personal finance

Living Debt-Free

I know so many people who portray themselves as happy on Facebook, that I can see are not very happy at all. People are keeping up with the Joneses, piling up credit card debt, feeling the pressure of impending college tuition, wondering how in the world did I get in this much debt and how […]

via Why Living Debt-Free Creates a More Joyous Life — Dream Big, Dream Often

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John J. Bowman Jr Accountant, personal finance

How to Choose the Right Bank

Having a bank account is essential so that you can keep your money safe, pay bills with a debit card or check and otherwise take advantage of the benefits of working with a banking institution. However, with so many different banks and credit unions out there, it can be tough to choose the right bank. These are a few tips that can help you do so.

Look at Branch Locations

Even though there are some benefits to online banking, you might prefer a bank that has a local branch. That way you can visit it if you need to make a deposit or withdrawal or if you’d like to ask a question. Consider looking for a bank that has a local branch that is convenient to your home or your job. Additionally, if you spend a lot of time traveling or visiting certain places, you may want to choose a national bank or a bank that has locations near your favorite places to visit.

Compare Fees

Pretty much all banks charge fees, but some charge more than others. For best results, you’ll probably want to look for a bank account that does not have a monthly fee. Other things to look at are fees for things like using an out-of-network ATM, which you might find yourself having to do occasionally.

Look for a Bank Account with No Minimum Balance

Many banks require you to have a minimum balance in order to open an account. However, lots of banks also require you to keep a certain amount of money in your account at all times. Whenever possible, try to avoid these accounts, since they basically require you to leave your money sitting in the bank without earning any interest. They can also leave you facing fees on a tight week when you might need access to all of your funds.

Choose Online Banking

The best and most modern banks offer online banking, which makes it easy for you to keep track of your money, transfer money from account to account and more. Some even offer mobile apps that make managing your money on the go easier than ever before.

Look for Multiple Products

If you only need a checking account right now, you might not be worried about signing up for any other services. However, if you would like to take advantage of multiple products, such as if you’d like to have a savings account or want to apply for a mortgage loan or car loan, you may want to look for a bank that offers all of these things.

 

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blog, John J. Bowman Jr Accountant, personal finance

How To Eliminate Credit Card Debt

Carrying thousands of dollars worth of credit card debt is a burden that many individuals experience. If you dread viewing your credit card statement, you’re not alone. A recent study found that the average US household carries $16,061 worth of credit card debt (Issa). It seems that as the cost of living increases so does the amount of debt that Americans carry. If you are serious about eliminating your credit card debt, take a look at the below credit card debt elimination strategies.

Don’t Use Your Card

This is one of the simplest strategies to eliminate debt, but it’s also one of the hardest habits to break. Many consumers are used to using their credit cards to purchase everything. If you want to eliminate debt, though, you have to put the card away for good. Don’t buy anything unless you have the cash to pay for it. This strategy will also help you think about your spending habits. Be honest with yourself and determine whether or not you use your credit card to purchase unnecessary items. Remember, the first step to eliminating debt is to not increase the amount of debt you carry.

Pay More Each Month

The way to eliminate debt quickly is to pay more than the minimum balance each month. Interest charges pile up each month, and unless you pay more than the minimum, you’ll spend years paying off your debt. When you add more money to your payment each month, you also end up saving money that would otherwise go toward interest charges.

Consider Your Repayment Options

  • Snowball Method – Look at all of your credit card debt. Pay the minimum balances on each card except one. Each month focus on paying over the minimum balance for that card. Most people choose the card with the smallest balance as the one to focus on. Once the debt is eliminated move on to the next card and repeat the process.
  • Debt Ladder Method – List each of your credit cards from the highest interest rate to the lowest interest rate. Then pay the minimum balance on every card except the one with the highest interest rate. Every month you pay more on this card to eliminate it quickly. This method is similar to the Snowball Method, but you focus on interest rates instead of balances.

