This year, I have completely revamped my tax tip structure. It’s time to think of tax concepts in big broad general categories, and then analyze the details later.  Accordingly,  I have realized that with the numerous tax law changes that seem to be coming faster and faster, and with the ever increasing expansion of the details and nuances of each tax idea, that there is too much information that can make the concepts get lost.  Therefore, I have structured these tips in a format that is meant to be used as check list. They are grouped into broad categories.  For example, there are tips related to being a homeowner, tips related to investments, tips related to owning your own business, etc. After all, it’s easy to go back and look up the details later if you think one of these may apply to you. I certainly can’t remember the details anyway.  It’s the concepts that are important. These tips each have a vast amount of detail behind them such as AGI limitations, and other numerous considerations.  However, just seeing the tip below will allow you to look up these details later and see if the tip can save you money.  In fact, I recommend actually running the numbers with tax software to determine the actual impact of savings these tips will give you.

I have tried to structure the tips below in a bullet point manner, and also include where on your tax return these may apply (i.e. itemized deductions, schedule C, etc).  I believe this will greatly improve your chances of actually using this check list and hopefully even if only 1 or 2 apply, you will save some nice money on your taxes.  I also want to make sure you’re aware of one very important “tip” if you will.  I just learned in a class I took called “Super Advanced IRS Problem Resolutions” that the IRS is ramping up big time.  The current administration has and apparently is going to continue allocating huge dollars to the IRS’s enforcement budget.  This means thousands of new IRS collection agents, more audits, and more careful tax planning needed.  Hey, this entire stimulus has to be paid for somehow.  Enjoy the new format.

Residences & Vacation Homes (applies if you: live, rent, sell, bought, gift, financed, refinanced, had debt cancelled, convert part of all of residence to rental):

Specifically, this section covers:

■Home Mortgage Reduced or Canceled

■Gain Exclusion – Sale of Principal Residence

■Residence Gain – Other Issues

■Home with Personal & Rental Use

■Homes Classified as Rental Property

■Vacation Home – Not Rented

■Converting Residence to a Rental or Investment Property

■First-Time Homebuyer’s Credit

■Energy Tax Credit for Homeowners

1. Owning a House – typically allows someone to itemize their deductions (taxes & mortgage interest).
2. Refinance – get a copy of the closing statement.  There are likely deductible closing points, and prorated interest and taxes that may be deductible.
3. Gain Exclusion – singles can exclude $250,000, married (and certain surviving spouses) can exclude $500,000.  Certain tests must be met.
4. Electing Out of Gain Exclusion – if first house has only a small gain, include the gain and wait for the sale of another house within two years that has much larger gain.
5. Reduced Gain Exclusion – if you don’t meet the two year ownership and use tests, a reduced exclusion still may apply if the reason for selling is job relocation, health problems, unforeseen circumstances (involuntary conversions, natural or man-made disasters, death, cessation of employment, change in employment that results in person’s inability to pay basic living expenses, divorce or legal separation, multiple births resulting from the same pregnancy – many other “unforeseen circumstances” are defined in IRS Private letter rulings).
6. Effect of Rental or Business Use – gain exclusion still applies if part rented is not detached.
7. Converting a Vacation or Rental Property to a Principal Residence – Starting in 2009, gain attributable to a period of nonqualified use cannot be excluded (proration of gain required).
8. Homes with Personal & Rental Use – allocation of expenses based on days rented required. See various scenarios below:

If personal use is more than 14 days, rental use is 14 days or less, then income is not taxable and not reported, mortgage interest all deducted on Schedule A, property taxes all deducted on Schedule A, expenses directly related to rental are nondeductible, and other rental expenses (maintenance, insurance, depreciation)  are nondeductible.

TIP:           Have 14 business meetings at home and charge fmv rent.  Rent your children’s home for your business for fmv rent (great income shifting strategy – you get deduction, they don’t pay tax on the rent).

If personal use is no more than the greater of (1) 14 days or (2) 10% of the number of days rented, rental use is more than 14 days, then income all reported on Schedule E, mortgage interest portion related to rental deducted on shed E, BUT personal use portion nondeductible if the dwelling unit is not used as a home (BE CAREFUL OF THIS). if it is, then the mortgage interest is prorated between Schedule E and Schedule A, property taxes prorated between schedule E and schedule A, expenses directly related to rental deducted on Schedule E, other rental expenses – portion related to rental activity deducted on Schedule E, personal use portion nondeductible.

1. Vacation Home – Not Rented – consider if it was used as principal residence for any part of the year because that may count toward 2 year rule for gain exclusion. Even part year use as principal residence may count because periods can be aggregated to meet two year rule. TIP: If you own two or more vacation homes, you can designate only one as second residence for qualified residence interest. However, you don’t have to pick the same one each year (i.e. mortgage on one vacation home is paid down or refinanced at a lower rate, then pick another vacation home that year as designated second home to yield larger interest deduction.)

10.  Converting Home to Investment Property – if former home is not rented may be classified as held for investment. Interest expense becomes investment interest expense subject to limitations and taxes can be deducted or capitalized.  Also, you can deduct properties operating expenses, but they would be subject to 2% of AGI limit,  IRS looks closely at taxpayer’s purpose, intentions and motive to determine if its investment property (if you continue to hold property after its conversion, this is investment.  If you try to sell property immediately after it’s not a residence, it stays as a residence.  TIP: If you have owned the property as a principal residence for at least two years, you can still convert the property to investment property for up to three years and exclude gain.  Also, after conversion, it can be exchanged for like kind exchange on a tax deferred basis.

