regarding whether or not you actually needed a landline any more.

A relatively new option to consider is a technology called Voice over Internet Protocol (VoIP). I won't try to describe the technical issues of this technology - let's just summarize by saying that your voice travels over the public Internet or Internet-like facilities. Two companies that have become popular providers of such service in the public domain are Vonage and Skype.

Now there is a new company that sells a device called magicJack. You may have seen one of their many ads on TV. They advertise that by using their device, you can make unlimited calls to any telephone in the United States and Canada for $40.00 for the first year, $20.00 for the second! Compare that with what you currently pay for landline service.

Let me say right off that:

• This is not an endorsement of this product.
• I have not tried this product.
• I have no financial interest in the company that provides it.
• I have nothing to gain or lose if you try or don't try this product.

However, it piqued my interest so I have done some research on the product and the service it provides. If I can save hundreds of dollars per years for landline telephone service, it's worth a look.

Based on what I've read in what appear to be accurate, unbiased reviews of the product, here are some things you need to know:

• You must have high speed Internet service such as DSL or cable-modem based.
• The magicJack device plugs into a USB port on your computer and your telephone plugs into the magicJack device.
• The transmission quality is pretty good, although not quite as good as traditional landline service.
• If your Internet service goes down, so does your magicJack service.
• You may have to be assigned a new phone number. It will be unlisted.
• Full enhanced 911 capabilities may not be provided.
• The person you are calling or who is calling you does not have to be using a magicJack.
• Caller ID is available.

These are my personal thoughts and opinions:

• If I used my landline for business, I probably would not use magicJack. That's just me!
• The better the Internet connection and computer, the better magicJack will work.
• I'd probably use my cell for 911 calls.
• If I didn't have a cell phone, I'd probably stick with my traditional landline.

So, if you are willing to give up a bit of transmission quality and need to save some serious cash, this might be for you. Here are some sites that might help:

• magicJack Home Page
• magicJack: Cheap, Way Overhyped, But Really Works

Do a Google search on "magicjack magic jack reviews". You'll find many sites with reviews, good and bad.

If you do try it, leave a comment here about your experience.

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Throwing Money Away, Part 2 - Home Communications

How long has it been since you calculated the amount you are paying each month for:

• Telephone (land line)
• Telephone (cell)
• Pay TV (cable, satellite, etc.)
• Internet access

There's no time like to present to do this. Once you've determined monthly charges, multiply by 12 to get the annual amount you are paying. Do you enjoy paying this much? Probably not!

A couple of years ago, I was searching for ways to decrease the amount each month I was paying for everything, including the above expenses. Because of contracts and "deals" I had in place, the only place I could see significant savings was in my pay TV service. I was a subscriber to the traditional cable TV provider in my neighborhood. I did not have any of the premium channels such as HBO, but I did have the HDTV option with DVR boxes for two televisions. After searching around, I settled on one of the popular satellite TV companies. For essentially the same service, my bill was reduced by about $30.00 per month. That's $360.00 per year, year after year!

When all my contracts expire, I'm going to search again for the best deals. It could be that a package of services from a single company will be the best deal but I'm not going to take that for granted. And, I'm looking hard at using the Internet for my TV service. I'm not technically savvy enough to know how all this works but I've got friends who are. So, I'm about to learn!

Here are some things to ponder, especially if you are in a pretty bad financial situation:

• Do you need your land line telephone? If you always use your cell phone, why do you need a land line?
• Do you really have to have Internet access at home? It's available for free in public libraries.
• Do you really have to have Pay TV? Broadcast television only requires you to have an antenna and is essentially free.
• Is that fancy cell phone really necessary? Calculate how much you are paying each month in service and check to see what basic plans would cost in comparison.

I don't have any specific advice to offer here other than you have to set aside a block of time to research what's available in your area. It's awfully easy to just continue doing what you've been doing but it may be costing you money.

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Finding Fixed Income Investments with Decent Returns

Since the recent financial meltdown, Federal Reserve directors have forced market interest rates to be extremely low. If you are trying to find a safe investment that pays a decent interest rate, you are mostly out of luck. Have you checked Certificate of Deposit interest rates at your local bank lately? Don't - it will make you nauseous!

