Need a Tax Break? Here’s a List

February 18, 2012 By Leave a Comment

Everybody wants some tax breaks…or a few more. When it comes to taxes these breaks—credits, adjustments, and deductions—are always your friend. They’ll lower your bottom line, reducing the amount you owe or increasing your tax refund.

So it’s important to have a grasp of what tax breaks are available and which ones you might qualify for. This is one of the major glitches in even the best tax return software programs—they don’t know about every detail of your financial lives. They can present a list of sections for you to navigate, but you need to know where to look to get the breaks you qualify for and deserve. To help you get familiar with these tax breaks, we’ll break down the most common (and most popular for 2011) ones below.

Before we start, take  note of this simple rule that many people do not understand: all tax breaks are not created equal. Tax credits, deductions, and adjustments are not the same! These are three completely different things that do different things to your tax return. That said, here’s a list of tax breaks that may matter most to your 2011 return:  [Read more...]

Auto Financing for Smart People: Tips for Saving on Your Car Loan

February 17, 2012 By 13 Comments

Earlier this week I wrote about mistakes we make when buying a car. One of those mistakes is overlooking the importance of the auto financing in the overall cost of your new car.

The example I gave is if you are buying a new Honda Civic, the difference between “sticker price” and the dealer’s invoice price (what the dealer paid for the car) is about $1,500. If you negotiate well, you could save $1,000 or more on the price of the car. If you then finance the car for four years at 6% with nothing down, you’ll pay over $2,000 in interest. Financing the car for three years at 4% with a $1,500 down payment, however, can save you over $1,000.

If you’re willing to negotiate the price of the car, you shouldn’t ignore the rates and terms of your financing. I made this mistake the first time I bought a car many years ago and vowed never to do it again. I posted some of this article based on my personal experience a couple years ago, and have vastly enhanced it for today. If you’re in the market for a new car—don’t wait until you’re in “the box” (what some dealers call the offices where you finish the paperwork) to think about your financing.

AUTO FINANCING TIPS

Cars aren’t investments. Quite the contracy, cars depreciate like crazy. For this reason alone, it’s not smart personal finance to pay interest on a loan to buy a car. What happens in many cases is the value of the car drops faster than you repay the loan leaving you upside down or underwater (when you owe more on the loan than the car is worth).

That said, many of us need cars to get to our jobs and don’t have the cash lying around to buy a reliable ride. So we get a car loan. That’s cool, but of course there’s a difference between using a car loan wisely and using it to buy a lot of car you can’t afford. I have the credit and income to go out and get a loan for a BMW M3. And I would love that car. But that doesn’t mean I should get it. What the dealerships will tell you can afford and what you should spend are two very different things.

So whenever you finance a car, you want to think about it not just from a monthly payment standpoint (how will this $350 payment affect my monthly expenses) but also from a total cost point of view. Here’s what I recommend:  [Read more...]

5 Big Car Buying Mistakes

February 14, 2012 By 9 Comments

Last Saturday I was out to dinner at one of those Japanese Hibachi places. Over a scorpion bowl, I was talking to a friend who works as a sales manager at a luxury car dealership. He was mulling over getting out of the industry because---as you might imagine---car shoppers aren't the nicest people … [Read more...]

Common Tax Schedules: The No-Stress Guide To Filing Your Taxes, Part 4

February 9, 2012 By 2 Comments

We're in the middle of the "No-Stress Guide to Filing Your Taxes". We've already covered:A tax document checklist: A guide to get you startedChoosing the best method to file your returnTax software: When to use and how to chooseToday, we'll talk about some of the more common "advanced" schedules you … [Read more...]

Your Automatic Investment Plan: How to Build a No-Hassle Money Management System, Part 4 of 4

February 7, 2012 By 14 Comments

Over the past couple of weeks, I’ve laid out three steps to help you build a hassle-free money management system:How to manage your spending without a traditional budget.How to create a bank account buffer to eliminate the risk of overdrafts.How to put your bills and savings on autopilot.What … [Read more...]

Capital One Venture Credit Card Review

February 1, 2012 By 37 Comments

The Capital One Venture Credit Card (spelled "Capital One" not "Capitol One") has stood out among miles rewards credit cards for a couple of years now with a generous rewards plan and frequent, funny ads like those featuring Alec Baldwin and Jimmy Fallon. But if you're reading my blog, you don't … [Read more...]

Best Tax Software Compared

January 31, 2012 By 9 Comments

Ever wondered what the differences are among tax software programs? Maybe that only keeps nerds like me up at night, but there are differences. Examples: The most popular tax software is also the most expensive. And some cheaper programs charge extra for support. You get what you pay for. As … [Read more...]

Tax Return Preparation Options: Calculator, Computer, or CPA?

January 26, 2012 By 4 Comments

As you gather necessary tax documents and prepare to start your tax return, it's time to decide how you are going to file. And these days, you have several choices. You can go old school and break out the pencil and paper. You can buy tax software to handle the heavy math for you. Or you … [Read more...]

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