- @Elle_CM Natalie's raid looked like it was filmed with a strobe light. Lame CGI in reply to Elle_CM #
- I want to get a toto portable bidet and a roomba. Combine them and I'll have outsourced some of the least tasteful parts of my day. #
- RT @freefrombroke: RT @moneybeagle: New Blog Post: Money Hacks Carnival #115 http://goo.gl/fb/AqhWf #
- TED.com: The neurons that shaped civilization. http://su.pr/2Qv4Ay #
- Last night, fell in the driveway: twisted ankle and skinned knee. Today, fell down the stairs: bruise makes sitting hurt. Bad morning. #
- RT @FrugalDad: And to moms, please be more selective about the creeps you let around your child. Takes a special guy to be a dad to another' #
- First Rule of Blogging: Don't let real life get in the way. Epic fail 2 Fridays in a row. But the garage sale is going well. #
How to Maximize Your Income and Reduce Your Expenditures
If the past few years have taught us anything, it’s that we need to be taking out less debt and building up more savings. And certainly, it’s where the public seem to be heading – levels of mortgage overpayment and personal savings have rocketed in the past year amongst those who have the luxury of being able to put income aside.
For many of us though, finding money to save is a real struggle. After the bills and living costs are taken out of a monthly salary payment, there’s not always a lot left to play with. So what do you do?
The answer lies in getting tough with yourself, carrying out a review of your current spending patterns and working out a sensible budget. Essentially you need to both maximise income and reduce expenditure – both sides of the coin. There are plenty of ways to do this when you start thinking, so be creative and start thinking outside the box.
Here are a few top tips to get you started:
Ask for a pay rise – it seems like an obvious option, but so many of us never do it. Take a look at the market and see what similar companies are offering for your job role or profession. This will give you an idea of whether you’re currently being paid enough for your skills level and experience.
Ask your manager in a calm and prepared manager and come with facts and examples to back up your request. If the request is turned down, try again in a few months time, with more evidence. Also, ask HR for advice about your job salary banding and progression, so you show that you’re serious.
Get a new job – the obvious option when your pay rise request is denied. You may find that you can earn more elsewhere in the same profession, or flex your skills into a new career entirely. See a professional careers advisor for guidance.
Get a second income – more people than ever are opting for this route, by becoming self-employed on a part time basis. There are numerous industries that rely on an army of part-time staff, often self-employed. Examples are party-planners, sales people, freelance designers, coders, copywriters and researchers, market researchers, bar and restaurant staff and plenty more.
Take in a lodger – if you have a spare room, then the government allows you to take in a lodger without paying tax on rental income (up to £4250 pa.) This can be an effective way to make the use of your home to bring in income. Do your research first though on how to select the right lodger and make the relationship work.
Look for opportunities to earn – examples include signing up for overtime during busy periods at work or selling unwanted items on eBay. You could also sign up with the local council to count votes during election period, or help steward at large events. There are various agencies offering links to such opportunities if you search online.
On the other side of the coin lies spending reduction. This is a bitter pill for some to swallow, but there really is no point in earning more if you’re not going to make good use of it!
Food shopping – when it comes to food shopping, start using grocery coupons/vouchers and sign up for reward schemes. Downgrade your brands when you’re out shopping, so that you save money on you shop each time. Look at bulk buying offers, local grocers, markets and other opportunities to slash monthly grocery bills.
Travel – identify ways to save on travel, firstly by walking when a journey is a mile and under. If you’re doing this regularly you’ll save on petrol and you can cancel your gym subscription! With train tickets, book well in advance to take advantage of special deals and with holidays, look for cheap holiday offers and promotions via online search sites – these check the whole of the market to find the best prices and options for your requirements. Holiday extras such as car hire and airport parking can also usually be arranged via these online travel sites so be sure to compare prices to save yourself some money.
Clothes shopping – instead of shopping expensively on the high street, channel your passion for fashion into eBay. Many of your regular brands will be on there already and you can sell last season’s purchases to make way for the current season of items. Get savvy with bids and set yourself limits – you’ll find some great bargains if you’re clever about it!
Entertainment – when it comes to entertainment, sign up to group buying schemes for special offers and look more broadly in your area for things to do that don’t cost a lot of money. Things like local leisure centres, museums, parks, libraries, city parades and exhibitions are often free or subsidised by the council and you can enjoy time with the family without spending a lot of money on more commercial entertainments.
