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The Intersection Between Personal Finance and Technology

Technology and personal finance have gone hand in hand for years. From the ATM to mobile banking, there are many ways that technology has helped people manage their finances more efficiently. They can use their smartphone to track expenses, compare prices at different stores, and even deposit checks from the comfort of their home. With so much information and services available online these days, it’s never been easier for people to keep on top of their money. Here are ways in which technology has allowed access, portability, and flexibility in personal finance.

Accessing money

Technology has made it easier than ever to access money. People can get cash from ATMs anywhere, use mobile banking to check account balances and transfer funds, and even deposit checks with a smartphone app. There are also so many websites helping people manage their money online by tracking expenses or finding the best deals on products at different stores.

Automated withdrawal for savings

It can be tough to put some extra money away every month when there are so many other expenses competing for attention. With an automated savings plan, someone can set up automatic withdrawals from your checking account into a separate one where they save money regularly without having to think about it.

Automated bills payments

There are plenty of services that help people pay their bills. They schedule payments to ensure all their bills get paid automatically and on time, without hassle. Services like Venmo and PayPal also allow people to send money over the internet faster than mailing a check or setting up an online bank transfer.

Using a budget to manage spending

People can use a budgeting application to track all of their monthly expenses and income, which will help them get a clear picture of where their money is going. It’s also easier than ever before to automate saving for certain things like vacations or home improvements so that they’re never forgotten about. With these tools at people’s disposal, it is easy enough to keep on top of their finances without having too much stress from looking at the numbers every day.

Technology is all about simplifying life. With technology being incorporated into banking more and more, people can get a lot done from the comfort of their couch. Besides helping people adopt better spending habits, technology is also helping them save money that they would otherwise spend without the help of money management apps and sites.

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California and Tennessee to Receive Tax Relief Following Disasters

California and Tennessee have been plagued by natural disasters in recent weeks. Californians have been affected by massive wildfires, while Tennesseeans have struggled with storm damage. In light of this, the federal government is offering affected citizens some tax relief options.

California wildfire victims residing in the counties of Lassen, Placer, Plumas, or Nevada, have until November 15th, 2021 to file individual and business returns or payments. This includes quarterly tax payments, excise tax returns, and quarterly payroll. November 15th will also serve as the new deadline for those who had received an extension on their 2020 returns.

Penalties on payments that were due between July 14th and July 29th of 2021 will also be forgiven if the payments were made by July 29.

Tennessee residents or business owners who were impacted by storm damage in Houston, Dickson, Humphreys, or Hickman county also qualify for tax relief. Those who had received an extension to their 2020 returns will now have until January 3rd, 2022 to file. That is also the new deadline for the quarterly tax payments that would’ve normally been due in September of 2021.

Penalties on payments that were due between August 21st and September 7th of 2021 will be dropped if the payments were made by September 7th of 2021.

If you’re a victim of the California fires or Tennessee storms and you receive a notice from the IRS that you’re being penalized for late filing or late payment but you believe you qualify for the tax extensions, you can contact the number on the notice. Explain your situation and they’ll be able to help you determine if you are eligible and if you are, they can remove the penalty from your file.

The IRS is making every attempt to automatically identify taxpayers who reside in the areas covered by the disaster extensions. When they identify these people, they apply the filing and payment relief options to their accounts. This means, that if you live in the affected areas mentioned, you shouldn’t need to contact the IRS to receive your tax extension.

If however, you are a victim of the fires or storm damage that lives outside of the mentioned counties, you will need to contact the IRS at (866) 562-5227 to request the tax relief.

This article was originally published on JBowmanAccountant.net

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Tax Breaks for Homeowners

While there are many opportunities to create financial wealth and safety in America, few are as powerful as owning a home. Even with decades of mortgage payments, the relative size of those payments usually declines over time as wages rise but the payments stay flat. Also, home values tend to go up over time, representing another way to secure wealth in a home.

Once a mortgage is paid off, families own their own homes and just have to pay taxes and maintenance, seriously freeing their regular income from one of life’s biggest expenses. The advantages don’t stop there. Multiple law enforcement agencies and municipal governments have learned that crime goes way down in communities where at least a third of the residents own their homes as compared to renting.

Buying a home isn’t cheap. In fact, it’s often the biggest single expense most families will make in their lifetimes. Fortunately, there are many tax breaks homeowners can use to make things more affordable.

