Plan to Be More Financially Fit in 2011

Posted on January 24, 2011 by Saldutti

A recent TransUnion survey on consumers’ 2011 financial goals found that two out of three consumers said they plan to improve their financial position this year. Effective budgeting, saving more and paying down credit card debt were the top three methods selected to achieve this goal. These results validate what consumers have done in managing credit card debt over the last 12 months. Tracked by TransUnion’s Trend Data, the average credit card borrower debt dropped 11.5% from the 3Q09 to 3Q10 ($5,612 to $4,964).

The survey, conducted by Zogby International, also found that a quarter of the respondents had no financial goals set for 2011, while eight percent said they plan to improve their credit standing. While the recession was officially over in June of 2009, nearly half (49%) of consumers felt 2010 was more financially stressful than 2009, possibly indicating a lag-effect when it comes to personal finances.

“One positive aspect of the past recession and moving forward in 2011 is that consumers see the need to better manage and control their credit and finances,” said Heather Battison, director of education for TransUnion consumer products.

The New Year is the perfect time for consumers to appraise their current financial situation and make goals for where they want to be at the end of 2011. TransUnion.com offers tools to help consumers understand their credit information, manage their debt load, protect their identity — and most of all, help them achieve their financial goals for this year.

TransUnion provides the following five tips to help consumers start 2011 off on the right financial foot:

  • Check your credit reports every three months: The first step to robust credit health is to recognize which bad financial habits, such as late payments, you have and how they are represented on your credit report. Regular check-ups will also help you guard against identity theft.
  • Know your score: The higher your score, the better rate you are likely to receive.
  • Create a monthly spending plan and stick to it: This simple commitment can help you start a savings plan and will help keep you from building up unmanageable debt. Also, setting aside a fixed amount each month or week will guarantee funds in the case of emergency, while helping you develop financial discipline.
  • File a dispute. It is your right to question information on your credit report that you don’t recognize or that might not be accurate. Online dispute forms can be found on TransUnion.com.
  • Guard against identity theft: To help guard against this increasingly prevalent crime, sign up for a credit monitoring service that will quickly alert you to any changes in your report.

Invitations to an IRS Audit

Posted on January 18, 2011 by Saldutti

It’s that time of year … Tax Season is upon us.  If you aren’t thinking about a tax audit, maybe you should be. They can be a nightmare even if you’re completely honest.  Thanks to the staggering federal deficit, the IRS is trying to close the $300 billion gap between what Americans pay in taxes and what the government thinks we should have paid. You aren’t paranoid if someone is really out get you, as the saying goes, and the IRS is out to get you.

But even if you aren’t wealthy, don’t operate a cash business, and you don’t have a CPA filing reams of forms for you, you still can easily become an IRS target.  Twice as many tax returns were audited in 2009 as 2000.  Enforcement revenue over the same period was up 50 percent.

It’s important to note that in this land of equality, not all individuals or companies are treated equally when it comes to their chances of an audit. About one in 100 businesses with less than $10 million in assets is audited. That number jumps to 10 in 100 for those with $10-$50 million in assets, and one in four for businesses with assets greater than $250 million.

Certain industries are scrutinized more heavily too. You can probably guess some of them—cash businesses are always high on the IRS hit list. But would you suspect Dr. Doggie, the vet, is a target too? It turns out the IRS has a special auditor guidebooks for veterinarians, ministers, laundromats, car dealers and many others too. Their Retailer Guide offers specific strategies for interrogating e-commerce businesses, gas stations, direct sellers, mobile food vendors, pizza shops and the like.

Here are some “red flags” that commonly trigger an audit (courtesty of OPEN Forum):

1. Math Errors – While an error in basic math might not instigate a full blown line-item audit, it’s the most common reason Americans receive those heart-attack inducing letters from their friendly local IRS office. Use a calculator and check your numbers twice.

2. Unusually High Itemized Deductions – The IRS uses a very secret formula to calculate what your deductions should be. If computer scan of your returns shows that your deductions for charity, travel and entertainment, and healthcare are out of line with your income, you’ll be on their radar.

3. Self-Employed/Schedule C Filers – Small businesses are suspected of being especially creative with their expenses. Be careful if you take a home office deduction, have lost money for several years in a row, and prepare your returns yourself rather than use an accountant.