11.  First Time Homebuyer’s Credit – Homes purchased between January 1^st, 2009 and November 30, 2009 – credit is $8,000.  AGI phase out applies.  TIP: You can elect to treat 2009 purchase as made in 2008 and amend your 2008 return for this purpose.  GREAT NEWS – CREDIT HAS NOW BEEN EXTENDED THRU PURCHASES MADE THROUGH JUNE 30^TH, 2010.  CFREDIT IS REDUCED TO $6500. AGI LIMITATIONS FOR PHASE OUT RAISED.

12.  Energy Tax Credits for Homeowners – A credit can be claimed for certain energy efficient home improvements or property placed in service in 2009 and 2010.  Keep the manufactures certification when an item is purchased for three years (statute of limitations on your return). Summary of Personal Energy Property Placed in Service During 2009 (ALL OF THESE LIMITED TO LESSOR OF 30% OF THE COST OR $1500 MAXIMUM PER TAXPAYER):  WINDOWS & DOORS, ROOFING, INSULATION, HVAC, WATER HEATERS, BIOMASS STOVE (STOVE WHICH BUNRS BIOMASS FUELS LIKE WOOD AND WOOD WASTE AND WOOD PELLETS, GRASSES, ETC.), SOLAR WATER HEATING, SOLAR ELECTRIC, FUEL CELLS, SMALL WIND ENERGY, GEOTHERMAL HEAT PUMP, ETC. 

13.  Energy- Efficient Credit For Contractors – up to $2000 allowed to a contractor for each qualified new energy efficient home that the contractor constructs and which is acquired by a person from the contractor for use as a residence.

14.  Home Mortgage Reduced or Cancelled – exception for debt cancellation of qualified principal residence (up to $2 mil).  Even if not principal residence, insolvent or bankrupt taxpayers can exclude the income.

15.  House as Rental – Passive Activity Loss Exception – losses up to $25k may be allowed to offset ordinary income.  AGI limits apply.

Investments (Stocks, Bonds & Mutual Funds):

Specifically, this section covers:

■Capital Gain Rules & Rates

■Taxable vs. Tax-Exempt Returns

■Treasury Bills

■Discount Bonds

■Premium Bonds

■U.S> Savings Bonds

■Stocks – Share Identification

■Section 1244 Stock Ordinary Losses

■Wash Sales

■Worthless Securities

■Stock Dividends & Stock Splits

■Investors vs. Traders

■Mutual Funds

■Investment Expenses

16.  Capital Gain Rates – 28% rate on gain of sale of collectibles held more then one year, 25% rate on un-recaptured Section 1250 gain on sales of depreciable real property held more then a year (if in lower tax bracket, the lower rate applies – TIP:  Consider putting property in name of family members in lower tax bracket), 15% and 0% rate – the 15% rate (0% for taxpayers in the 10% and 15% ordinary income tax brackets) applies to the sale of assets held more than one year. The 15% (or 0%) rate also applies to qualified dividends.  PLANNING IDEAS TO REDUCE TAXABLE INCOME IN YEARS 2009-2010 TO GET THE 0% CAP GAIN RATE – (1) DEFER BONUSES OR CONTRIBUTE TO RETIREMENT PLANS AND IRA(S), (2) CONVERT INVESTMENTS FROM TAXABLE INSTRUMENTS TO NONTAXABLE MUNICIPAL BONDS OR OTHER TAX-FREE FUNDS, (3) CONSIDER TRANSFERRING MUTUAL FUND HOLDINGS INTO EXCHANGE TRADED FUNDS (ETFs) TO AVOID YEAR-END DISTRIBUTED INCOME, (4) REVIEW STATE TAX POSITION AND DETERMINE THE BEST YEAR TO PAY ESTIMATED TAX (FOR STATE TAX DEDUCTION), (5) BUNCH DEDUCTIONS FOR MEDICAL EXPENSES, CHARITABLE CONTRIBUTIONS AND THE LIKE INTO A SINGLE TAX YEAR, (6) CONSIDER HME EQUITY LOANS TO CONVERT OTHERWISE NONDEDUCTIBLE PERSONAL INTEREST OR STUDENT LOAN INTEREST INTO DEDUCTIBLE EXPENSE, (7) POSSIBLE GIFTING OF APPRECIATED CAPITAL GAIN PROPERTY TO DONEES EXPECTED TO BE SUBJECT TO THE 0% LONG-TERM CAP  GAIN RATE IN 2009-2010 (MAY NOT LAST BEYOND THAT) – WATCH OUT FOR KIDDIE TAX RULES.

17.  Capital Losses.  Up to $3000 of capital losses can be deducted against ordinary income each year. Any remaining loss is carried forward indefinitely to future tax years.

18.  Grouping Capital Gains & Losses – First grouped into long term and short term, and then the long term is further grouped into the various cap gain rates (28%, 25%, 15% or 0%.  Further details available on how they are grouped and used, then the net remaining unused loss from the short and long term capital losses can be used up to $3000 each year then carried over indefinitely.

19.  Timing Security Sales to Minimize Taxes – delay a planned sale if at a gain to meet 12 month holding period (lower rates will apply).

20.  Use Capital Losses to Offset Short-Term Gains – Consider timing the recognition of capital losses for years when they can offset short-term gains rather than long-term gains. Capital losses produce the most tax savings when they offset short term gains, 25% Section 1250 gain or 28% capital gains.

21.  Take Advantage of Stepped Up Basis Rules – Taxpayers holding appreciated capital assets but who have a short life expectancy either because of age or terminal illness should avoid recognizing the gain. Taxpayer’s estate or heirs receive a stepped up basis (fmv at death) and any gain recognized because of post death appreciation is treated as long term, regardless of when the property is sold.