Utilize Your Savings

Keeping money in a savings account is important—especially for emergencies. Yet if you have a lot of money saved and you owe a lot of credit card debt, it might make more sense to use your savings to eliminate credit card debt. The interest rates on your credit cards are likely high while your savings account interest rates are low. If you don’t pay off your credit card debt quickly, it will continue to increase. Take care of your debt first and then focus on your savings.

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blog, John J. Bowman Jr Accountant, personal finance

Know What You’re Worth

Navigating the tricky area of personal worth is no easy task. You know what skills you possess and the quality of work you put forth, but everything else is unknown. In order to put a number on yourself and what you should be receiving as a salary, there are a few steps you need to take. Check out the list below to start taking hold of your personal worth and landing a job that pays you exactly what your skill set and determination deserve.

Do some research

The first step to pinpointing what you should be getting paid, is research. There are great sites out there, GlassDoor for example, that let employees leave company reviews, but also salary ranges. Look around for the position you currently hold or are seeking out, and see how you stack up. Obviously there are many factors, like company size and experience, that go into salary decisions, bust having a ballpark will help you the rest of the way.

Network and ask questions

Once you have a general idea, get out there and start networking. The only way to really know what you’re up against and how you stack up is to see who else is in your field. You obviously will not be able to ask directly what someone in a similar position is making, but you can get a range. Ask if a salary between A and B makes sense for the field and experience you have. You’ll either get someone wanting to come work with you or a gentle nudge that you should be making more. Either way, this helps hone in on what you’re really worth.

Take inventory of how you stack up

While networking, also take notice to what others are working on, the skills they have, and their accomplishments. Are you playing in the same field, accomplishing more, or have ground to make up? No matter where you fall, it will be valuable information. If you are ahead of the pack, you may want to highlight that and use it later on in negotiations. If you are behind, it may be time to invest in yourself and start some professional development. If you want to make more money, you’re going to have to work for it.

Know how to ask

Once you have all the information you need and feel confident in your worth, it’s time to negotiate. This is the trickiest part of the whole process. You need to careful and not go overboard with your ask, but it doesn’t hurt to push the envelope a little. You will have to do a bit of research on the company you’re negotiating with to see what their typical range is to begin with. If you ask way over what they have in the budget, then you most likely won’t be receiving a call back.

Right pay and right spend

Once you finally are making exactly what you deserve, you’ll need to reevaluate your budget and work on your overall finances. Getting the right pay is half the battle. You alse need to be spending the right amount. If you spend more than you have coming in, you’ll certainly get yourself into debt. Anytime you have a fluctuation in salary, take some time to plan accordingly. It will help you know what to expect and how to maximize your savings.

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Documentation For Tax Season

For some, it may be the most wonderful time of the year- Tax Season! Whether or not this is true for your situation, filing taxes is a civic duty, therefore there is no way out. Here are some of the most common forms of documentation you will need in order to file your taxes. Happy filing!

Personal and Identification

First and foremost, the most important thing you’ll need to have alongside you when filing your taxes is your social security number. This is a form of identification that is used to identify you as a taxpayer, and without it, you will not be able to file your taxes. If you have misplaced your social security number, be sure to contact your social security office. Bringing a copy of last year’s taxes may be helpful to you as well, especially if you’re filing on your own. This will help you answer any simple questions that you may have during the filing process. If you’re expecting direct deposit, bring along your bank account and routing information for an easy way to receive your processed return.

Earnings

A W-2 Form is required to file your taxes as this form shows how much money you’ve earned throughout the year. As long as you bring this form along, your taxes will be simple to file.

Investments

The tax filing process begins to get tricky after you learn where you’ve spent your money throughout the year. If you have any type of investments, such as property, stocks/bonds, or have done any type of freelance work, you should receive a 1099 form in the mail. This form will be required for the tax filing process, as you will enter how much of your earning from your W-2 was paid into taxes for your investments.

Education

If you are recently attending a higher education institution, you will receive a 1098-T form. This from is used to show how much you paid to higher education which will be written off when you file your taxes.

Interest Calculation

A 1098-E form will be sent to you if you have a mortgage, private loan, or debt (such as educational loans).

