Archive for the ‘Taxes’ Category

Loanio Roundup – Dia de Los Muertos

Tuesday, March 2nd, 2010
Financial State of the Economy

Financial State of the Economy

Good morning and welcome to the Dia de Los Muertos edition of Loanio’s roundup. Dia de Los Muertos is a holiday celebration that takes place primarily in Mexico and celebrates the dead. It goes by Day of the Dead in English and correspondingly it matches the Catholic holidays of All Saints Day and All Souls Day. Below you will find links in easy to manage categories on the following topics: the economy, small business, p2p lending, and Loanio. See what people are saying and have a great day.

The Economy:

Small Business:

Peer-to-Peer Lending:

Loanio in the News:

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Originally posted 2008-11-02 05:24:16. Republished by Blog Post Promoter

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Should You Pay Off Your Mortgage Early?

Monday, January 4th, 2010

With the trouble in the housing market, those that are financially stable are left wondering whether now may be a good time to pay off their mortgages. There are some definite pros and cons to early payment, and this strategy is one that must be carefully considered before taking action. Let’s look at a few of the considerations that should be thought out ahead of time.

What are the pros and cons of paying off the mortgage?

What are the pros and cons of paying off the mortgage?

Pros

1. Interest rate fluctuations no longer matter.

For those with variable rate mortgages, the past few months have been incredibly stressful. It’s not easy to put your finances through this kind of wringer and in many cases, for those with high interest rates and burgeoning payments, paying off a mortgage early, or at least paying it down, may have many benefits.

2. Freeing up monthly income.

If your mortgage payment is taking up a large chunk of your monthly finances, paying off that loan early can help free up income that can be used for other things, such as paying down debt, or simple living expenses. For those that are finding it hard to make ends meet, dipping into savings to get rid of that high fee loan may not be a bad idea.

3. Lack of worry.

Once that mortgage is paid off, you never have to worry about interest rate changes or problems with the bank. For many people, this kind of peace of mind is more than worth the extra expense of paying off a mortgage. If you are concerned about financial stability in the future, this course of action can provide some relief.

Cons

1. Loss of tax benefits.

Since you can write off the interest that you pay on your mortgage each year, losing this ability can have a big impact on how much tax you pay. For those in a high tax bracket, this may be the straw that breaks the camel’s back. Consider carefully the tax implications that you can face by paying off that mortgage early.

2. Initial expense.

Paying off that mortgage, especially if it is still quite large, could mean that savings may have to be used. In addition to that initial expense, you might also have the loss of extra income if that account was earning interest. In most cases, this would be slight, but for those that rely on additional streams of income, this can have an impact.

3. Penalties.

Most banks will charge a penalty fee if you pay off a mortgage early, or even prepay a large chunk of what you owe. Always read the fine print before you decide to pay early to see just how much you will have to end up paying in extra fees. These may be quite large, so it is vital to take this into consideration.

Any major action requires a good deal of thought beforehand and paying off a mortgage early is no exception. Always take the time to read the fine print and ask your financial advisor about any additional implications you may be facing.

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Originally posted 2009-01-06 05:23:11. Republished by Blog Post Promoter

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How Do Savings Bonds Work? Is My Money Safe if I Purchase Them?

Monday, December 21st, 2009
B is for Bond.

B is for Bond.

These are questions most people ask when they consider buying savings bonds. Yes, your investment in savings bonds is one of the most safe investments you can make. You’re purchasing the bond and giving the government cash, which they pay you interest back on at a later date. It’s rather like the government borrowing a small amount of money from you, and paying interest on the loan.

Savings bonds are issued by the United States government.

They’re non-transferable, which simply means they must be sold by the government. You can buy savings bonds in a variety of denominations, with $50 and $100 savings bonds being quite popular amounts. You pay less than face value for the bond, and it begins earning interest so that when it matures, usually in several years, the bond is worth the face value. Most bonds will continue to earn interest for years after maturity, so by the time you cash in a bond it can be worth much more than its face value. Some bonds will continue to accumulate interesting for up to 30 years, so if you wish you can leave your investment long-term and still continue to earn profits.

Because savings bonds are registered securities, they’re replaceable.

If they’re damaged, stolen or lost, there is a record of your ownership of the bond so you don’t lose your money. And the amount of a savings bond can never go down, so the money you invest in a bond cannot be lost. Savings bonds are also fairly fluid—the money isn’t locked away so that you can’t get to it in the case of an emergency. But if you cash in a bond early, you won’t see the full return as it won’t be worth its face value yet. And bonds cashed before 5 years are also subject to an interest penalty. But for some, that risk is worth knowing that they can withdraw cash from their investment at any time.

When you purchase savings bonds, you do have to pay Federal Income Tax on the interest they earn.

But you can ease this burden on yourself—a wise choice if you have multiple high-value bonds—by paying the tax on this interest yearly. Or you can opt to wait until the bond is cashed in and pay this tax in one lump sum. You’ll only pay federal tax on bonds, not state or local tax, and if you use the bonds toward education, taxes are sometimes waived.

The two types of bonds you can purchase today are Series EE bonds or Series I bonds.