Hobbies – rather than taking up yet another expensive sport that you’ll buy all the equipment for and then never see through, find low cost hobbies to enjoy and cultivate. Walking or running, painting, music appreciation, gardening, racket sports, debating groups, local social clubs – all of these can be enjoyed without necessarily parting with too much cash. And it will broaden your horizons too – thinking more broadly about what counts, such as spending time with loved ones, rather than throwing money at free time like there’s no tomorrow!
This post brought to you by MoneySupermarket.
Saturday Roundup
- Image via Wikipedia
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This week has been terribly busy. I can’t tell you how happy I am for a 3 day weekend. Right now, the 2 week queue of posts I had before I went on vacation is gone. Have a good weekend!
The Best Posts of the Week:
200 year-old, chilled beer found. That’s a party.
Follow your dreams and eff the haters. There’s a life lesson there.
Affiliate marketing basics by Chris Brogan. There’s definitely more than one way to skin the “make money online“(affiliate link) cat.
One of the first things we’re going to save for after we get out of debt is Lasik. Is it worth it?
Finally, a list of the carnivals I’ve participated in:
Crystal included me in the Carnival of Personal Finance with Bonding Relationships.
8 painless ways to save money was included in the Yakezie Carnival.
Work at Home Scams was included in the Festival of Frugality.
If I missed a carnival, please let me know. Thanks to those who have included me!
Budget Lesson, Part 8
This is a continuation of the budget series. See these posts for the history of this series.
This time, I’m looking at our discretionary budget. These are the things that don’t have a fixed cost. Any individual item is largely optional, and, ultimately, we don’t track these purchases closely. At the beginning of the month, I pull this money out of the bank in cash, except for 1 category. When the discretionary budget is gone, it’s gone.
- Groceries/Dining – At the beginning of the week, we sit down with a meal planner and (Can you guess?) plan our meals. The planner we use has a weekly calendar with a checklist below each day to build the grocery list. At the bottom of the page is another checklist for staples that don’t apply to a specific day’s meal, like milk or snacks. We build the list, then transfer it to another sheet, broken out by grocery department. That keeps me from having to criss-cross the store. I make one lap. When I go to the store, I only bring that week’s grocery budget in cash, so I keep close track of how much is going into the cart. Recently, we’ve gotten so good at making our meals cheaply from scratch that I reduced our monthly food budget by $50. I enjoy good food, so I wouldn’t reduce this budget item if it was a sacrifice in quality. For example, the Rainbow Foods store-brand chips actually taste better than Lay’s for half of the price. We stock up when things are on sale and cook creatively. Sometimes, if time has been too tight to make a meal plan, we eat solely from the pantry for a week, buying nothing but bread and milk. By sticking to the list, and not fearing the store’s brand, we are able to feed our family of 5 1/2 for $450 per month and still eat well.
- Discretionary – This is for the random things that come up, and some of the not-so-random. Toiletries, activity fees, admissions, and fund-raisers all come out of this fund. At the end of the month, whatever is left gets tucked into a box and forgotten. When the box gets full, it goes to the bank to be applied to debt. There isn’t a lot to cut here, since this line-item is only $200.
- Baby stuff – This category is continually shrinking. Our middle kid is recently potty-trained and our youngest is trying. There is no baby food and no formula, just 1 pack of diapers every month. In 6 months, this category will be eliminated.
- Gas/oil – This is the single category that isn’t cash-based. It makes no sense to take the kids out of the car to pay inside, especially in the winter. Also, all of the temptation is inside. It’s much better to spend the money at the pump. There isn’t much we can do to reduce this, at the moment. Our next car won’t be a full-sized pickup, but we are several years from that purchase. We’ve started clipping oil-change coupons to keep this down to the minimum amount possible.
- Clothes – We only allocate $15 per month for clothes. In a good month, we don’t spend it. We can’t eliminate it completely, because things do come up. Over the summer, I’m hoping to completely leave it alone to save up for a new(used) winter jacket for our older daughter, who doesn’t get hand-me-downs.
- Blow Money – This is the safety valve. It can’t get reduced and still work.
We’ve now addressed out entire budget, including what we can do and have done to keep our costs under control. Looking back, I don’t see too many cuts I’ve missed.
The Tax Man Cometh
- Image by brianjmatis via Flickr
Is the IRS after you? Did you forget to file your tax returns for the last 10 years? Are you worried that they are going to seize your bank accounts, leaving you broke and unable to finance your latest Pokemon acquisition?