4. Lots of 1099s – In February of 2010, in hopes of adding billions to depleted U.S. Treasury coffers, the IRS began a three-year initiative to crack down on what they believe to be a common practice of misclassifying employees as contractors.  Six thousand businesses have already been targeted for audit, and the government hopes to hire 100 new Department of Labor employees specifically to police these abuses. And yes, the do share their successes with the IRS and State authorities.

5. Unreported Income – Be especially careful to report all your income. If you’ve received a 1099, so has the IRS and their computers will notice if they don’t match up.  The same is true for other sources of income. If your former spouse reports alimony paid and you don’t report receiving it, you’ve just painted a big bull’s-eye on your tax return.

6. Previously Audited – If you’ve been audited in the past don’t think you’re off the hook—especially if you owed taxes or fines. The IRS knows people have the mistaken impression that the auditor won’t come knocking twice. But, of course, just the opposite is true.

7. Shareholder – If you are an investor in a partnership or corporation that came under the gimlet eye of the Feds, you may be next in line.

8. Ticked Someone Off – Disgruntled former employees are a regular source of IRS tips. But payback isn’t the only reason people go the IRS—the agency is authorized by law to pay rewards to informants. In cases that involve huge amounts of money, the informant’s cut can be as high as 30 percent of what they collect.  

Make no mistake, your IRS auditor won’t be jolly.

A Friendly Reminder: Check Your Credit Report

Posted on January 13, 2011 by Saldutti

It’s the start of a new year – the perfect time to begin to get your finances in order.  The first step should be to request a copy of your credit report and check it for accuracy.  It’s simple, it’s free and it’s crucial: Old or inaccurate information could cost you a job, an apartment or a lot of money when you borrow.

The Association of Credit and Collection professionals (ACA International), encourages consumers to check their credit report for accuracy at least once per year to identify and correct errors, and spot signs of identity theft. 

“Closely monitoring your credit report is vitally important to being an informed and active consumer,” said ACA General Counsel Valerie Hayes.

 Under both the Fair Credit Reporting Act (FCRA) and the Fair Debt Collection Practices Act (FDCPA), consumers have federally protected rights including:

  • The opportunity to obtain one free credit report per year.  This is not  to be confused with a consumer credit score.  The ONLY authorized source for consumers to access their anual credit report online for free is www.AnnualCreditReport.com.  These credit reports used to cost as much as $9.50 each.  The credit report provides an overview of a consumer’s credit history but does not contain a credit score, which is a numerical value of the credit report that can be purchased through a consumer reporting agency (such as Equifax, Experian or TransUnion).
  • The ability to dispute information provided to a consumer reporting agency about a debt you owe (or have been alleged to owe). If your dispute is valid, the information in your credit report must be corrected or deleted accordingly.
  • The ability to dispute a debt or any portion of a debt that a debt collector claims you owe by filing a dispute under the Fair Debt Collection Practices Act (FDCPA). If you believe the debt amount is wrong or that the debt does not exist or never has existed, contact the debt collector and they will be required to mark that debt as disputed if it is being reported to consumer reporting agencies.

For more information about consumer rights in credit reporting, visit www.AskDoctorDebt.com, a valuable consumer-focused financial literacy resource created by the non-profit ACA International Education Foundation.

Here's to Better Financial Health in 2011 …

Posted on January 04, 2011 by Saldutti

With the fresh start of 2011, many Americans have set forth a new year’s goal to better manage their finances.  “It’s a popular goal because people tend to get in over their heads with debt and they tend to look at their situation on January first and say what can I do to really better the situation,” says Scott Hemauer, Senior Financial Advisor with Ameriprise Financial.  However this situation can quickly fall apart if an unwanted expense presents itself.  Most people don’t reserve enough money for something unexpected – costly medical bills, replacement appliances or an auto or house repair.

According to a CNN Money report, the average American household with at least one credit card will have almost $11,000 in credit card debt.  So how can you get our debt and manage their financial plan?  The advisors at Ameriprise Financial suggest utilizing automatic payments for many accounts.  By setting up these payments, it ensures the bills will be paid in a timely manner (which will preserve your credit rating) and will better help you budget the remaining funds.  This will help you pay off debt sooner and save for your future. 

