Money Quote Friday – Deserve Honors Edition.

It is better to deserve honors and not have them than to have them and not deserve them.

-Mark Twain

That one is for the folks at AIG getting bonuses and retention payments for driving the company into the ground. Have a great weekend…


I Owe, I Owe, It’s Off…Oh Forget It, I Owe The IRS Money. Again.

So, my taxes are being filed this week – and I owe money again. Granted, I would rather owe money than get a refund, for sure, as that would mean I gave the government use of my money interest-free all year long! Being self-employed certainly has its benefits in terms of working when I want and for how long I want, taking time off whenever I choose, and spending afternoons outside in the yard instead of stuck in a cubicle. But in exchange for such freedom comes the responsibility of paying taxes myself all year, as I don’t have an employer taking it out every week automatically. I also have to pay a 15% self-employment tax to cover what an “employee” would typically be paying into Social Security. On a regular old paycheck, the employer pays 7.5% and the employee pays 7.5%, but when you are self-employed you have to pay the entire thing yourself (although you can then deduct 50% of that in your taxes somewhere – I leave that to my brother the accountant).

So, where was I…oh yea, I owe money again this year. 2008 was a difficult year for us, as we moved – which started saving us money right away – and I was also trying to pay off over $10,000 in medical bills leftover from my cancer ordeal. When estimated taxes were due every quarter, which I have to pay because I don’t have taxes taken out all year, I had to make a decision – pay less in estimated tax but more on my medical bills, or pay more on my taxes and less on the medical bills. It was a tough choice, but after some careful thought and discussion, we decided to pay less taxes and try to get the medical bills knocked out. The penalty for underpayment of taxes is pretty small, but if you don’t pay your medical bills they send you to collections! In fact, one bill that I never received was sent to collections only 38 days after its due date. So in the end we decided to do our best to bust arse paying off the medical bills and to underpay our taxes for the year, at least until the fourth quarter of the year when I tried to make up for some of it by sending in a huge amount of money to the IRS. But alas, we still owe money come April 15th.

All things considered, the fact that we only owe $2,100 or so in Federal taxes is pretty good after the year that we had. We got our bills all paid off and managed to only owe a few thousand in taxes, which I will take. It could have been much, much worse! So come April 15th, I will pull money out of my taxes fund at ING Direct and pay both the money due for 2008 AND the estimated tax due for the first quarter of the year. For this year, I am aiming to come close to even on my taxes so I don’t owe much of anything (I am shooting for $500 max owed and/or refunded come April 2009), and I want to avoid the penalties for underpayment as well. I will be keeping a close eye on my earnings each quarter and making sure I pay enough to cover any and all taxes. And hopefully, knock on wood, I won’t have any more major medical issues come up which stopped us from paying them last year. However, getting that debt off our books and paid off was such a relief I would probably do the same thing again!

What about you? Have you ever had to make a decision like this? And if so, what did you do? As for your taxes, do you owe or are you getting a refund this year?


Swap Your Home And Take A Vacation For Free.

How cool would it be to take a vacation overseas (or just across the country) for nothing more than the cost of getting there? That would surely save a ton on hotel costs, especially in Europe with the value of the American dollar so low! There are tons of people taking these types of vacations right now, by swapping their house with someone looking to vacation in their hometown. Live in Los Angeles but always wanted to visit Paris? Just find someone in Paris looking to vacation in Los Angeles and trade places – voila, a free stay for your vacation!

I would imagine that this type of swapping would not be for everyone, as I am sure there are plenty of people who don’t want complete strangers staying in their home without them being there. But luckily there are services that exist that prescreen and rate potential swappers and can set you up with a perfect match for your needs and wants. I guess I could trust a family to stay in my house if they were allowing me to stay in their home at the same time. Besides, the money savings alone would probably be worth it! A few of the sites I found that facilitate house swaps charge an annual fee, but that seems like a small price to pay for free lodging on vacation, no?

While I cannot vouch for any of these organizations, as I have never done any house swapping, here are a few names that popped a couple of times in my searches:

I suppose the key to participating in a home swap is being comfortable with both living in someone else’s home while allowing someone else to stay in yours. Supposedly problems are few and far between, and I can imagine that would be true. After all, you are being trusted while trusting someone else! I think I will keep this in mind for the future should we ever want to vacation overseas somewhere. Have you ever had any experience with home swapping? If so, how was it? If not, would you ever consider it?