There are many reasons people neglect to file their tax returns. None of the reasons are good. The usual reason is that you know you’ll owe money you can’t afford to pay, so you wrap yourself in denial and attempt to delay the inevitable. For future reference, the government always wins. Not filing is a temporary solution at best, and a really bad one at that. Not paying just guarantees that you will owe more penalties than if you had filed and gotten on a repayment plan. Avoiding your tax return will come back to haunt you eventually.
If you haven’t filed your tax returns, you need to do so as soon as possible. The longer you wait, the fewer options you have and the more likely the account seizures. Keep your money under your own control. Another problem with not filing is that the IRS will estimate your tax debt. The estimate is always in their favor. If you file, you get to list your deductions. If you don’t file, they give you the standard deduction and ignore almost everything in your favor. In some cases, this can mean they think you owe $10,000 when in reality, if you file, you will only possibly owe $1500.
To get started, you need to do is call the IRS at (800) TAX-1040. This call serves three purposes.
First, you need to confirm which years you need to file. Simply ask for the last year in which you have filed.
Second, request a transcript of all of your 1099s and W-2s. These are the forms that your employers, investments, and banks have sent to the IRS detailing your income. Over the years, it’s easy to lose paperwork, so this will ensure that you’re records match theirs. Depending on the time of the year, you should have the files in under a week. You’ll get one per delinquent year.
Third, this call gives you a chance to get on the “good debtor” list. You may have to get transferred to the collections department, but make sure you get someone to update your file with the fact that you are making good on your taxes. They will probably give you 30 days to file. Treat this as a hard deadline.
[ad name=”inlineleft”]Now that you have all of your paperwork, it’s time for the long slog. You have to do several years worth of returns, generally in one or two sittings. You can usually find back years of Turbo Tax on Amazon for cheap. As of this writing, the back years are under $10 per year. While you are filing, please keep in mind any charitable donations or business expenses you may have had. If you are missing a receipt for a major business purchase, never fear! The IRS does accept reasonable alternatives. I know of one case of an individual writing a letter to the IRS that read:
To Whom it May Concern:
Please accept this letter as a receipt for the purchase of a snowplow in the amount of $3000.
If you do this, you had better be able to back it up with the existence of an actual snowplow.
After you prepare your returns, look at the amounts you owe. You can only collect a refund for the last three years. If you owe more than you can afford to pay, you have two option, payment plans or settlement.
Payment plans involve delayed or continual payments. From IRS.gov:
Request an Extension of Time to Pay — Based on the circumstances, a taxpayer could qualify for an extension of time to pay. The IRS is willing to allow extensions of time to pay in order to assist in tax debt repayment. A taxpayer can request an extension from 30 to 120 days depending on the specific situation. Taxpayers qualifying for an extension of time to pay of 30 to 120 days generally will pay less in penalties and interest than if the debt were repaid through an installment agreement. Taxpayers can request an extension of time to pay using the Online Payment Agreement option available on thisWeb site.
- Apply for an Installment Agreement — The IRS may allow taxpayers to pay any remaining balance in monthly installments through an installment agreement. Taxpayers who owe $25,000 or less may apply for a payment plan electronically, using the Online Payment Agreement application. Alternatively, taxpayers may attach a Form 9465, Installment Agreement Request, to the front of their tax return. Taxpayers must show the amount of their proposed monthly payment and the date they wish to make their payment each month. The IRS charges a $105 fee for setting up an installment agreement. The fee is reduced to $52 for those who establish a direct debit installment agreement and $43 for those with an income below a certain level (for more information, see Form 13844). Taxpayers are required to pay interest plus a late payment penalty on the unpaid taxes for each month or part of a month, after the due date that the tax is not paid. A taxpayer who does not file the return by the due date — including extensions — may have to pay a failure-to-file penalty.
The IRS must accept your payment plan if your tax debt is under $10,000 and your proposed plan will pay it off within three years.
The other option is a settlement, or Offer in Compromise. Generally, only 10-15% of such offers are accepted. The IRS will rarely accept the off if they feel they can collect the debt for less than the amount owed. Don’t believe the guys on TV who pretend it is an effortless solution. From IRS.gov, the three acceptable reasons for OIC are as follows:
1. Doubt as to Collectibility – Doubt exists that the taxpayer could ever pay the full amount of tax liability owed within the remainder of the statutory period for collection.