Records

Throughout the year, it’s important to keep track of records, whether digital or print receipts. Records should be kept for the following; job search/ work expenses (that you paid yourself), medical care payments, contributions or donations, childcare, rental expenses, educational expenses (supplies, transportation, etc.).

Additional

If you receive any additional forms or records in the mail from the IRS, you should bring them along. Your account will be able to determine which forms will be needed, but it is always better to be safe than sorry.

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John J. Bowman Jr Accountant, personal finance, tax

Taxes: DIY or HIRE

Tax season is right around the corner. If you remember last year’s season, you may have been left with frustrations, questions, and concerns. Many people are beginning to wonder if it’s worth hiring an accountant, or if they should file their taxes themselves using programs such as Turbotax. Filing taxes is an important, yet very tricky duty. But I’m here to tell you that there is no right or wrong answer; the choice is simply yours. The ultimate decision simply comes down to you and your preference for filing, and no one can tell you which is the better choice. However, there are some helpful things to think about when the time for filing comes along.
Before you begin the tax process you’ll want to ask yourself is, “How organized are you?” Receipts and records of transactions are critical elements of tax filing. Whether you hire a professional, or do your taxes yourself, you will need these records. Here are some things to consider when deciding how to file your taxes this year.
DIY
Whether or not you did your taxes yourself last year, one of the things you’ll need to consider is has your work life or personal life changed in a considerable way. If you haven’t spent a lot of money on investments or big charitable donations, then it may be a good idea to file your taxes on your own. Another thing to consider is whether or not you understand the numbers and vocabulary that come with taxes. If you understand tax laws and have the time and patience to look up questions of concern, then you can file your taxes on your own. Filing taxes is also a good idea if you’re filing alone. Without any dependents, the filing process becomes less challenging, and may save you money. For example, if your total income is less than $50,000, you may qualify for free filing. The simpler your transactions throughout the past year were, the easier it will be for you to file your taxes on your own.
HIRE
Hiring a tax professional comes with many benefits. For one, you’ll know that you won’t make any important legal mistakes when filing. Typically, if you own a business or make over $200,000 per year, you will want to hire a professional to file your taxes. The reason is because the more money coming in, the more confusing deductions become. Hiring a professional is also a great idea because you may qualify for certain deductions or exemptions that a professional would be able to find for you.
If you’ve had any major life changes such as buying a property, getting a new job, or getting married, you will probably want to consider hiring a professional. First of all, it will take the stress off of you by making sure everything is filed correctly. Filing taxes after a life change can become very challenging. Second, it can take a lot more time to file, which can become frustrating. With a professional at hand, you will be able to get a thorough explanation and understanding of any questions or concerns you may have.

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Tax Penalties to Avoid

Tax time will be here before we know it! We talk an awful lot about what you need to do and have in order to file successfully. We don’t discuss enough what you should steer clear of. If you are penalized for any reason, you’ll end up owing more money. Take a look at the top four ways in which people accrue penalties. Be careful to avoid these pitfalls come tax season.

Late filing

The cut off for filing a tax return is April 15th and it’s the same date every year. To avoid receiving a late file penalty, file before the 15th or request an extension if absolutely necessary. Tax season can be stressful, but starting early to get everything completed before April 15th will save you some money and frustration.

Nonpayment Penalty

It’s not enough to just file your taxes by the 15th. You also need to pay your taxes by then as well. If you avoid paying what you owe by April 15th, you’ll end up owing a penalty equal to .5 percent of your due taxes. If that still is not unpleasant enough, you can end up owing up to 25 percent of your tax balance for nonpayment.

Math Errors

Most common on pen-and-paper tax returns, math errors can end up costing you. If you have poor math skills and end up paying less than the actually owed amount, the IRS can charge you interest on the remaining balance until it is paid off. Do yourself a favor and double check your math, file electronically, or hire an accountant.

Incorrect Charitable Donation

For non-cash donations, such as clothing or furniture, it’s imperative that you have proper documentation. When it comes to non-cash items that you plan to claim, make sure you have a copy of the itemized receipt. If you do not have proper documentation, you can be penalized during an audit for up to 25 percent.

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