Posts made in November, 2014

2 Common Mistakes That People Make That Inhibit Their Financial Security

Everyone would like to be more financially successful. Many people work their whole lives to acquire money and then wonder at the end of the day why they are still in debt, without a good nest egg. There are some common mistakes that people make that hurt their financial security. Here are some of those mistakes.

1. Not Having An Emergency Fund

Emergencies happen to everyone. It could be as simple as a car problem to as detrimental as your entire basement flooding. Whatever the emergency, you need a little extra cash to take care of problems when they arise. If you don’t, you will have to put it on a credit card or take money from other areas of your life and go without.

This is why you should always have an emergency fund. Dave Ramsey suggests starting with $1,000. As you learn to save and pay off debt faster, you can increase the emergency fund to 3–6 months worth of living expenses. This means that you should know how much it costs for you to survive each month, and then multiply that number by 3–6 and work towards having it in savings.

This way if you loose your job, get sick, or have a major problem, you can survive without problems for the next couple months while you get back on your feet. Having an emergency fund will make you feel more secure and more confident.

2. Buying Everything On Credit

Everyone has heard the idea that you should buy everything on your credit card so that you can get the rewards and then just pay it off each month. Do you know who tells you to do that? The credit card company. This is because there is a small amount of people who actually pay off their card each month. Instead, the majority of people allow a balance to carry over onto the next month, meaning that they are paying a great deal in interest and are acquiring credit card debt.

Instead, get in the habit of buying things with cash. If you don’t have it in your bank account, you can’t afford it. This way you can make sure that you are not paying extra money in interest charges and that you are not getting into debt over things that you really don’t need. If you do really need it and don’t have the money, you can pull from your emergency fund or take out a payday loan, such as at http://www.kosterfinance.com.

By doing these things, you can become more financially independent.

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Starting A Small Business: 4 Accounting Tips You Should Know

Have you recently started your own small business, or do you plan to open for business in the near future? If so, you should know that good accounting practices can prove vital to your success. Thankfully, the easy to follow tips outlined below can help to ensure your books stay in order at all times.

Tip #1: Always Keep Personal And Professional Charges Separate

It can be quite tempting to throw a few personal expenses on your business credit card thanks to the higher credit limits these cards offer, or to deposit business funds into your personal account simply because they will draw a higher rate of interest. However, giving into the temptation to mix your personal and business finances can result in a world of accounting nightmares, especially if your business is ever audited by the IRS. In order to keep things simple and ensure everything is accounted for properly, be sure to always keep your two financial worlds completely separated from one another.

Tip #2: Schedule Time To Tend To Your Finances

Unfortunately, accounting tasks are often put off in favor of what seems like more important duties, such as tending to a customer. However, the truth is, there really is nothing more important to the success of your small business than being on stable financial ground. This is why it is so important that you schedule time specifically for the purpose of reviewing your finances. During this scheduled time, concentrate on reviewing your income and expenses for the entire week, and do not allow any distractions to take you away from the task at hand.

Tip #3: Make Use Of An Invoice Tracking Software

As your business begins to grow, it will become increasingly difficult to keep up with which invoices have been sent, and which invoices have been paid. In the end, this can result in late or missed payments from your customers. Assuming you are not in the business of giving away free products and services, this inability to collect payments on a steady basis can have a huge impact on your bottom line. Thankfully, making use of an invoice tracking software can make this job much easier and ultimately ensure that you are getting paid for the work you do.

Tip #4: Hire A Professional To Monitor The Big Picture

While you are certainly capable of tracking your day-to-day spending and income, it can be far more difficult to judge the overall financial health of your business, or prepare your annual tax returns. This is why you should always have a professional accountant in your corner from a firm like Homer Wilson & Co Ltd to help oversee the big picture and help with complex accounting tasks

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Ways To Start Planning For Your Retirement At A Young Age

If you have no desire to work when you reach retirement age, you need to spend some time and effort creating a retirement account. There are several ways to create and grow this account without causing you financial instability. It is best to learn which methods can help you create a workable plan so you can retire when you are older.

Set a Goal

Before you can build a retirement account, you need to determine a realistic goal. Your goal is the amount you will need for food, shelter, utility and medical bills.

To help you figure out this amount, you can use a retirement calculator that considers several factors for you. These factors include basic needs such as food, but it also considers inflation, which is the amount items will cost in the future.

However, these calculators have limited input areas that may affect the outcome of your overall goal. For example, the calculator only considers your age, current income and savings you currently have. For a more cohesive plan, it is best to work with a financial advisor who can help you create a plan for retiring by a specific age.

Savings Options

Once you have a goal, you need a plan to create and build the amounts you require. Your first option is to use an employer retirement plan that matches a portion of the amount you want to put into the account. Each employer offers a different percentage, so you will need to find out how much your employer is willing to put into your retirement account.

If you are self-employed, you want to create a retirement savings account based on a percentage of your income. It is best to start slowly by placing one or two percent of your income each month into this account. As time goes by, you can up the percentage as high as you want to grow your retirement money.