Here are some additional “Five Minute Financial Fixes” courtesy of Dumb Little Man, a blog featuring tips and advice on careers, finance, health and fitness.

Start a Spending Log – Create a spreadsheet, utilize software or grab a basic notebook and log your spending each month.  Create categories such as Bills, Groceries, Household, Travel, Entertainment, Medical, Misc, etc.  It won’t take up much time – and it’ll be a big eye opener. Once you know how much you’re spending, you’re in a far better position to take control.

Take Out Cash for the Week Most people find that they spend less when paying in cash: it’s easy for money on a piece of plastic to seem unreal. And if you only take $30, you’re more likely to only spend $30.  You don’t need to use cash for everything you buy- but having a set weekly amount for certain things can help you resist impulse purchases.

Find a Box File – If filing isn’t your thing, get yourself a box file (or just a large cardboard box will do) and stick a “Finances” label on the front.  From now on, every document that comes in (bills, paycheck stubs, bank statements, tax information) goes in that box. You never know when you’ll need to access this information and it’s very convenient to have everything in one place.

Cut Up Extra Credit Cards Buying on credit – spending money you don’t have – puts you in debt. Even if you always pay off the balance on time, there’s going to come a month when your check goes astray in the mail or you’ll splash out on something you can’t really afford, and then scrape by on the minimum payments – racking up more and more debt.

Register for Online Banking – What’s your bank balance? Do you know?  Rather than making time-consuming phone calls or trek to the local ATM, register for online banking today and you can check your balance at any time of the day.  Online banking can be used to set up direct debits, make bank transfers, pay bills, move money between accounts and much more.  It saves time and gives you the peace of mind of being able to easily see which checks have cleared and which payments have gone out.

Successful New Year's Resolutions

Posted on December 30, 2010 by Saldutti

Many people view New Year’s Day as a fresh beginning as it is the start of a new year full of potential and promise. We celebrate our surviving the passing year and rejoice in the promise before us and part of that celebration is contemplation of what we want to be in the coming year. That is really what the resolution is about—what we want to become. It is our vision the new and improved self.

Some New Year’s resolutions are popular year after year.  According to several surveys, losing weight, getting fit and quitting smoking are always top contenders. Drinking less alcohol, getting a better education, finding a better job, managing debt and stress, saving money, taking a trip and volunteering to help others are also on this years resolution list.

The simplest way to make resolutions that can be accomplished is to be realistic about them. They need to be very specific and more of a plan of action rather than a widespread hope.

Simply ask yourself the following questions in order to form successful resolutions:

1. What do I really want?  If I say I want to lose weight that is much too vague. What is it that you really want? Do you want to lose one size? Trim your hips? Look better in your clothes? If you say you want more money what do you really want? Do you want more savings, better credit rating or lower debt?

2. How can I get what I really want? Once you have decided what it is that you really want by breaking down the general desires into specifics. Make a list and come up with at least 5 ways in which you can actualize that desire. These smaller steps are your resolutions.

3. How long do I allow myself to get what I really want?  The quickest way to fail in any resolution is my having unrealistic expectations in how long it will take to achieve a result to a change. Once you have identified specifically what you want, come up with at least 5 ways to achieve what you want, you need to add another column and set a time for when you want to accomplish these changes. Once you have done that – add an additional 8 weeks. Change takes time.

Stress is usually one of the things that derails many of our goals.  The following are some healthy tips for coping with stress in 2011 (courtesy of HelpYourselfHelpOthers.org)

  • Engage in physical activity or exercise. Studies indicate that the psychological and physical benefits of exercise can help reduce anxiety and improve mood.
  • Give back. Helping others can also help you feel better. Volunteer at a homeless shelter, mentor a child or visit people in a nursing home.
  • Limit your alcohol consumption. Problems with alcohol abuse or dependence increase your risk of developing depression or may exacerbate existing symptoms.
  • Eat a more healthy diet. Dietary changes can bring about changes in your brain structure, both chemically and physiologically. Those changes can help improve mood.
  • Try to set realistic goals. When making life changes, take baby steps. When you have unrealistic expectations, you are at high risk for getting hurt, disappointed and depressed.
  • Stay connected. Spend time with other people, try not to isolate yourself. Confide in a trusted friend or relative about your feelings.