Example: A taxpayer owes $20,000 for unpaid tax liabilities and agrees that the tax she owes is correct. The taxpayer’s monthly income does not meet her necessary living expenses. She does not own any real property and does not have the ability to fully pay the liability now or through monthly installment payments.
2. Doubt as to Liability – A legitimate doubt exists that the assessed tax liability is correct. Possible reasons to submit a doubt as to liability offer include: (1) the examiner made a mistake interpreting the law, (2) the examiner failed to consider the taxpayer’s evidence or (3) the taxpayer has new evidence.
Example: The taxpayer was vice president of a corporation from 2004-2005. In 2006, the corporation accrued unpaid payroll taxes and the taxpayer was assessed a trust fund recovery penalty as a responsible party of the corporation. The taxpayer was no longer a corporate officer and had resigned from the corporation on 12/31/2005. Since the taxpayer had resigned prior to the payroll taxes accruing and was not contacted prior to the assessment, there is legitimate doubt that the assessed tax liability is correct.
3. Effective Tax Administration – There is no doubt that the tax is correct and there is potential to collect the full amount of the tax owed, but an exceptional circumstance exists that would allow the IRS to consider an OIC. To be eligible for compromise on this basis, a taxpayer must demonstrate that the collection of the tax would create an economic hardship or would be unfair and inequitable.
Example: Mr. & Mrs. Taxpayer have assets sufficient to satisfy the tax liability and provide full time care and assistance to a dependent child, who has a serious long-term illness. It is expected that Mr. and Mrs. Taxpayer will need to use the equity in assets to provide for adequate basic living expenses and medical care for the child. There is no doubt that the tax is correct.
If you have a settlement accepted, you have three options for payment. A lump-sum payment must be paid in 5 installments or less, a short-term payment plan may be paid over 2 years, and the long-term repayment option has no set payment. Each of these options must meet differing levels of potential repayment, including figuring your real assets(your house and investments). In addition, you must include a non-refundable first payment and a $150 application fee when you apply for the settlement.
No matter which option you take, you can’t run from government debt. It will catch up to you and that will always be more painful that dealing with it on your own terms.
Update: This post has been included in the Carnival of Personal Finance.
Time Management
My wife told me that I don’t do enough around the house.
She is, of course, correct.
I could make a list of excuses, but none of them matter. There’s really only one reason: I have problems with time management. I’m easily distracted.
For example, in the time it’s taken me to write the above three lines, I stopped to check a website, updated my Evernote installation, and added a new contact to my address book.
That’s not multi-tasking, that’s inefficiency. People don’t actually multi-task. Instead, they break concentration and completely switch gears. Repeatedly. They pretend they are doing a lot of things at once, when in fact they are doing a large series of individual tasks. That’s serial single-tasking, poorly.
On top of that, I focus to the point of obsession. The entire world goes away when I am working.
No, that’s not a contradiction. I’m good at procrastinating and I am interested in everything. If a random thought floats to the surface while I’m working, I follow it to Google and, if it’s interesting enough, I get lost. It generally only happens during research or while doing a job I hate.
For those of you following along at home, I can be easily distracted from some tasks, then lock on to some tangent and have an evening disappear.
For some reason, my wife hates that, especially when there are dishes to be done and laundry to be folded.
This has blown up on me a few time.
We’ve come upon a solution, in three parts.
1. Timer. When I get on the computer, I set an egg timer for 1 hour. When the time’s up, I’m done. The time limit helps me focus on finishing the task at hand. If I know I need to get a post written in an hour, I’m less likely to catch up on the comics in my news reader.
2. Communication. If I’m working on something that I know will take more than an hour, I tell her. I’ve had to do that for each installment of the Make Extra Money series.
3. Nagging. If #1 has failed and #2 doesn’t apply, I’ve given my wife explicit permission to remind me, as often as necessary. Sometimes, I don’t register everything people say when I am “lost”, so now she knows to keep trying if I don’t respond, or respond with a spaced-out “Uh-huh, yes, dear.” Before, she was worried about upsetting me by nagging, but I wouldn’t have noticed the first few times. Thankfully, with #1 and #2, #3 has only been an issue one.
Time limits, communication, and persistent reminders. That’s my plan to manage my time. Getting off of the computer has helped me be more useful with household chores and it’s given me a chance to be closer to the woman I love most. The time-limited focus has even helped me get a couple of projects rolling.
We all have the same 24 hours. Are you using yours efficiently?
(P.S. Happy anniversary, honey. These have been the best years I could ask for.)