If you want to stay with fixed income investments (as opposed to common stocks) and if you are willing to take a little more risk, you might search for a short term bond mutual fund. To get an idea of what you might find, go to Morningstar and follow these steps:

• Click on "Funds" at the top of the screen
• Scroll down and look for "Fund Screener" in the left column. Click on it.
• You will see some criteria you can use in searching for a fund. To start with, set these criteria:
• "Fund Group" - select "Taxable Bond"
• "Cost and Purchase" - Select "$3,000"
• "Load Funds" - Select "No-load funds only"
• "Morningstar Star Rating" - Select five stars
• "Morningstar Risk better than or equal to" - Select "Average"
• "YTD return greater than or equal to" - Select "Category Average"
• "1-year return greater than or equal to" - Select "Category Average"
• "3-year return greater than or equal to" - Select "Category Average"
• "5-year return greater than or equal to" - Select "Category Average"
• "Average Credit Quality" - Select "A or higher"
• "Duration" - Select "Less than 5 years"
• Click "Show Results"

Several funds will probably be displayed in a "Snapshot" format. At the top of the chart, change the "View" to "Performance". You can review the returns these funds have generated over several time periods. If you would like to look at details regarding a particular fund, just click on its name. If you would like to modify the selection criteria you used, click on the "Change Criteria" tab. For example, you might change the "Duration" field to "Less than 3 years". When you "Show Results" again, you'll see a shorter list.

I've intentionally used shorter duration bonds in this example. As interest rates rise, bond values fall. So, in this world of very low rates, there is no where for the rates to go but up. By limiting your investment to shorter duration bonds, the effect of rising rates will not be as damaging. Once interest rates reach "normal" levels, you can consider medium and long term bonds.

Please do not invest in any of these funds based solely on what you have read in this post. To educate yourself, start by reading the advantages and disadvantages of investing in bonds here: Ohio State University FactSheet - Investing in Bonds. Talk with your financial planner if you have one. If you don't, at least seek advice from others. If you would like, feel free to ask a question on this blog by posting a comment.

Here's a link to an earlier post about Morningstar.

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Free Tax Return Filing Assistance

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Balance Transfer to Zero Interest Credit Card

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Don't Transfer Money to Your Child for College Savings

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USAA - A Good Insurance and Financial Services Company

Normally, I don't endorse products and companies. This is an exception.

USAA is an outstanding company for insurance of various types and other financial products. Historically, they have sold insurance to officers in the various branches of the United States armed forces. We became "members" when my husband was an Army officer many years ago. We bought a new car while he was on active duty and we purchased insurance for the car from USAA. When we bought our first house, we purchased insurance for the house from USAA. We have purchased life insurance from USAA and we have a MasterCard account with USAA Savings Bank.

A number of years ago, USAA expanded the membership criteria to include these categories of people:

• Active duty military
• Military veterans
• Spouses of USAA members
• Widows, widowers and former spouses of USAA members
• Individuals whose parents are or were USAA members
• Former USAA members

Individuals who do not fall into one of these categories can still purchase many financial products; they just cannot purchase life, auto or property insurance.

I have found their products and rates to be reasonable and their customer service to be outstanding.  When comparing their rates with other companies, remember that you may receive some of your premium payments back at the end of the year. USAA places part of the premium you pay into a Subscriber Savings Account. This forms part of the reserves USAA maintains in case they have to pay unusually high claims in a given year. If they don't need to use the money, they refund part of the account balance to you at the end of the calendar year.

So, consider switching to USAA if you qualify.

I received no compensation or other favorable treatment in return for this endorsement. It is freely given.
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New Rules for Prepaid Gift Cards

If you're lazy like me, you hate searching for just the right gift to give someone. I have to plead guilty to the fact that I have contributed to the growing gift card trend. But, I have not liked certain hidden penalties associated with some gift cards. Happily, some of those penalties no longer exist, or at least are not as bad.