New Year’s resolutions that succeed are those that create a permanent change, which is the result of slow and steady progress. Allow yourself lots of small wins. Set your goals slight yet attainable and as you attain each one, add another. It is the step-by-step progress that will have you celebrating at the end of the year your successes and have you looking forward to making new and improved resolutions the coming year. In this way, we’ll all enjoy a Happy New Year!

Festive Facts & Figures – Holiday Edition

Posted on December 22, 2010 by Saldutti

Ever wonder how much time we devote to celebrating the winter holidays? According to the latest Consumer Reports Holiday Shopping Poll, the average American expects to spend about 42 hours buying, wrapping, and returning gifts, as well as partying and traveling to visit family and friends.  Here’s a look at how Americans will be spending their time this holiday season:

On Gifts

• Consumers will spend lots of time gift-shopping, 15 hours on average.  Women plan to spend twice as long as their male counterparts, 20 hours versus 10 hours respectively.

• Shoppers expect to wait in store check out lines for about three-and-a-half hours on average; one in four expect to stand in line 4 hours or more.

• Once they get home, Americans plan to spend about 3 hours on average wrapping gifts; one in four expect to spend 4 or more hours doing so.

• Americans anticipate that they will devote about an hour on average to returning holiday gifts; over half say they won’t spend any time making returns.

Entertainment

• About 15 hours on average will be spent attending holiday parties, gatherings or events with friends or family; a quarter (24%) of Americans plan to spend twenty hours or more.

To and Fro

• Americans estimate that they will spend 7.4 hours on average traveling to or from their holiday destinations; a quarter (24%) said they will spend 10 hours or more.

So what is on this season’s “IT” list?  The most popular holiday gifts this year are clothes, followed by electronics, gift cards, toys and the ever-popular cash.  According to a new Consumer Reports Holiday Shopping Poll, 68% of us plan to give clothes this year. At 62%, gift cards, electronics and toys tie for second most popular gift, with cash next at 58%.

 “You can’t fault consumers for focusing on the fundamentals,” said Tod Marks, Consumer Reports senior editor and resident shopping expert. “Cash makes a great gift because people can buy something they really need or really want.”

Of the consumers who indicated that they will be purchasing electronics for the people on their holiday shopping lists …

  •  39% of adults will give video games this year
  • 59% will give vide games to households with kids under 12
  • 18% plan to give video game accessories – Microsoft Kinect (for Xbox) and Sony Move (for PS3) being the most popular
  • 18% plan to give MP3 players or iPods
  • 14% plan to give digital cameras
  • 11% will give digital photo frames
  • 10% are projected to give GPS devices
  • 8% plan to give a TV as a gift (despite lower prices and 3D technology)
  • 10% of Americans plan to give Wi-Fi-enabled e-book readers and tablet computers (up 6% from last year)

Exchange Less, Give More This Holiday Season

Posted on December 15, 2010 by Saldutti

With Black Friday and Cyber Monday behind us, the season of shopping is in full swing. Thousands of gift cards have already been purchased for holiday exchange.  Have you ever swapped gift cards for the same value with a friend or family member? We have. Does it make your holidays feel like they have become more about meaningless exchange than the true spirit of giving? Us too.

This year, Americans will spend over $24 billion on gift cards alone, averaging $40 each. Imagine if, instead of giving you a piece of plastic, your friends and family gave a $40 donation for a cause you care about.

Bring the giving back to your holidays – take five minutes and create a personal fundraising page.  Then ask your friends and family for a $40 donation.  Oh, there you are, holiday meaning … we knew we could find you!

Imagine if, this holiday season, your friends and family gave a donation to a cause you care about.  They can – simply ask them to bring the giving back to your holidays!

Take the first step today ane create a personal fundraising page.  Go to First Giving to get started – www.firstgiving.com/bring-the-giving-back-give40

Bring back the meaning of the season!

Throw an Office Holiday Party on a Budget

Posted on December 08, 2010 by Saldutti

Times are tough and the traditions of years past might seem like luxuries now. Businesses have to carefully decide how to spend their money. This year, throwing a big office holiday party may qualify as an expense that not everyone can afford. From renting a space to paying for food, party budgets can quickly spiral out of control.