22.  Watch Out for Stepped-Down Basis Rules – adjusting a capital asset’s tax basis to date of death value works both ways.  If it has depreciated, it must be adjusted down to new lower fmv.  If a taxpayer dies owning property that has declined in value, the unrealized loss goes away and no tax benefit is ever realized.  Therefore taxpayers with a short life expectancy should consider selling depreciated property to claim the tax loss, which may reduce income taxes in years before death. Any unused capital losses at the time of death expire unused. 

23.  Compute the Price to Which a Stock Can Fall & Still Be Advantageous to Hold for Long-Term Capital Gain Treatment.  Very important because if you think the stock will fall in price before long term holding period is met, then you may be better off selling the stock at the current price and recognizing a short term capital gain.  Formula is:  Stock Price Break Even Point = Current Price – [(Current price – basis) X ordinary tax rate] – (.15 X basis) / .85

24.  Be Careful if Your Brokerage Firm Allows Your Stocks to be Short Sold (Now You Know To Ask Your Brokerage Firm This) – The Dividends paid while lent out on short sale (which are known as payments in lieu of dividends) will not be qualified, and subject to ordinary income tax rates. Many stock brokerage agreements allow the broker to lend out stock held in a margin account. In the past, investors were generally indifferent (and often unaware) that their stock was lent out, since it did not affect the amount they received, and dividends and payments in lieu were taxed at the same rate.  The rate reduction on qualified dividends now creates a tax cost to lending securities.

25.  Taxable vs. Tax-Exempt Returns.  It’s important to know if the after-tax returns of a taxable bond are higher or lower then a municipal bond.  Just because the taxable bond pays a higher yield doesn’t mean its really yielding a higher rate of return after taxes are factored in.  Use the following formulas to help with this determination:   Taxpayer Does Not Deduct State Income Taxes (doesn’t itemize):  After tax yield = Pretax yield X (1-combined state and federal tax rate).  Taxpayer Deducts State Income Tax (itemizes):  After tax yield = Pretax yield x [1-combined state and Federal tax rate + Federal rate X state rate)]   Another method that can be used for this comparison is to determine the equivalent taxable yield of the tax exempt investment using one of the following formulas:  Taxpayer Does Not Deduct State Income Taxes (doesn’t itemize):  Equivalent Taxable Yield = Tax-exempt yield (after-tax yield / 1-combined state and Federal tax rate.  Taxpayer Deducts State Income Tax (itemizes):  Equivalent taxable yield = Tax exempt yield (after tax yield) / 1-Combined state and Federal tax rate + (Federal rate x State rate)

26.  Other Factors to Consider That Affect the Analysis of Taxable Versus Tax-Exempt Investments:  (1) Taxable interest increase AGI, which can reduce allowable itemized deductions or certain credits subject to an AGI phase out (2) Taxpayers who do not generate sufficient taxable income may lose the benefit of itemized or standard deductions and personal exemptions. Taxpayers may want to generate enough taxable income to take advantage of these deductions, assuming the rate earned on taxable investments is at least equal to the rate earned on tax exempt investments.

27.  Potential Tax Advantages of T-Bills:  No OID (interest taxable at maturity rather then over the life of the T-Bill., T-Bill interest income not subject to state and local income taxes, taxpayers can elect to recognize the acquisition discount of T-Bills as it accrues rather than at maturity or sale (this matters if you think you will sell T-Bill before maturity because if no election has been made, and gain from the sale is less then the amount of discount that would have ratably accrued to the date of sale, ordinary income is recognized to the extent of the lesser of (1) gain from the sale or (2) the amount of discount that would have ratably accrued to the date of sale. If the accrual election was made and the T-Bill is sold at a loss, capital loss results.  In this case, making the election to include the accrued discount would not be beneficial.

28.  Be Aware That OID Applies For Bonds Other Than Tax-Exempt Bonds, T-Bills and Other Short-Term Obligations, Series E, EE and I U.S. Savings Bonds Issued at a Discount.

29.  Purchasing Bonds at a Premium (at a price above face value) & Making Election to Deduct the Premium Paid over the Life of the Bond.  This offsets interest income on the bond, which otherwise would be taxed at ordinary income tax rates.  Amortizing bond premium is generally advantageous because the taxpayer can offset a portion of ordinary income from the bond.  Unamortized premium otherwise becomes part of the bond’s basis so its recovery reduces capital gains (or increases capital losses), which is generally less beneficial than an ordinary deduction.

30.  Selling Bonds Purchased at a Premium – The sale of the bond will result in a capital gain or loss. If held long term, preferential rates could apply. Taxpayers can use a sale and repurchase to create a beneficial tax situation. This is possible when a taxpayer receives capital gain treatment on the sale of a bond and obtains an offsetting ordinary deduction for a bond that has a corresponding premium deduction.

31.  Bonds Held To Maturity – if election was made to amortize premium, then it will have a basis equal to its face value, and no gain or loss will be recognized on redemption, but while holding the bond, the premium was amortized offsetting interest income (preferential). If the premium had not been amortized, on redemption a capital loss will be recognized (not as advantageous).

32.  U.S. Saving Bonds Tax Advantages – interest income can be deferred until redemption or maturity on the following bonds. (1) Series E and EE U.S. Savings Bonds, (2) Series I U.S. Savings Bonds combine the features of deferring taxes on the interest until maturity with inflation protected growth.

