Search This Blog

Friday, May 3, 2013

THE ACCIDENTAL TAURUS

Earth signs are said to be naturally practical - and a Taurus is all Earth. They are often attracted to material things, but it's less about the objects themselves than it is about the pleasure they bring to the senses. Comfortable living and things that feel and smell nice are important to the Taurus, like clean linens, soft clothing, aromatic food and music. As one of the most practical signs, the Taurus's outlook on life is usually quite sensible.

So how does one balance, "practical" with the want of pleasurable material things? Can a Taurus fight the urge for wanting soft comfortable things, perceived to make life more pleasurable with the practical "carry no balance" motto? 

This Taurus can. 

Credit cards…colorful, shiny, and easy - offering immediate gratification and all kinds of rewards.  They put power, vacations, toys, dinners and YES – debt  in your hands.! Swipe, sign and then…

One credit card gets used to pay off another; the card is used to pay for expenses of daily living;  things you need; things you want; groceries, gas, , monthly bills, and soon there’s a multi-colored library of plastic in your wallet.  For some this is not a problem, if each and every one of them was completely paid in full every month. But, in the more common scenario, they’re gathering interest-on-interest along with new principal  - like a black hole swallows stars.

NerdWallet.com indicates that the average amount of debt for Americans with credit card debt was $15,422. Add average mortgage debt of $149,782, and average student loan debt was $34,703 and that's a whole lot of debt!

When you total everything up, the numbers quickly surpass the average human capacity for comprehension: the total American debt was $11.31 trillion, $858 billion of which was credit card debt (for those of you who like zero's, that is $858,000,000,000). With the numbers so high, it’s no surprise  that late payments are on the rise.

So what can you do about it?  There are five time-tested tricks to help with alleviate current credit card debt, while not accumulating more. 

1) Create a budget - and yes,  I realize I am asking you to use the "B-Word".  Figure out what’s coming in, what’s going out, how, and where. If you want to be successful , you have to be honest with yourself.  Determine where you are and where you want to be. This can be a daunting and emotional process, but the real truth is that, whether your budget looks balanced or unbalanced, tomorrow is a new day. You need to start somewhere, and the point is to get reach your goals.

2) Improve your rates. Make some calls to the credit card companies. Call the credit card companies and ask if they will reduce your rate, even if only for a period of time After all, it’s not like they’ll raise your rates for asking.

3) One at a time.If you pay additional amounts over the minimum amount due each month, the best thing to do in order to pay off the debt faster is to pay one card off at a time. Put all the "extra" towards one card while paying minimums on the others. Then, once the each card is cleared, take the amount you were paying on that card and add it all to the next card. Rinse, wash, repeat. Start this process by focusing all of your attention on the card with the highest interest rate, or the card with the biggest balance.

4) Pare it down. Now that your wallet is full of empty credit cards, figure out which ones you can do without. The ones retail stores give you in exchange for 20% off when you buy $200 worth of stuff are a good start. MIT did a study that showed people who pay with cards are more likely to spend more than people who pay with cash (think casino's and chips here).

5) Keep track of yourself. The last thing you want is to get yourself out of trouble only to climb right back into it. Updating that budget you’ve already made yourself can help make sure you know what money is going where, and you might even find that after a while you’ve earned yourself a little wiggle room.

Most importantly, have patience, with yourself and with the process. If you find yourself frustrated, remember that it is a process.Unless you used your credit card to buy a condo or a boat, accumulating the debt was a process too.




Friday, February 1, 2013

HOME, HOME ON THE CHANGE




Now that we’ve put away the eggnog, shiny party hats, and stopped hearing the phrase “fiscal cliff” every 15 seconds, ’tis the season to be thinking about how the changes in tax code may affect you.

Unless you slept through the last three months, you are probably aware that courtesy of Congress, tax code has changed.  Here are some of the results, for 2013 and the foreseeable future.

The threshold for who can claim an exemption for the Alternative Minimum Tax was raised to account for inflation, meaning that 60 million Americans will not be affected by Congress’s new changes. The Alternative Minimum Tax, or AMT, is a parallel tax system which began as a way to ensure that taxpayers pay at least a minimum amount of tax. AMT has a completely different set of calculations than regular tax. For the regular tax, you add up your total income, subtract out various deductions and personal exemptions, and then the tax is calculated.  AMT, however, does not allow for the standard deduction, personal exemptions, or certain itemized deductions. Also some income which is typically not subject to regular tax is added back in for AMT purposes. Your tax under AMT rules may be higher than your tax under regular tax rules.

Obama’s payroll tax reduction, which we have been enjoying for the past two years, was set back to its original amount. This means that Social Security tax on each paycheck will once again be the full 6.2%. The wage ceiling, on which Social Security is taxed, was raised to $113,700, which means that the first $113,700 you make is subject to the 6.2%. And for those earning $200,000 or more, the tax for Medicare will be taking 0.9% more than last year out of each paycheck.

High-income households, that is, singles making $400,000, or married filing jointly and  earning $450,000, will see rates rise from a previous 35% to 39.6%. This begins as of 2013, however, and will not affect 2012 tax returns. Capital gain rates for this tax bracket will rise to 20% (previously 15%), and will see a 3.8% surcharge for the Affordable Care Act. Affectionately nicknamed “Obamacare,” the ACA includes all of the new healthcare reforms we’ve debated so much about. Some of the highlights of the ACA include coverage for people who have not been covered, lower costs to consumers, and the end of the pre-existing condition clause.

If you are single and earning $250,000, a head of household earning $275,000, or a married couple filing jointly and earning $300,000, the new regulations mean that the old itemized deduction and the personal exemption phase-outs, which were part of tax code for years, will be reinstated. In layman’s terms, this means that you won’t be able to take all of your itemized deductions anymore and your personal exemptions will also be reduced. Don’t despair, though—if you build a racecar track for NASCAR, you can get a tax benefit that way. No, seriously.

Many tax deductions that were applicable last year still stand, however, including being able to get credits or adjustments  for tuition costs, a deductions for those pesky mortgage insurance premiums, and deductions for substantiated charitable donations.

Of course there is a lot more, but no room here for all 157 pages of the new law. So now that you’re all up to speed, “walk into the light.” And no matter how nervous you feel, avoid the Puerto Rican rum, since there’s been a tax on it since 1917 that is now whistling to the tune of $13.50/gallon.

 I’ve found feelings of trepidation can be just as easily conquered by a few aromatherapy candles and a hot bubble bath. But please don’t bring your 1040 with you. Soggy documents will not be accepted, no matter how nice they smell.