Fortunately, there are several ways you can trim costs on your traditional office party to make it more affordable. Or, if a party isn’t even an option for your budget this year, there are certainly other ways to celebrate with your employees besides going all-out and planning an extravagant company gala.

Here are a few tips and suggestions to consider, courtesy of American Express OPEN Forum, as you begin to plan how you’ll celebrate the holidays this year.

  • Skip the DJ – Rather than shelling out for a DJ or band, make a digital playlist for your party. If your music selection is lacking, ask the most passionate music aficionado in your office if they could craft one.
  • Make it potluck – Save on food by doing things potluck-style. Have everyone in the office agree to bring a light appetizer, with specific individuals scheduled to bring salad and dessert. Or, create a list of necessary courses, and have people sign up for what they want to contribute. The company should still supply the drinks.
  • Don’t rent out a space – Instead of renting out a restaurant or bar, hold the party at the office after-hours. Set up an area for drinks and food, toss up a few decorations and throw on music: instant party. If you’re looking for a more intimate setting (and your staff is small), you could throw the party in your home or in the home of an employee who is willing to host. Either way you’ll be saving big bucks on the rental cost by holding the party in a space that’s free.
  • Host an in-office lunch instead of throwing a traditional evening party – Rather than planning an evening event, order in a delicious spread and offer your employees a long afternoon lunch. You can spice things up by playing some games, voting on superlatives, or doing an inexpensive gift exchange at this time. You’ll save on the party expenses that can really add up, like alcohol and a venue rental; but your employees will still enjoy having the extra social time, a yummy company-sponsored meal, and a break from work. Plus, this plan might actually be preferable for those who’d rather not spend extra time outside the office with their coworkers.
  • Hold your party during off-peak times – Thursdays in December are the most popular and therefore the most expensive dates, so some companies are putting their celebrations off until January.  Also, many staffers might appreciate a winter break rather than another commitment during the busy holiday season.  Also consider that often slow week between Christmas and New Year’s.
  • Barter with clients – If possible, barter work or services for a dinner (or a free party space) at a local venue.  Everyone will make out on the deal.
  • Less of a party, more in their pocket – If money isn’t too tight but a party still seems frivolous, offset a smaller scale party with a holiday bonus.  It is highly doubtful that you’ll get many complaints with this option. 
  • Make an office donation to a local charity rather than spending money on a party – Your company could decide to donate the money it would have spent on a party to a local charity instead.  Have employees vote on what cause they’d like to support and send it in the company’s name.
  • Offer the ultimate holiday gift: paid time off Joyce Rosenberg of the Associated Press suggests giving your employees the best present of all: time off. Close down the office for an extra half-day one Friday towards the end of the year. There’s no better gift that a boss could give.

Consumers Pay Lower Monthly Payments

Posted on December 01, 2010 by Saldutti

Recently, Experian®, a global credit information group, released its insights on average monthly payments of the top 25 metropolitan areas.  The study found that nationally, consumers are paying $903 per month on their bills, which could include a combination of credit cards, auto loans and leases, and mortgages – a decrease of two percent in the last three years.

The study also reveals that Washington D.C., Seattle and Baltimore top the list with the highest average monthly payments with Washington D.C. coming in at 42 percent higher than the national average.  Cities with the lowest payments include Cleveland, Tampa and Pittsburgh.

“Consumers have lower payments, indicating both proactive deleveraging by consumers and tighter limits from lenders and certainly consumers are making fewer major purchases such as homes and cars than they were a few years ago,” said Michele Raneri, senior director of analytics, Experian. “There are many ways to manage and develop a positive credit score and good payment habits.  Paying bills on time is generally the single most important contributor.”

The following are some tips that Experian suggests to take into consideration when making a major purchase:

  • Get Your Credit Report – Before approving your request for a home loan, mortgage lenders review your credit report. If you review your credit report in advance, you’ll see yourself from a lender’s perspective.
  • Be Prepared – When lenders review your credit report, they evaluate how much you already owe, how much unused credit you have available, how prompt you are in paying your debts and whether you’ve recently applied for new credit.
  • Count Your Savings – To buy a house, you generally need a down payment in the range of 5 percent to 20 percent of your new home’s purchase price, depending on your credit risk. You also need money for closing costs and be sure to set aside extra funds for emergencies. If you spend everything on your down payment, you’re statistically more likely to lose your new home to foreclosure sometime in the future.
  • Make Your Payments – How much you borrow, how much you owe and when you pay become a part of your credit history. When you apply for new credit purchases, other lenders will review this history. Late payments can stay on your credit report for up to seven years, can keep you from buying another house or can make it more expensive to buy a car. A good credit history proves that you manage your finances well. It lets you enjoy using credit at your convenience and at a lower cost.