While there are many opportunities to create financial wealth and safety in America, few are as powerful as owning a home. Even with decades of mortgage payments, the relative size of those payments usually declines over time as wages rise but the payments stay flat. Also, home values tend to go up over time, representing another way to secure wealth in a home.

Once a mortgage is paid off, families own their own homes and just have to pay taxes and maintenance, seriously freeing their regular income from one of life’s biggest expenses. The advantages don’t stop there. Multiple law enforcement agencies and municipal governments have learned that crime goes way down in communities where at least a third of the residents own their homes as compared to renting.

Buying a home isn’t cheap. In fact, it’s often the biggest single expense most families will make in their lifetimes. Fortunately, there are many tax breaks homeowners can use to make things more affordable.

  1. Capital Gains: If you sell your home and profit from it, then capital gains taxes might apply. However, if it was your primary residence, you might be able to keep capital gains without them getting taxed.
  2. Discount Points: When you get a mortgage, you might get to buy discount points that lower the interest rate applied to the loan. Points you buy to lower the interest rate are tax-deductible.
  3. Home Equity Loan Interest: This is just like having a second mortgage. You can deduct the interest you pay on a home equity loan if you took the funds for home improvements.
  4. Home Office Costs: The actual details are up to the IRS on this one, but home office space might get you tax breaks.
  5. Mortgage Insurance: Also known as PMI or private mortgage insurance, it’s there to give your lender protection if you can’t keep up with mortgage payments. You can itemize the cost of this insurance.
  6. Mortgage Interest: The mortgage interest deduction lets you lower taxable income if you do an itemized deduction.
  7. Necessary Improvements: The scope of what is ‘necessary’ is up to the IRS, unfortunately, but certain improvements can qualify as tax deductions.
  8. Property Taxes: These are often applied at the state and municipal levels. Depending on how you file, you can deduct $5,000 to $10,000 from your federal taxes.

This article was originally published on JBowmanAccountant.net

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When To Claim Social Security

Social Security is one of the major components of a successful retirement plan. This benefit is not likely to fund a comfortable retirement on its own. However, it can provide a nice supplement to other retirement options. Americans can apply for their Social Security benefits at any age between 62 and 70, and this causes many people to wonder when to claim their benefits.

Benefit Levels

Retirees can start to take their Social Security at age 62. This is actually considered early retirement, and the government will cut benefits by 30% for those who start drawing them at this age. Full retirement age varies based upon the year of a person’s birth. Those born between 1943 and 1954 can earn the full benefit beginning at age 66. This age increases by two months for those born in each year between 1955 and 1960. Those born in 1960 have a full retirement age of 67, and this is the same full retirement age for anyone born after 1960.

Those who wait to draw Social Security until age 70 will see an increase in their benefit levels. This will add 24% to their total payout each month when compared to those who file at their full retirement age. Overall, a person who decides to file at age 62 could lose more than half of the maximum payment they might receive each month.

When To File

When looking at the increased payments for those who wait until age 70 to draw Social Security, it might seem that this is the best time to claim benefits. However, those who have a sizable nest egg might want to start drawing as soon as possible. Those who do not file before they die will not earn a penny. Therefore, it can make sense to enjoy the extra money even if it’s not needed. Also, those who have health issues might that necessitate retirement might need the money on short notice. On the other hand, those who are healthy and enjoy their work might want to hold off on filing until the last possible minute to maximize their monthly payouts. Personal finance is personal. Therefore, it’s a good idea to weigh the pros and cons before deciding when to file.

This article was originally published on JBowmanAccountant.org

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What to Know About Taxes and Retirement Income

Taxes are one of the most important things to consider when saving for retirement. The way you are taxed depends on the instruments you’re using to save. Sometimes, savers are taxed at the time they put money away. At other times, their contributions are tax-free, but taxes are scheduled to be collected when they’re distributed down the line. It’s important for people to understand a little about how this all works. It can prevent unpleasant surprises in the future.

Former federal employees will find that their FERS annuity is taxed like regular income at the federal level. Depending on the state, it can be taxed at that level, too. Over 80% of retirees’ Social Security payments are also taxable as ordinary income. People can elect to have taxes withheld from their payments, but that doesn’t happen automatically. If not, they will have to pay at tax time. People should make this decision carefully, ideally after talking with a financial advisor.