Book Review & Giveaway: Nobody Wants A Million Dollars.

This giveaway has ended. Quite a long time ago I was sent this book titled “Nobody Wants a Million Dollars: How to View Money as a Personal Finance Tool Instead of a Life Goal” and I somehow lost track of it. I only just discovered the book again a few weeks ago when rearranging the bookshelf in my office to clear out space for some new books I was expecting in the mail. So, I sat down one afternoon and read through the book, and most everything in the book made sense to me. The author, Dan Holt, makes his point by saying that money is only a tool, not a goal – “Nobody wants a million dollars”. I have been writing about personal finance for almost 3 years now, and I preach the same type of thing; that happiness will not and never will come from having money. If all you are doing in life is constantly chasing the almighty dollar and trying to increase the size of your bank account at any cost, you are just asking for a big letdown.

My goals in life are separate from my desire to have money. I have no need to be “rich” in the common meaning of the word, but rather I desire to be rich in life, not just in the bank. I want to live a comfortable life, doing the things I love, while not working 14 hour days just to make ends meet because I have created a monstrously expensive lifestyle I have to pay for. That’s basically the point of this book – a common sense guide to “managing money in your life, rather than having money manage your life”. Amen to that, Mr. Holt.

Most of the tips and ideas in this book are not new to me, but that is because I have already been living this type of life for quite some time. But for someone looking to actively manage their money AND their life goals, this book is for you. And lucky for you guys, I am giving my copy away to a lucky reader!

All you have to do to enter is leave a comment here on this post (with your email address so I can contact you if you win) and I will randomly select the winner from those who comment. Only one entry per person, open to US residents only (due to shipping costs), and the contest will end Friday, March 20th at 8am MST with the winner being announced later that morning. Good luck to everyone!This giveaway has ended.


What’s In The Economic Stimulus Package For You Other Than Cash?

I get at least a few emails a week asking for more details about the economic stimulus package, so I figured I would go looking for a couple more examples of how it will be affecting you. I already wrote about the cash and paycheck aspects of the stimulus, but there is much more to it than just that.

First and foremost, and something I was worried about, is a change in the AMT exemption. We have come very, very close to this for years, and this year would have been no exception. But thanks to the change in the rules and my self-employed income/write-offs, we missed it again this year. There is a $500 increase in the AMT exemption for individuals making up to $46,700 and a $1,000 increase for couples making up to $70,950. This should supposedly stop over 25 million families from having to pay the AMT, which is great. (By the way, AMT means Alternative Minimum Tax, which is an alternative way of figuring your taxes. The AMT does not allow for the standard deduction, personal exemptions, or certain itemized deductions.)

If you collect social security or disability, you will get a one-time $250 check in a few months. This is because you are not collecting a paycheck to have your taxes reduced inside of, so the government is going to send you a check instead.

Are you thinking of buying a new car? You can deduct state and local sales taxes from your tax return, for purchases up to $49,500. This is only for new cars, so I unfortunately cannot write-off the purchase of my new/used Jeep I bought earlier this year.

If you are a first-time home buyer and buy a house in before December 2009, you can take an $8,000 tax credit that you don’t have to pay back. This is one that I would like to take advantage of, if we can find the house we want AND we can get approved for a mortgage while I am self-employed.

Laid off? You can get an extension of your previous employer’s health-insurance plan, and the government will give you a 65% subsidy of that cost for 9 months. This is very helpful, as paying for Cobra is usually out of the question for many, many people. I remember when I was laid off in 2000 from a dot-com company, and my Cobra insurance would have cost me $600 a month! And for anyone receiving unemployment benefits this year, you won’t pay any federal income taxes on the first $2,400 you receive.

Looking to go green? Homeowners who add energy-efficient windows, furnaces and air conditioners can get a tax credit to cover up to 30% of the costs, up to $1,500. Yet another reason I wish I owned this house…

If you are heading to college soon, there might be more money available for you. The maximum Pell Grant, which helps the lowest-income students attend college, would increase from $4,731 to $5,350 starting July 1 and $5,550 in 2010-2011. Supposedly an extra 800,000 students would now get Pell funding who would not have been able to before.

I could go on and on, as the list of projects being included is very long. But I wanted to concentrate on what was being done on an individual basis and not on the general welfare of the country. These are the ones I found out about; if I am missing anything that affects people as individuals, be sure to let me know!