33.  Election to Accrue Savings Bond Interest.  Taxpayers can elect to report interest on the bonds mentioned above over the life of the bond.  This makes sense when any of the following apply (1) Additional current income may go untaxed (for example, the taxpayer’s income is below the filing limit), (2) Additional current income would be taxed at a lower rate than income in the year of the bond’s maturity, (3) The tax rate is relatively low for the final return of a deceased tax-payer in relation to the tax rate of the estate or beneficiary, (4) An NOL or other carry forward item is expiring or otherwise could be used to offset the additional income, (5) Itemized deductions are of little or no benefit because of a low level of taxable income, (6) the accelerated income is offset by investment interest expense that would otherwise be deferred until investment income is incurred.

34.  Taxpayer’s Should Consider the Impact of the Accrued & Recognized Income on the Taxability of Social Security Benefits. I.e. spreading the income may create less of an impact than including all of the accrued interest in the year the bond matures.

35.  Taxpayer’s Should Consider That Tax Rates are Likely Going Up.  By accruing the income now, rather then taxing it all at maturity, it may be subject to a lower tax rate.

36.  Transfer Bonds to Donee in Lower Tax Bracket – although taxable income is triggered equal to the difference between the bond’s issue and redemption prices at the date of transfer, gifting a bond may be beneficial if substantial income is yet to be earned on the bond and the donee is in a lower tax bracket.

37.  Savings Bonds for Education Expenses – if the interest from EE U.S. Savings bonds is used to pay for a child’s education expenses, all or a portion of the interest may be excluded from income. Must be for qualified higher education expenses.

38.  Swapping Bonds to Claim Losses – sell bond with a loss to create a capital loss if you have capital gains needing to be offset.  Watch out for the wash sale rules (can’t buy substantially identically bond within 30 days – bonds issued by different states are not substantially identical, bonds with different coupon rates are not substantially identical).

39.  Watch Out For AMT Tax From Private Activity Bonds – just make sure to ask your advisor if any “tax-exempt bonds” are “private activity bonds”.  If they are, they are likely going to subject you to AMT. 

40.  Be Aware That TIPS (Treasury Inflation-Protection Bonds) Can Create Phantom Income.  Each year, you must recognize interest and any increase in principal resulting from inflation. This is phantom income because you’re not actually receiving the increase in principal until you sell the bond. Therefore, these really may be more suitable for retirement accounts where the phantom income has no impact.

41.  Stock Share Identification – Be aware that you have the right to identify to your broker which shares of stock you want sold.  This could impact the gain or loss on sale as stocks bought at different times may have a different basis.  Be sure this is done in writing.  Otherwise FIFO is used.

42.  Be Aware of Rules for Stock Holding Periods.  Just be aware that there are various different rules on how long you are deemed to have held a stock (for determining short term versus long term) depending on how the stock was acquired (purchase, nontaxable stock dividend, taxable stock dividend, dividend reinvestment plan, stock split, received as a gift, inherited stock, by exercising a sock option, employer stock received from an employer’s retirement plan, etc…).

43.  Section 1244 Stock – Eligible Small Business Stock – Sale That Results in a Loss is Ordinary (limited to $50,000 per year single or $100,000 MFJ).  Definition of section 1244 stock should be researched further. Consider spreading the sale if these limits will be exceeded in the year of sale.

44.  Sale of Qualified Small Business Stock at a Gain – Two Tax Advantages available (1) 50% of the capital gain can be excluded (60% if in empowerment zone, and even a 75% exclusion for empowerment one stock acquired from 2/18/09 through 12/31/10), and (2) Rollover of gain available if new QSBS purchased within 60 days.

45.  Wash Sale Rules – No loss is allowed on the sale of a stock if within 30 days taxpayer buys substantially identical stock or securities (TIP: Sell a stock at a loss and buy the ETF of that stock to replace it – this wont be subject to wash sale rule).

46.  Worthless Securities – a capital loss is allowed in the year the investment becomes worthless.  Very detailed rules are applicable for determining when a stock is considered worthless (in general, considered worthless at the time it first has no liquidation value and no reasonable hope or expectation exists tat it will become valuable at a future date).

47.  Stock Dividends & Stock Splits – there are a slew of rules related t whether or not stock dividends are taxable and what the basis in these new shares are.  Further research should be done if you received stock dividends or stock splits, t properly account for the transaction for future tax ramifications.

48.  Investors versus Traders – Different tax rules apply so it’s necessary to distinguish if you are a trader or an investor.  Very specific rules are used to determine this classification.  Big tax differences such as trading expenses for traders are deductible as ordinary and necessary business expenses on Schedule C, a home office deduction may be available for traders, and many more tax differences.  If you are actively trading your account (you spend a lot of timing trading and do it on a regular basis, you should further research this area).

49.  Mutual Funds – Determining Basis – FIFO, Weighted Average or Specific identification can be used.  Must be used constantly.  Can have vast differences in tax results.  Mutual funds usually have dividends re-invested so this becomes important.

50.  Be Careful Not to Purchase a Mutual Fund Right Before The Record Date (the date which determines which shareholders will receive a distribution). Purchasing just before the record date is buying a tax liability.  This is because the funds price usually goes up by the income that is about to be paid out. Also, typically at year end they make capital gain distributions.  Don’t purchase them near year-end.

51.  Consider ETFs Over Mutual Funds – ETFs typically distribute little or no income and have very little fees.

52.  Tax Efficient Mutual Funds – these funds turn over their investments far less then non efficient funds. Index funds tend to be more tax efficient, resulting in less phantom capital gains.

