Dave Ramsey’s Freedom Week
If you haven’t already been able to tell from my posts, I am a big Dave Ramsey fan. I think he’s got a lot of good ideas and ways to simplify your financial life. This week he is running a “Freedom Week” promotion on his website and is offering a number of his products for just $10.
One of the books he is selling is his New York Times Bestseller “The Total Money Makeover”. It is available in both hardcover and cd. He is also offering a number of other financial planning products for just $10 each as well. Also, shipping is free on orders over $65. I just bought 10 copies of “The Total Money Makeover” that I am now going to use as gifts over the next year.
Click Here to See the $10 Items
Happy 4th of July!!
June 2008 Networth
Well I finally decided to do the inevitable and run my numbers for last month. They actually aren’t as bad as I thought they might be. With the S&P down over 8% in the month of June alone I thought my portfolio would really be hit, but I managed to fair pretty well. So here they are….
June Highlights
- We saw a steady increase in our emergency fund which was nice. We are now less than $400 away from having the emergency fund fully funded.
- With the market as bad as it was during the month of June I was surprisingly happy to see that our IRA’s only dropped by less than 3%. Part of that is due to the fact that about 1/3 of it is being held as cash. I have been hesitant to invest this years contributions….In hindsight I’m glad I’ve waited. However, this month I plan on investing those funds.
- Our daughters 529 savings plan actually took the biggest hit (we invested $50 so it looks like an increase), but that’s ok, it’s a longtime until she is heading off to school.
- Our credit card balance was about normal for the month. We put most of our monthly spending on the credit card and then pay it off in full each month….we’ve never paid a cent in credit card interest and never plan on doing so.
$75 & Free MyAccess Checking from BoA
If you are a Bank of America credit card holder you can get $75 free for opening a MyAccess Free Checking Account. I am not actually a Bank of America credit card holder so I am not able to complete the offer, but it seems pretty straight forward and easy to do.
According the Bank of America website it’s 3 quick easy steps to the $75.
- Open your new MyAccess Checking® account online with offer code CH75TAD
- Fund your new account with $25 within 30 days
- Receive your $75 within 90 days of account opening
The MyAccess checking account has no minimum balance requirements, no fees and no direct deposit requirements. It looks like the only stipulation is you must be a Bank of America credit card holder and you must keep the account open for 90 days to get the $75 deposited. Good luck for those who qualify, you can’t beat FREE MONEY!!!
June 2008 Spending Report
Here it is. My first edition of the monthly spending report. I also plan on posting the balance sheet, financial ratios, and statement of networth, but I am still working on putting those together so hopefully in the next few days I’ll have something up. I’m trying to figure the best/simplest way to present all of the data.
June 2008 Spending Report
At first glance you might be wondering why we are able to keep the monthly bills and house cost so low. Let me explain. We are currently living with family so we have been fortunate enough not to have rent/utilities expenses. However, we are currently looking to purchase our first home so that should be changing in the next few months. It has been nice to be able to save up a little that we can put towards a down payment. Here are a few highlights for the month of June.
Savings
We originally we going to try and save 30% of our income this month, but because of the vacation we took we weren’t able to save quite as much as we wanted but we were glad to see it stay above 20%. We are going to shoot for keeping the savings above 15% each month. That includes everything from 401(k) and 529 savings to emergency fund and down payment savings….we are saving for quite a few different things right now.
Miscellaneous
The miscellaneous category kind of took over this month. Normally we try to keep as much out of misc. as possible so we are better able to analyze our month spending, but with our vacation we took we didn’t have anywhere else to put it. It’s only about once a year that we go on a big 1-2 week family vacation so next month should be a lot better. We also had to register our cars and get oil changes.
Tithes and Fast Offerings
As you can see we were able to give just over 10% for tithes and offerings. We have a goal to keep this percentage over 10% each month. We have felt so blessed and feel that this is the least we can do to help those less fortunate.
Gas
Surprisingly we were able to keep our gas cost rather low this month. Normally it is up around 10% or 15%, but it looks like we must have planned it just perfect for our fillups….yeah, we filled up both cars today (july 1st)….July might have a little bigger bill than normal.
Chase Card Holders: $5 per Day for Any Purchase
If you are a Chase card holder and are in good standing you may be eligible to receive up to $5 a day for the entire month of July ($155 max).
The Bad News: You will only receive the five dollar bonus on the days you make a purchase.
The Good News: It doesn’t matter how small the purchase is….$.01 would work.
Are you eligible?
First, you must be a Chase credit card holder, second, you must be in good standing and third, you must receive the promotional pamphlet in the mail (see photos below). It looks like only select Chase card holders are receiving this pamphlet in the mail. I have been unable to verify how they are selecting these card holders. If someone is aware of how card holders are being selected please let us know.
Here is what the pamphlet that comes in the mail looks like…..thanks leftnotright
I have also read that some people are getting a $3 per day promotion instead of the $5 per day. If you think you may be part of this promotion or think you should be, it might be worth a 5 minute phone call to Chase (1-800-432-3117).
Mileage Deductibility Rate Increase
When it comes to automobile expense deductions and work related travel you are allowed to chose one of two ways to expense automobile related expenses. The first, and easiest, is the per mile deduction method. You simply track your business related mileage and are allowed to deduct 58.5 cents per mile. The second method, but sometimes more profitable method, is the actual expense deductions. This is when you actually track the expense you’ve accumulated for your car over the year and then allocate a portion of those to business expenses based on your business/personal use ratio. This method is a lot more work and usually not worth the hassle, but if you know your auto may need a lot of maintenance it may be the way to go.
So what’s the good news?