For some gift cards sold since August 22, 2010, new rules imposed by the Federal Reserve are in effect:

• Limits on expiration dates - The money on a gift card must remain available for at least five years from the date the card was purchased or additional money added. 
• Replacement cards. If your gift card has an expiration date, you still may be able to use unspent money that is left by requesting a replacement card.
• Fees disclosed. All fees must be clearly disclosed on the gift card or the package it comes in. 
• Limits on fees. Card fees typically are subtracted from the money on the card. These fees are now limited and can be charged only if
  
  • you haven't used your card for at least one year, and
  • you are only charged one fee per month.
  These restrictions apply to fees such as:
  
  • inactivity fees for not using your card,
  • fees for using your card (sometimes called usage fees),
  • fees for adding money to your card, and
  • maintenance fees.

You can still be charged a fee to purchase the card and certain other fees, such as a fee to replace a lost or stolen card. Be sure to understand the rules before you buy.

These rules do not apply to all prepaid cards. Go here to see which cards are covered and which are not. You'll also see more details about the rules: Federal Reserve Bank New Rules for Gift Cards.

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Investing, Part 3 - Index Mutual Funds

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Investing, Part 3 - Index Mutual Funds


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Refinancing Your Home Mortgage

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Refinancing your home mortgage .
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Watch Out For More Bank Fees!

Read this post first if you have not already done so: Throwing Money Away, Part 1 - Bank & Credit Card Fees.

Last month, the Card Act passed by Congress banned several fees such as some overdraft and excessive late charges. Now banks are becoming more creative in the fees they charge customers for 'free' checking accounts, banking services and credit cards. Watch out for these and avoid them:

• Higher credit card cash advance fees
• Higher credit card balance transfer fees
• Higher checking account monthly maintenance fees
• Higher minimum balances required to avoid fees
• Higher overdraft protection transfer fees
• Paper statement fees
• Fees to receive copies of cancelled checks
• Annual fee for open line of credit
• Fees for using a live teller

If you find that you are being hit with unreasonable fees, complain to your bank. Most everything is negotiable. Depending upon how good a customer you have been, they might adjust your fees.

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Throwing Money Away, Part 2 - Credit Reports and Credit Scores

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Morningstar

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     Morningstar

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Individual Retirement Account (IRA)

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Want to Pay Off Your Mortgage Early?

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Investing, Part 2 - Annuities

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Saving Money on Travel, Part 2 - Airlines

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Social Security Spouse and Widow Benefits

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Investing, Part 1 - Introduction

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Saving Money on Travel, Part 1 - Hotels

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Throwing Money Away, Part 1 - Bank & Credit Card Fees

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How Much Money Will You Need to Retire?

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Buying a Car

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Do You Need Help From a Professional Financial Planner

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Should Your Property Taxes be Lower?

Is your home worth less today than it was a couple of years ago? Chances are, that's the case.

While house prices have fallen, it's a safe bet to assume that your local city and/or county government has not voluntarily lowered your property taxes based on a lower market value of your property. You may be paying taxes based upon the value of your home in 2005 or 2006!

Can you do anything about it? Yes, you may be able to appeal your local government's assessed value of your property. You could save hundreds, maybe thousands, of dollars each year if you are successful.

Some governments are raising tax rates to offset lower tax revenues. If they do in your location, this may offset some or all of your savings from your appeal. However, in a situation like this, if you don't appeal, your taxes could go up!

It's time to think about this now. In our county, the time to appeal occurs only during the first three months of the year. In your location, it might be something different. If it's the last three months of the year where you are located, for example, now is the time to act!

There are companies out there who can help you appeal if you don't feel comfortable doing it yourself. Be prepared to pay a few hundred dollars to such a company.

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Estate Planning: Just Do It!

Everyone, male and female, should have a sound estate plan. At the very minimum, you should have a valid written last will and testament. If you don't, one will be written for you after your death and it will be written by your state's politicians! In other words, the laws of your state will decide who gets what. Is that what you want?

This is one topic where we are not going to offer suggestions regarding your estate plan. Each woman's personal situation is too unique to generalize. It's probably best for you to consult an attorney and, if your estate will be large, other financial professionals.

Here's some places to start the education process:

• Money Magazine - Money 101 Lesson 21: Estate Planning
• American Bar Association Estate Planning FAQs

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Life Insurance: Term vs. Whole Life

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