53.  Consider Selling Shares of a Mutual Fund Before Distribution – in essence this converts what would be dividend income, typically taxed at a higher rate then capital gains) to a capital gain subject to a lower rate because the funds price usually increases by the amount of income about to be distributed.

54.  Donate Appreciated Stock or Mutual Fund Shares to a Charity Just Before Dividend Paid – deduction is fmv at date of donation, and no capital gain is recognized.  Doing this right before a dividend is distributed usually results in a higher deducting amount because FMV is higher.

55.  Mutual Fund Capital Loss Carryover – read the fund prospectus to see if the mutual fund has capital loss carryovers.  The fund can carry these over for 8 years and this will help shelter future capital gains that would otherwise be distributed t shareholders and taxed.

56.  Investment Interest Expense – Investment interest is interest paid or incurred on indebtness incurred to purchase or carry property held for investment. It does not include qualified residence interest, interest in a passive activity, capitalized interest, interest related to tax exempt income. Investment property includes any property producing interest, dividends, annuities, royalties and gain generating property other than that used in a trade or business.

57.  Investment Expense Are the Deductions Allowed (Other Than Interest) That Are Directly Related to the Production of Investment Income.

58.  Election to Include Qualified Dividend Income & Net Capital Gains in Investment Income – Normally, these are not considered investment income.  You can elect to include all or part of these as investment income. If elected, this income is subject to ordinary income tax rates (not preferential dividend or capital gains rate) but then investment interest expense can offset this income.

59.  Minimize Expenses Allocated to Tax Exempt Income – Because these expenses are not deductible.  So investment interest expense for the purchase of tax exempt income investments is not deductible. An allocation can be made using a pro-ration based on the number of transactions or time spent in each class. A statement must be attached to the return showing the allocation method used.

You’ve finally set a date for your wedding. When you begin planning, you realize how much a wedding can cost. If you plan ahead and do your research, you can save money on nearly all aspects of your big day. Here are some ideas of how to save money on wedding stationery.

Most brides-to-be realize how important their invitations or announcements are in setting the tone for their wedding. These are the first indication your friends and family may have of your impending nuptials, so you want to find wedding stationery that matches your personality.

You may be aware of formal invitations, but what do you do if you and your fiancé are far from formal people? Simple designs are often the least expensive because they don’t have ribbons, double envelopes, or multiple pieces of vellum – all of which adds to the price.

Buying software to design and print your own wedding stationery is another option you may want to consider. You can create a single invitation or you can create a number of designs and print them on your own printer at home. If you’re comfortable doing Calligraphy, you may want to order blank cards and hand write your stationery depending upon the number you plan to send out.

Local office supply stores may print your invitations for less than if you have them printed professionally. This may be a valid option if you’re not comfortable printing the invitations at home.

Check online to see if there are discount internet printers who may offer printing services in your budget range. Quite often you can save up to 50% compared with traditional printing shops. If you choose anything other than standard ink, you may have to pay extra. Take time to compare online printers to get the best price.

Depending upon what skills you have, you may be able to barter for the price of your wedding stationery. How would you do this? You may be able to offer tax advice to the printer if that’s your skill. If you’re experienced in marketing or advertising, you may be able to help them market their business in a more effective way. Think of what skills you have that you may be able to barter with and receive free printing.

Technology is another way in which you can save money on wedding stationery. Create your invitation and then send it via email. Digital invitations will work for those friends and family who have access to this type of media; however, you may still want to purchase some invitations to send through the mail for those who don’t. This will save on both printing and on postage.

Learning how to save money on wedding stationery is one of many ways to make your wedding more affordable. Remember, this is your wedding and you want your stationery to convey your personality as you’re letting friends and family know of your big day. You can have the wedding of your dreams without going broke.

Brought To You By:
Woody Alpern
CPA/PFS
www.yourwealth.com
woody@yourwealth.com

Stress-reduction techniques are often sought after when pressures mount. But when that pressure comes from financial difficulties, stress-reduction needs to be economical as well as effective. Thankfully, you really don’t need a lot of money to take advantage of some simple stress-relieving techniques. Here are some suggestions to get your body and mind relaxed.

1. Breathe deeply
You breathe all the time; how can doing more of it help you relax? Breathing to relax is not the same as the breathing you do every day. Specifically, deep breathing helps center your focus and delivers much-needed oxygen to every part of your body. Take in air slowly into your lungs, visualizing the air going all the way to the bottom of your lungs and body. Pause, and then exhale slowly through your mouth. Yoga, Tai Chi, and other Eastern disciplines use variations of this technique.

2. Exercise
Stress puts your body into “fight or flight” mode, which can exhaust your adrenal glands and cause a build-up of toxins in your system. Exercise reduces these toxins by increasing circulation. The increased blood flow helps relax tight muscles. Keep the exercise fairly gentle – injuries and muscle soreness are not what you are aiming for.

3. Herbal teas
Herbal teas are non-habit forming and affordable. Most grocery stores carry blends geared toward relaxation or relieving tension. You can also try a single herb tea – lemon balm and catnip are pleasant-tasting and known for their relaxing properties. Try to grab a quiet moment to sip your tea, and/or sip throughout the day. Of course, if you are pregnant or nursing, or taking any medications, check with your doctor before drinking any herbal teas.

4. Prayer or meditation
A big part of reducing stress is shifting focus. Getting your mind off of the situation and onto a higher power helps put your problems in perspective and helps relieve the mental burden.

5. Stretch/Massage
Muscles tighten up in response to tension. If continually tense, muscles can pull bones and joints out of alignment. Stretching relieves the tightness and lets the joints fall back into place. Yoga and other Eastern disciplines offer excellent stretching techniques.