By using a percentage instead of a flat amount, you can easily contribute more into these accounts as your pay increases. Additionally, if your pay decreases for some reason, you will not risk financial instability by placing a higher amount into your savings. Even with a lower amount, you still only put in that specific percentage.

When you want to plan for your retirement, you will have several options that may suit your needs. It is a good idea to set a monetary and age goal, so you can retire when you want to. This process will take some time, but it is worth the effort so you have financial security during your golden years.

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Needing To Buy Your Own Health Care Insurance? Things You Should Know

Have you recently left your job, and as a result, are losing your health care insurance coverage? Or maybe you have been without health care insurance for years because you simply couldn’t afford it. New laws in the United States have made health care insurance more affordable for the average consumer—whether they are employed or not. However, shopping for health care insurance on your own is tricky. You have more options to choose from than when signing up for group benefits offered by an employer. This leads many consumers to confusion over what policy is best for their needs. Luckily there are some things to keep in mind when buying health insurance from a company like American Financial Concepts.

What Types of Policies are Available?

There are two main types of health care insurance policies that consumers can choose from: HMO and PPO. HMO policies refer to health maintenance organization plans, while PPO policies refer to preferred provider organization plans.

Under an HMO consumers are limited to what doctors will be covered. Consumers can only go to providers that are considered in network in order to have their medical expenses covered. In a PPO policy, consumers have the ability to choose whatever doctor they prefer, but will be required to pay a higher copay when visiting an out of network doctor. HMO plans are generally less expensive on a monthly basis.

What Terms Should I Know?

There are a number of terms that you will see across the board when you are examining health care insurance plans. These terms include:

  • Deductible: How much the consumer pays out of pocket before insurance begins to pay
  • Copayment: Payment that is due at the time services are received
  • Out of Pocket Maximum: The maximum amount a consumer will spend out of pocket before insurance covers all expenses
  • In Network: A group of medical service providers that have a contract with an insurance carrier to provide services
  • Out of Network: Medical service providers that do not have a contract with insurance carriers
  • Coinsurance: The percentage of a fee that the consumer is responsible for paying

What About Pre-Existing Conditions?

The Affordable Healthcare Act changed laws in the United States regarding health insurance and pre-existing conditions. Once this went into effect insurance providers were no longer allowed to deny consumers coverage just because of a pre-existing condition. The only exception to this is if a consumer was already on a policy that had a pre-existing condition clause. However, these consumers could purchase a new policy during open enrollment on the Healthcare Exchange.

Buying health insurance is never easy, especially the first time you do it on your own. Health insurance laws are changing, making coverage more accessible to the everyday person. If you have questions regarding health insurance, contact an agent in your area.

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Tax Implications Of Home Equity Loans

Taking out a home equity loan can put a few extra dollars in your pocket come tax time. While you can benefit from loan-related tax deductions, whether the mortgage interest you pay is fully deductible depends on why you borrow the money.

If you use the money for reasons other than making improvements to your home or buying a second home, there are limits on how much of the interest you can deduct on your federal income tax.

Deduction Limits for Home Improvements

If you take out a home equity loan to make home improvements and file your tax return as single or married filing jointly, you can deduct the interest on up to $1 million of the combined amounts you’ve borrowed. You can’t deduct interest you pay on any amount that exceeds the $1 million loan limit.

For example, if all the loans that qualify for the mortgage interest deduction total $1.1 million, you can’t claim the interest you pay on the additional $100,000 loan amount, even if you use the money to make home improvements.

The most interest you can deduct is $500,000 if you are married but file a separate tax return.

Deduction Limits When You Don’t Make Home Improvements

If you don’t take out a home equity loan to make major home improvements, buy another home, or build a home, you can only deduct the interest you pay on the first $100,000 you borrow. In other words, if you borrow the money to go on a Caribbean cruise, the tax break you get will be smaller.

If you and your spouse file separate returns, you can each deduct the interest on the first $50,000, but you both have to itemize your deductions.

Your Home as Collateral

You can’t deduct the interest you pay on a home equity loan as mortgage interest expense unless you put up your home as collateral.

The total for all your mortgage debt can’t be more than your home’s fair market value when you take out the loan. Your home’s fair market value is the price you would expect to get if you sold it at the time.

Itemized Expenses

You must itemize deductions on Form 1040, Schedule A of your tax return to deduct interest you pay on your home equity loan. Whether you can claim mortgage interest as an itemized expense depends on whether you exceed the standard deduction you can take for your filing status.

Even if you didn’t itemize in previous tax years, the interest you pay on a home equity loan may be enough to put you over the standard deduction. Form 1098 that you get from your lender shows the amount of interest you paid on the loan during the tax year.

Home Office

If you use any part of your home as a home office, the IRS only allows you to deduct the amount of interest you pay for the part of the home you live in.

You may be able to deduct the remaining portion of the mortgage-interest expense for the business use of your home on Form 1040, Schedule C — Profit or Loss from Business. Contact a company like Capital Accounting And Tax Service Inc for more information.

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