Retirement accounts that people may contribute to taking different approaches to taxes. With a Roth IRA, account holders pay taxes upfront, when they make deposits. Later, their withdrawals in retirement are tax-free. This is essentially the opposite of a traditional IRA. Contributions are tax-advantage, but distributions are taxed later on. Some people maintain both types of accounts, in order to reap the tax advantages on both ends.

401(k) and 403(b) are popular retirement plans that are offered by employers to their workers. 401(k)s are generally available from for-profit companies, and 403(b)s from charities and religious organizations. These plans offer tax benefits upfront. Employers take money from each paycheck on a pre-tax basis and place it in a plan where the money grows for the account holder. Generally, 401(k) distributions are taxed as normal income. There are Roth 401(k) accounts available, and contributions to those are taxed.

Retirement planning is complicated. It’s important that every worker keeps one eye on the future and considers what they want their retirement years to look at. Being more aggressive, and taking advantage of some Roth-style accounts, can be a good idea for many American workers. Speaking with a financial advisor about these decisions can be prudent.

This article was originally published on JBowmanAccountant.org

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Four Purchases That Should Never be Made With a Debit Card

Although debit cards are extremely convenient, they aren’t always the right choice for payments. Under some circumstances, it’s actually more beneficial to use a credit card. Here are four things that should always be paid for with a credit card instead of a debit card.

Furniture and Appliances

Large home purchases, such as furniture and appliances, should always be made with a credit card. These purchases are large enough that a mistake by the delivery team or the manufacturer can cost buyers thousands of dollars. With a credit card, it’s possible to dispute the charges, even if the seller isn’t willing to arrange a refund directly. In addition, the size of these purchases means that even 1-2 percent cashback will add up to a considerable sum of money.

Car Rentals

When renting a car, it’s almost imperative to use a credit card. Even if the rental company will allow renters to pay with a debit card, they should expect to pay a large additional fee in order to do so. Rental car companies also tend to run credit checks on renters who pay with debit cards. This, in turn, can cause damage to the renter’s credit score by adding an unnecessary hard inquiry. To avoid this hassle and expense, anyone renting a car should be prepared to pay with a credit card.

Recurring Payments

People with memberships and subscriptions often make the mistake of billing their bank accounts directly through their debit cards. While there’s little risk of losing money this way, credit card rewards on these recurring payments can add up over time to significant amounts. Points, miles, and cashback rewards can all be built on recurring payments with no extra effort. Given this fact, it rarely makes sense to make these recurring payments using anything other than a credit card.

Online Purchases

Unfortunately, online scams are everywhere these days. Sellers who bait and switch their buyers or fail to deliver at all are quite common, even on major online platforms. Credit cards offer a degree of protection against this kind of behavior by allowing buyers to dispute charges and get their money back.

While debit cards certainly have their place, they aren’t for everything. These four types of purchases are generally best made with credit cards, as debit cards introduce higher risks or lower rewards in these cases.

This article was originally published on JBowmanAccountant.org

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The Biggest Financial Decisions You Will Make

Most individuals have had to readjust their lives occasionally to meet various financial needs. Making the right financial decisions is critical to surviving unforeseen financial constraints. Below are suggestions on the most significant financial decisions one can make towards achieving financial stability:

PAY YOUR DEBTS

Once your financial situation stabilizes, make a payment plan in order to pay off debts. Not paying off your debts can start to affect other aspects of your life, such as taking out loans for buying a home or a business. It can be wise to involve a debtor advisor that can look at your financial situation holistically and tell you exactly how you can go about paying your existing debts in a timely manner that will work for you.

INVEST

Investing your finances at a young age can be one of the best decisions you’ll ever make if you go about it the right way. Putting your money in a bank is one way you can invest, but the problem is that you gain a small amount of interest when doing this. The best way to grow your wealth by investing is by investing in the stock market. Depending on how you go about it, this can be a risky decision so be sure to do your research and ask financial advisors for their input to ensure you’re going about it properly.  A high-risk return investment has a higher return than a lower-risk investment that pays less, but they’re also not likely to lose money in the short term. 

BUY A HOUSE

One of the most significant financial achievements for many is buying a house. A home gives equity so that one doesn’t have to pay rent anymore. At the same time, it can be an income-generating project since it can be rented or sold at a profitable price. Settling in one place for a long time gives one a sense of entitlement, no more moving from one place to another.

LIVE WITHIN ONE’S MEANS

Living within one’s income is the best decision one can make early in life. It helps in managing finances and staying out of debt. Yet again, set aside a portion of the salary and deposit in a fixed savings account that is beyond reach. Have a budget for every expenditure, be it food, transport, or rent. It will help in cutting down on costs and save more.