You don’t have to pay for a class, although the social aspect can help a lot with relieving stress. There are books and online instructional videos to help you get started. While you are stretching, pray or meditate as noted above so that you don’t spend your entire session worrying about your finances. That defeats the purpose of stretching!

6. Eat light
The digestive system seems to bear the brunt of our stresses. Take care of your digestive system by consuming healthy, whole foods without preservatives and other additives. Be sure to eat foods with “good” bacteria in them, such as yogurt. It’s tempting to eat a lot of sugar or starch when you’re stressed, but indulging in these kinds of foods can actually increase your stress in the long run.

Many of us are feeling the economic pinch these days. But financial difficulty does not have to ruin your health or well-being.

Brought To You By:
Woody Alpern
CPA/PFS
www.yourwealth.com
woody@yourwealth.com

The current financial circumstances have many people nearing retirement age wondering if they’ll even be able to retire. They wonder if it might be best to continue working to make and save as much as they can until the economy improves. The following are strategies for retiring in bad times you may want to consider.

Most financial experts agree the first five years of retirement are the most important. The first five years may very well determine how much money a retiree has available to them, especially when economic times are questionable.

* Get help. If you don’t already have a financial advisor you trust, you may want to find one soon. There are so many variables to think about when considering retirement that you may not have all the information you need. A financial advisor will be able to help you understand your options and make decisions based upon what is best for your family.

* Leave your money where it is. You may be tempted to take your money out of the stock market, especially after watching it fall so dramatically. However, most financial experts feel the stock market will rebound. While you may have lost some money, you may still be able to regain those losses by leaving your money where it is.

* Consider postponing retirement for a time. By postponing your retirement until economic circumstances improve, you can possibly make more money to go toward your retirement if you follow the advice of financial planners. They will be able to guide you into wise investments you can make now, rather than retiring and using money from your already lowered retirement account.

* Get a part-time job. If you’re ready to retire from your current position but are unsure about your finances, you may want to get a part-time job to help you keep from spending your retirement funds. Even if you’re not making as much in a part-time job as you would in your current job, you may make enough to meet your regular financial needs. This would help you maintain your financial nest egg rather than depleting it.

Despite our country being in a recession, that doesn’t mean you have to put your retirement plans on hold. Talking with a professional financial advisor may help you to see your options and decide whether or not you’re fiscally ready to retire. An advisor can also give you ideas on how to stretch your retirement account to meet your needs for years to come.

These strategies for retiring in bad times are by no means the only ones. They may help you see that retirement doesn’t have to be postponed. They may also help you think of other things you can do that will allow you to retire sooner rather than later.

Brought To You By:
Woody Alpern
CPA/PFS
www.yourwealth.com
woody@yourwealth.com

The two general categories of loan are secured and unsecured. What are the differences, and which one is right for you?

* Secured Loans

To qualify for a secured loan, you must own something that will serve as collateral – that is, assets the lender can claim in case you fail to make payments on your loan. Usually, lenders require that prospective borrowers own real estate and/or a home. That means that the lender has something to fall back on should you default on your loan. If you own a home or other significant collateral, or if your credit history is less than perfect, a secured loan is an option.

Characteristics:

1. Larger loan amounts
Secured lenders are more willing to give big loans. If you need a significant amount, a secured loan will probably be the way to go.

2. Longer payment period
Many secured lenders provide long payback times. This, of course, will make your payments smaller. If you prefer to pay low monthly amounts for a fairly long period, you may consider a secured loan.

3. Lower interest rates
Because the lender has recourse in case of default, they are able to offer lower interest rates. Once again, this will make your payments lower and possibly make your payback time shorter.

* Unsecured Loans

An unsecured loan is established on mutual trust between you and the lender, usually based on your credit history. The logic behind an unsecured loan is: if you’ve made timely payments on loans in the past, you are likely to do so now. Such a loan carries more risk to the lender, who has no recourse should you go into default. (Credit cards are an example of an unsecured loan.) If you are a renter or otherwise do not own real estate, and you have a good credit history, an unsecured loan is a viable option.

Characteristics:

1. Smaller loan amounts
If you need a fairly small amount of money, an unsecured loan makes sense. The borrower has little to lose and the lender has much to lose, meaning the lender views an unsecured loan as one carrying less incentive to pay. Obviously, a smaller loan amount minimizes the risk to the lender.

2. Few payback options
The longer a borrower takes to pay back a loan, the greater the likelihood that the loan will go into default – thus a greater risk to the lender. This is why unsecured loans usually offer shorter payback periods, which will make your payments higher. If you foresee being able to repay your loan quickly, considering an unsecured loan is a possibility.

3. Higher interest rates
Lenders usually have higher rates on unsecured loans to provide some fiscal protection.

Some loans can be either secured or unsecured – that is, if you are applying for an unsecured loan of $15,000 and your credit rating is not up to par, the lender may consider giving you the same loan as a secured one if you have the collateral.

Brought To You By:
Woody Alpern
CPA/PFS
www.yourwealth.com
woody@yourwealth.com

Financial experts recommend saving up to six months’ worth of expenses so you’re prepared for emergencies. An emergency fund might cover expenses when you’ve lost a job, had unexpected medical bills, or you have to take a leave of absence from work to care for a loved one. If you don’t have money coming in, should you use your savings to pay off credit card bills?

Before you run to empty your savings account to pay off one or more credit card bills, there are some things you may want to consider.

If you have limited income, try to pay the minimum payment rather than paying the balance off each month. However, as soon as you’re back to work, it is important to start paying more than the minimum payment so you can get your balance back down to a reasonable level. Paying at least the minimum will keep your credit in good standing.