Black Friday – America's Day To Shop

Posted on November 23, 2010 by Saldutti

For the past seven years, Black Friday has been the biggest shopping day of the year in both sales and customer traffic, according to ShopperTrak, which measures shopping habits.  This Friday is likely to see the biggest Black Friday in years, according to America’s Research Group.  According to the organization, 49% of American households are planning to shop on Black Friday, up from 40% in more typical years.

Even before the name “Black Friday” was coined, the link between shopping and the day after Thanksgiving was set. In the wake of the Great Depression, President Franklin Roosevelt was pressured to move Thanksgiving back a week so retailers could enjoy a longer holiday shopping season. 

It’s not clear that Black Friday was initially meant as a positive nickname. A New York Times article from 1975 said the day got its name from Philadelphia police and bus drivers because of the huge traffic mess created by the confluence of holiday shoppers and football fans arriving in town for the Army-Navy football game.

News stories from the 1980s also say store clerks used the day’s nickname because of the pandemonium created by masses of shoppers.  Others believe the term was coined because the surge of holiday shopping supposedly pushed retailers “into the black,” making them profitable for the year.

As the holiday shopping season gets underway, here are some tips, courtesy of Consumer Reports Money Advisor, to help you get through your gift-giving list without blowing your budget.

NEW GIFT-CARD GOTCHAS

Gift cards come with so many tricks and traps.  While federal consumer protections took effect this year, there are still good reasons to give cash instead.

  • Cards might be mislabeled – Under the new law, gift cards must remain valid for at least five years, and issuers are limited on when they can charge certain fees. That information, along with a toll-free number for questions, has to be printed on the cards—but card issuers have until Jan. 31, 2011, to do so. Until then, they can sell cards printed with incorrect expiration dates and other terms.
  • Many cards aren’t covered Only bank-issued and store gift cards are subject to the new rules. They don’t apply to rebate, reward, or refund cards, prepaid calling cards, or “reloadable” cards.

AVOIDING SHIPPING FEES

If you plan ahead, you can avoid paying extra for expedited shipping.  Many major retailers are offering free shipping on many holiday purchases. Here are some other ways to pay nothing for shipping.

  • Shop on Free Shipping Day It’s Dec. 17 this year, and more than 1,000 merchants are expected to participate. Delivery is guaranteed by Dec. 24. For the details, go to www.freeshippingday.com.
  • Check shopping websites – To keep the cash registers ringing until the last possible moment, many online merchants are offering free shipping upgrades to two-day or next-day delivery.
  • Try ship-to-store – If you’re really up against the clock, see if you can place your order online and pick it up at the nearest store. Many merchants offer free next-day delivery; some can have your order ready in an hour or two.

SIMPLIFYING RETURNS

Stores set their own return policies, but here are a few general rules:

  • Keep the receipt – Most stores require a receipt or gift receipt to get a cash refund. Without one, the best you can hope for is credit for the lowest price the item sold for.
  • Save the packaging Stores are likely to refuse a return if you’ve discarded the original packing materials, the warranty cards, or the manual. Online stores usually require a packing slip and a return-authorization number.
  • Don’t remove the tags – If you do, it could void the return. Software, video games, and CDs or DVDs aren’t usually returnable after the seal has been broken.

POSTHOLIDAY SALES

Hard-core shoppers know that Dec. 26 is the real Black Friday. Many stores open early and close late for the crowds out to return unwanted presents and spend gift cards.

  • Time it right – You’ll generally save the most money right after Christmas. Many merchants offer early-bird specials for folks who shop before, say, 1 p.m., when the stores aren’t as crowded.
  • Don’t be misled – Ads might promise savings of 70 percent or more, but those bargains often apply only to clearance, discontinued, or holiday merchandise.