Financial decisions are complex and not easy to adhere to, but with a little patience, discipline, and focus, you’ll be well off.

This article was originally published on John Bowman’s website.

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The Best Holiday Shopping Budget Tips

Holidays are a time for giving, but giving too much can also put you in a huge financial hole. If you don’t want to end up having to dig yourself out of a shopping deficit at the end of December, follow these holiday shopping budget tips.

1. Set an overall budget.

Think about what you’re really able to spend overall and stick to that amount. What you’ll spend on each individual can fluctuate within that amount, but the overall budget should remain the same to avoid overspending.

2. Make a list of gift recipients, then trim it down.

Your second cousin whom you haven’t seen in 10 years probably doesn’t need a new set of dinner plates. Stick to the closest family members and friends for gift giving. If you still want to send something to long-lost relatives and acquaintances, a holiday photo card is a nice, inexpensive idea.

3. Use cash for purchases.

Credit cards can make it much easier to overspend. Instead, put cash aside at the beginning of the holiday shopping season and use that money to make purchases. If you prefer online shopping, create a separate account for your holiday shopping money, or be extremely disciplined in sticking to your budget.

4. Take advantage of free shipping.

Online shopping is convenient, but the shipping costs can really add up. Take advantage of free shipping days by making several gift purchases at once. Most retailers offer free shipping if you spend a certain amount.

5. Start shopping early.

Waiting until the last minute can cause you to overspend. Starting your holiday shopping as early as September or October is a good idea because you can shop a little bit at a time. Everyday deals are often better than Black Friday and Cyber Monday deals anyway, and you’ll be more likely to score the big-ticket items that might sell out on these busy shopping days.

6. Think quality, not quantity.

One thoughtful gift is more appreciated than several random items. Homemade gifts are also a good idea as they come from the heart. The best part is, they’re also less expensive.

Stay on budget with these holiday shopping tips and enjoy the season!

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EXPENSES THAT COULD HARM YOUR RETIREMENT SAVINGS

If you have a good amount of money in your retirement savings account, you may feel like you’re ready when retirement comes. It’s natural to feel that way when so many senior citizens all around the world end up working past retirement age due to not having much money in their savings. However, you should be concerned about a few expenses you may run into.

With these expenses, you could end up emptying your retirement savings account at a rate much faster than you were expecting. Take note of these expenses you may run into once you retire.

Healthcare

Whether you’re healthy now or not, healthcare can easily become one of the most expensive things to worry about once you’re retired. The reason for this is that older people generally need to take care of themselves more, whether it be through regular checkups, surgeries, and much more. To help you with this, you should think about opening a health savings account.

With a health savings account, you can save thousands of dollars regularly since this account can be used for medical purposes without having to pay taxes. If you feel like you are too close to retirement to build your health savings account, make sure you look into various Medicare coverage plans so you’re covered in case anything happens to you. Ensure that you look into saving money for healthcare before you end up retiring.

Long-Term Care

As you get older, you might find it harder to take care of yourself. This can be a difficult period as you might still want your freedom, but you might start having to pay some else to take care of you when you’re older. This can be very costly though where you don’t want to expect your children to pay tens of thousands every year just to keep you in good care.

By saving money for long-term care, you’ll feel ok knowing that you’re always going to have your housing, food, and other care taken care of without finding some solution to pay for your life. Just make sure you look into long-term care solutions before you end up getting too old, as you want to find a long-term care system that isn’t going to scam you financially. Make sure you save up for long-term care so you’re covered once you retire.

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Improving a FICO Score in Four Steps

A high FICO score can unlock many doors for consumers, including the doors to low mortgage interest rates, attractive credit card offers, and zero-interest car loans. A low FICO score, however, keeps many of those entrances locked and creates a far more expensive borrowing experience. To improve a credit score and gain access to all the benefits afforded, borrowers can try these steps.

Paying bills before the due date

Over one-third of a FICO score is determined by a borrower’s compliance (or lack thereof) with payment due dates. Thus, when a creditor pays a bill late, it is reported to the credit bureaus and can have a devastating impact on a credit score. Paying bills early and maintaining automatic bill pay through a bank can help ensure consistent, timely payments and remove the risk of garnering a low score due to late payments.

Read the full article at JBowmanAccountant.info.

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