What do you do if you know you won’t have any income? Contact the credit card company and explain your situation. Let them know you’ll be laid off or whatever the problem may be that will keep you from making your payment. Try to see what arrangements can be worked out. They may be willing to lower your interest rate, postpone payments for a couple of months, or both. Do your best to abide by the agreement made.

Pros of using savings

If you have an emergency fund and won’t deplete it by paying off your credit cards, it might be worth doing so. This could be especially true if the cards have a high interest rate. The most interest you’ll probably earn for a traditional savings account is 5% and you’ll be lucky if you earn that. However, when you consider you could be spending as much as 19% or more interest on your credit cards, it’s easy to see how paying those off with savings could look like a good idea.

You could choose to leave your money in your savings account. However, if you choose this option, you may end up missing payments which could make your interest rate go up and ruin your credit. You may also be sued for the balance. Using your credit can help you avoid this possibility.

Cons of using savings

Since experts recommend having an emergency fund set aside for emergencies or the unexpected, using your savings account means you won’t have that fund. Sure, you can begin to build the balance in your savings account back up, but how long did it take to amass that balance the first time?

You may also feel that once you have the credit card paid off, it’s alright to use it again and drive the balance back up. When and if you use your credit card, be sure to pay the balance off each month to avoid paying interest on your purchases.

The choice of how to use your savings is entirely up to you, but it’s good to have others’ opinions on whether or not you should use your savings to pay off credit card bills. If you need further advice, be sure to speak with a qualified financial counselor to give you the best advice based on your own circumstances.

Brought To You By:
Woody Alpern
CPA/PFS
www.yourwealth.com
woody@yourwealth.com

If you are in your thirties, you’ll most likely retire when you’re quite a few years older and you may not really be thinking about retirement at all. But even at this age it’s important to think about your financial future.

Many people in their thirties are beginning to realize how reckless they may have been in their twenties when they thought they had the world by its tail. They are beginning to see how spending like there was no tomorrow was wrong; tomorrow is now here. They may also be thinking about buying their first home, and retirement is in the not-too-distant future.

Beginning to think about your financial future while in your thirties is a great idea. It really is a time when you can create your financial foundation and then build upon it as you age. Here are some financial things you may want to begin working on now rather than waiting until later.

Pay off your credit card debt rather than continuing to add to it. If you’ve been able to keep your payments up, call the credit card company and ask for a better interest rate. Having a good credit score may encourage them to reduce the rate so you can begin paying down principal instead of just interest.

Create a budget so you can work on paying off the remaining credit card debt you have. If you can get your monthly spending down to necessities, you can take the remaining income and use it to pay down debt. Start paying off the card with the lowest balance. Double up that payment and pay the minimum payment on any other debt. When you have paid off that card or loan, use that money to pay toward the next lowest balance. Before you know it, you’ll have your credit cards paid off. Pat yourself on the back; that’s a huge accomplishment.

Fund your retirement account. Don’t be like over one-third of employees in their thirties who don’t have a 401 (k) or other form of retirement account. Gone is the time you can expect to draw from Social Security when you retire, so it’s important to invest whatever you can in your own retirement while you’re young. Take some risks rather than being too conservative. You can’t expect a large payout if you’re afraid to take any risks.

If you can, buy your first home while you’re in this age bracket. Most mortgages are for at least 30 years. If you continually pay your mortgage payments, you should have your home paid off about the time you retire, which means you won’t have that payment to worry about come retirement time.

Along with paying off your debt, funding your retirement account, and buying your first home, you’ll also want to create an emergency fund. As much as you’d like to think you can stay at the same company until you retire, that simply isn’t how things work any longer. You also may have unexpected medical bills. Having an emergency fund of at least three to six months’ worth of expenses will give you enough to live on until you can return to work.

Speak with a professional financial advisor or planner to help you make decisions about retirement. This money advice won’t provide the information that speaking with a professional can. Remember to start thinking about retirement now and you’ll be prepared when you reach that age and can retire, knowing your financial future is taken care of.

Brought To You By:
Woody Alpern
CPA/PFS
www.yourwealth.com
woody@yourwealth.com

You may have seen the commercials on television with a famous actor suggesting senior citizens get a reverse mortgage to help with unexpected bills. While a reverse mortgage may be a good option for some people, it’s not for everyone. What are the pros and cons of reverse mortgages?

Cons

Many people like the idea of reverse mortgages because, according to the advertisements “your house pays you” instead of you having to pay for the house. Unfortunately, reverse mortgages can be very expensive. Reverse mortgages require all the fees to be added to the loan balance; depending upon how much your home is worth that could be quite a bit.

For senior homeowners needing to borrow a smaller amount or for only a short time, the fees associated with a reverse mortgage can make it a bad choice. There are other options you may want to consider instead. Talk with your local bank or financial advisor to see if they have suggestions that will enable you to get the money you need without having to pay such expensive fees.

Obtaining a reverse mortgage can also reduce the amount you’ll be leaving to your family as an inheritance. The major reason for this is that the loan must be paid in full from the proceeds of the sale of your home, which will leave less for your dependants.

Some seniors who obtain reverse mortgages live longer than the money they receive through the reverse mortgage. With the expressed concerns about Social Security solvency they may feel they don’t have a choice, however. Getting a reverse mortgage sooner rather than later can also reduce the amount they can obtain.

Be careful that your total loan receipt is not more than is allowable by Social Security. If you borrow more than you’re allowed, your Social Security benefits may be stopped completely.