As of July 1, 2008, the optional standard rate to calculate deductible operating costs for business vehicles will rise 8 cents from 50.5 cents a mile to 58.5 cents per mile.
For many people this won’t matter. However, for anyone who has their own small business or uses their personal car for company related travel this is music to our ears. I know 8 cents is not a ton, but every little bit helps. It’s good to see this come as the summer driving begins.
For more details on the rate increase please see this article.
What Are Others Saying…..
I am relatively new with the whole art of blogging and have found myself spending hours upon hours surfing, reading and skimming others blogs. There is a lot of good stuff out there……there is also a lot of garbage. However, there are a number of articles that I have seen in the last week or two that I thought might be worth your reading.
Here they are in no particular order.
- Iowa Floods: Reconsidering Flood Insurance - Do you need flood insurance?
- How to Improve Your Gas Mileage - A few tips and tricks.
- Best Credit Card for Foreign Travel - What cards are best for your next international excursion?
- Eat Healthy on a Budget - Eat great without breaking the bank.
Ok, so I found one more today that I couldn’t resist.
Credit Scores Dropping
It looks like banks and card lenders are have found a new way to protect themselves from high risk borrowers. They are reducing their credit limits. According the the Associated Press this is just one more way banks are trying to protect themselves from more massive losses like those they’ve seen from subprime mortgages.
By reducing your credit limit your credit score is negatively affected. Let me explain. Let’s say your current credit limit is $5,000 and your carrying a $2,000 balance on your card. The credit card company worries that your large outstanding balance may increase your default risk so they reduce your credit limit to $2,500.
By reducing your credit limit they have in turn increased a key ratio used to calculate your FICO score. The ratio they’ve increased is called your credit utilization rate and is found by dividing your current outstanding balance into your total credit limit. In the above situation your credit utilization rate goes from 40% to 80%.
Thankfully banks and card companies must give you at least 15 days notice when they are changing your terms and conditions, but what they don’t have to do is tell you is that this reduction in your credit limit will negatively affect your credit score.
I think the best way to prevent your credit score from dropping is to pay off your outstanding balance every month. First off, if you are not carrying an outstanding balance your card company would most likely not consider you high riskand would have no reason to decrease your limit. Second, even if they were to reduce your limit and you do not carry a balance on your card, your credit utilization rate would remain the same, 0%.
The Debt Hole
Have you ever felt that your “digging” yourself out of debt? I know that might sound a little funny, but that it literally what we are doing. Normally you don’t even realize you’ve started digging the hole. It can start with something as simple as the family car breaking down or the air conditioning going out in the middle of the summer.
There is always on unexpected expense that can’t be covered by the monthly budget and forces us to put the charge on the credit card. Sometimes we just roll it into the 2nd mortgage becuase it’s “tax deductile interest” and we can’t afford not to fix it now.
Although that may be true, I would suggest there are better ways to deal with the unexpected. As almost any financial planner would tell you, GET AN EMERGENCY FUND. Even if you have as little as $500 put away for a rainy day it might be what keeps you from starting to dig that hole.
The problem that occurs is in the following month our budget is already busted because of last month’s surprise charge. So how do we fix it? We don’t pay one of current bills or simply continue to carry a balance on our credit card telling ourselves that “next month we will be able to pay it off and get back on track.” As we all know, next month comes along and another “emergency” expense comes up and the credit card balance continues to grow and our debt hole gets deeper and deeper.
How deep is your debt hole?
Here are a few questions to ask yourself to see if maybe your debt hole is a little deeper than you thought.
- Can I pay off my credit card balances each month?
- Do I skip some bills to pay others?
- If I lost my job today, would I have enough in liquid assets to survive for more than a month?
- Do my spouse and I constantly argue about money?
- Do I receive phone call from creditors about overdue bills?
- Have I postponed medical or dental appointments because I can’t afford them right now?
- Am I using an increasing amount of my monthly income to pay down debt?
Amending a Tax Return
I was recently asked by a family friend if I would be willing to look over their tax return to see if I could tell why they did not receive their stimulus payment. (Not really sure why they asked me, but hey, I guess it’s a compliment).
The first thing, and most obvious thing, that I checked was whether or not they should have received it by now. I just looked at the IRS time line of when stimulus payments were supposed to go out (Stimulus Payment Schedule). Because their original return was submitted on time and their refund came via direct deposit I knew they should have received it by now.
The second thing I check was whether or not they had sufficient qualifying income. According to the “fine print” of the stimulus payments you must have at $3,000 of qualifying income (Qualifying income includes any combination of earned income and certain benefits from Social Security, Veterans Affairs or Railroad Retirement). After reviewing of their original return they only had $1,012 of qualifying income. However, they had an additional $4,000 of income listed on line 21 as “other income”. I found out that this “other income” was actually income from a side business they had started in order to make a little extra income. With that knowledge I now knew that this should actually be categorized as business income (a.k.a. qualifying income) and not other income.
The final thing I had to do was figure out how to file an amended return. After a little searching on the IRS’s website I found the solution. It is actually relatively easy. There is one form, two pages (1040X), that must be filed out and mailed in along with any supporting documentation.
What did I learn from the process…….
- Find a friend to help - Although I am by no means an expert in the area of tax I was able to save them a $400+ charge from H&R Block just to tell them what was wrong and file the amended return.
- Search online for 5 minutes - Literally, it me less than 5 minutes of searching on IRS.gov to find out how so file an amended return.
- If your original return was wrong, amend it - After about one hours worth of work I was able to get them an additional $1,600 in refunds ($900 of stimulus payment and $700 of additional earned income credit)
- Call for help - If you are unsure of whether you are doing something right, give the IRS a call…that is one of the reasons we pay taxes. IRS Help