Pros

Seniors 62 years of age and older can apply for a reverse mortgage if they own their home. The loan uses the equity of the home and allows homeowners to borrow that money to pay medical bills, pay off debt, or any number of other reasons. Some may see it as a way to supplement what they are earning through Social Security or pensions they may receive.

Rather than having to pay monthly payments as in the case of a traditional home equity loan, the reverse mortgage does not require you to pay back the loan while you are alive unless you move. Reverse mortgages also do not require a credit check. As long as the home you’re using as collateral for the reverse mortgage is your primary residence, you should qualify.

Reverse mortgages are tax free and the funds can be used for whatever you choose. As long as you have funds in your equity line of credit, that money is available to you. You and your heirs can never owe more than the property is worth, so if the value of the home decreases you and your family are covered.

There are many companies offering mortgages and they can be a good choice for some. However, look over the pros and cons of reverse mortgages and make the best decision for your own circumstances. You may also want to discuss the option with your family.

Brought To You By:
Woody Alpern
CPA/PFS
www.yourwealth.com
woody@yourwealth.com

Parents want their children to learn about money without having to make the same mistakes they made when they had less financial experience. When deciding how best to teach them, many consider getting their teens a credit card. Prepaid credit cards are a great way to teach your teenager about money.

Considering the trouble a teenager can get into related to money and credit cards, parents realize the importance of teaching their children about responsible money management. You may want to consider the relative safety of prepaid credit cards.

Reasons to avoid credit cards

Let’s face it; credit cards are notorious for letting people live beyond their means. People often feel that because they have a balance on their credit card they need to use it. Nothing could be further from the truth.

Credit card use can give people the “buy now, pay later” attitude. It can also cause an entitlement attitude where people think they deserve to have items they simply cannot afford. When anyone maxes out their credit card, they’ll have to pay interest on items they could possibly have paid cash for if they had saved for it.

Unfortunately, when credit cards are maxed out, especially when your teen doesn’t have a regular paycheck, they may make payments late or miss them entirely. Guess who will have to pick up your teen’s payment?

Some parents allow their teens to face the consequences of not making payments even though it can be a harsh and possibly costly lesson. The problem of allowing a teen to create a large debt and not paying for it is they will be entering their adult life with a financial black mark against them. And it won’t necessarily teach them to be more responsible with their money.

Reasons to use a prepaid credit card

There are many reasons for helping your teen obtain a prepaid credit card. Not only will they be unable to create debt they aren’t ready to deal with at this age, they will also learn how to budget their money.

Prepaid credit cards carry the same card identification as a regular credit card. This means the cards will be accepted wherever those credit cards are accepted. Prepaid cards are also refillable which means teens can add more money to their balance if they have a summer or after-school job.

They can learn how to use a check register to track their spending so they can see how their money is reduced with each item they purchase. Use this time as a way to teach them how to balance a checking account and budget the money they do have, since they can’t spend what they don’t have at their disposal.

Prepaid credit cards are a great way to teach your teenager about money. Any mistakes they make with a prepaid card will not affect their future credit rating. They’ll also learn how to budget the money they have so they can get what they want or need without asking you for it. And that might be the best lesson of all.

Brought To You By:
Woody Alpern
CPA/PFS
www.yourwealth.com
woody@yourwealth.com

Hosting Thanksgiving dinner each year can be physically and financially draining. To give everyone a chance to enjoy the get together, why not break from tradition. Having a pot-luck thanksgiving dinner can save you money if you’ve been the one doing the lion’s share of the work each year.

Rather than having one family being totally responsible for the meal, it makes sense to ask everyone to chip in – especially if you have many families getting together each year. The hosting family can be responsible for the turkey and the paper goods. A second family can plan to bring another meat, another can be in charge of potato dishes, another noodle dishes; hand off relish trays to another family, desserts to a couple of families, and everyone can bring a drink to share. Oh, and don’t forget dinner rolls! You get the idea; you have each family be responsible for bringing something so one family isn’t supplying everything.

You may think using paper goods is a waste of money, but think about it a minute. If a huge crowd is at your home and you don’t have enough dishes for everyone, that means you’ll either have to borrow, rent, or buy them. A stack of good quality disposable plates are cheap compared to the prospect of buying enough dishes for the whole crew!

Another benefit of using disposables is that clean-up will be much easier. Instead of having a couple miss out on visiting with others because they’re washing all the dishes, they’ll be able to put lids on things, clean up any spills, and then toss the rest. How easy is that?

Having other families chip in on the food also means that one family won’t have to bear the brunt of the cost. Instead of one family spending an entire paycheck for food to feed a whole bunch, the cost can be spread out among many families. In the long run, each family will end up spending less.

Plan your menu well in advance and let each family choose what they’re bringing. If you’re hosting the party, you may want to have some extra, easy-to-fix dishes available just in case one family can’t make it.

When planning your own part of the meal, begin purchasing items you’ll need several weeks before the holiday. This will enable you to buy things a little at a time, use coupons to save the most money, and provide enough time to ensure you have everything. Many grocery stores offer coupons for free turkeys when you spend a certain amount of money in the weeks leading up to Thanksgiving. Planning early means there’s no need for an emergency trip to the store to buy something you forgot.

Having a pot-luck Thanksgiving dinner can save you money, there’s no denying that. However, if you’ve never had one it might be an unusual thought for some. Discuss it early enough for everyone to feel comfortable with it. You may find, after giving it a try, that everyone is glad to be able to help provide something for the meal.

Brought To You By:
Woody Alpern
CPA/PFS
www.yourwealth.com
woody@yourwealth.com