For Series EE bonds (also called Patriot Bonds) you’ll pay half the face value and it will draw interest every month for 30 years. Series I bonds also accrue monthly interest for 30 years, but you pay full face value for the bond and the interest rate varies with the current inflation indexes.

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Originally posted 2008-12-23 05:49:16. Republished by Blog Post Promoter

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Posted in Bonds, Personal Finance, Taxes | 1 Comment »

Child Savings and Investment

Wednesday, December 16th, 2009
What are you doing about your child's savings?

Are you investing for your child?

Having children is not cheap by any means these days, especially when you consider the long term basis. The older your children get, the more they will end up costing you, especially when you consider education costs which are rising with every passing year. It may seem easy to put saving and investing for your child’s future off, since higher education is so far away when your kids are young, but it is absolutely vital that you start saving now if you want to make sure that your children have everything they need in life, even far into the future. Surveys are luckily beginning to suggest that as a whole, we are beginning to realize how important it is to save ahead of time for the future. Saving and investing for the future of your children is a necessary parental responsibility. Here is some basic information on how to save for your children, and a look at some of the available financial products that may help you with this process.

* Bank Accounts –

The first step that many parents take toward saving for the futures of their children is to open a savings account on the behalf of each child, making small cash deposits over time. Most banks have accounts that are designed specifically to tailor to children, often offering a higher interest rate and other incentives like savings club memberships for kids, piggy banks, badges and other toys. Even if you are not sure how often you will be able to make deposits, it is still a good idea to set a deposit account up as soon as possible so that it is there any time you want to put money aside. It is surprising how quickly this money can add up if you are diligent about depositing it.

* Tax –

Children are subject to income taxes on their bank accounts just as adults are. They do receive a tax allowance, and they will not be taxed on the interest as long as their total income does not exceed this allowance over the span of the financial year. This only applies to savings accrued by relative or friend gifts so the money that you deposit will be naturally subject to the tax amount.

* Trust Funds for Children –

Trust funds are a unique way for parents to invest money into their children’s futures, creating a fund that belongs to the child but only after they reach a certain age. Most trusts last until the child turns 18, meaning as soon as they reach adulthood they will have access to a savings fund of money that will help them with purchases like buying a car, going to school and so on. Money can be invested into these funds every year, and you can choose between savings funds, shares funds and stakeholder funds depending on your needs and the needs of your family.

There are lots of other possibilities when it comes to savings methods for your children, including bonds, savings accounts, trust funds, investments, shares and stocks. Some are not designed specifically for children, but all can benefit the child as long as you are willing to manage them on the behalf of your children until they are old enough to handle the management their own selves.

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Originally posted 2008-12-18 05:17:37. Republished by Blog Post Promoter

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How Do Savings Bonds Work?

Tuesday, December 8th, 2009
Savings Bonds

What are Savings Bonds?

Savings bonds are a major offering in credit unions and at banks. It is important to know what savings bonds are all about so that you can understand whether or not they will benefit you in any way. This page is going to take you through some of the basics of what savings bonds are and how they are used.

What are Savings Bonds?

Savings bonds are securities that are issued by the United States Treasury Department. They are designed to provide funding dollars for the United States Government. In return for making use of your money, the government can then pay you interest. This discussion is going to specifically focus on covering EE Savings Bonds and I Savings Bonds.

How much interest is earned in Savings Bonds?

The interest rates generally depend upon the economic conditions. As interest rates in general begin to rise, so will the interest rates that are paid on these savings bonds. If you are looking for exact numbers based on the current conditions, the best resource is the website for the Bureau of Public Debt. In general, you will find that the interest rates are fairly competitive as far as safe, government backed investments go, and you may even benefit from additional tax incentives to enhance the returns that you receive.

What Tax Benefits are offered by Savings Bonds?

This is really going to depend on your individual situation. Depending on your situation, you may be able to earn some really nice benefits simply by using savings bonds. For starters, for example, savings bonds do not pay periodic interest that is subject to an income tax. Instead, they increase in value over the span of years. What this means is that you can delay claiming the interest until your bonds are redeemed, or until they mature, which is around 30 years following their issuance. If you do not want to claim the income now, but you want to claim the income later instead, then savings bonds can make this possible.

Another tax benefit that is associated with savings bonds is the Educational Tax Exclusion, or the Educational Savings Bond Program. If you cash your bonds in for use for qualified higher education related expenses, you may be able to exclude that income all together from your taxes. It is important that you are sure to follow the rule regarding the expenses, income limits and other regulations that exist if you want to take full advantage of this. For more information about this exclusion program, visit the website for the Savings Bond for Education Program.

Finally, savings bond interest is exempt both from state income taxes and local income taxes. What this means is that you can spend more of what you earn without worrying about the taxes. Depending on your state that you live in, this may be a big deal, but it may be insignificant instead so find out about your state’s regulations before you invest.

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Originally posted 2008-12-10 05:03:46. Republished by Blog Post Promoter

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Personal Budget Planning

Thursday, November 26th, 2009
Budget Budget Budget

Budget Budget Budget

Personal budget planning is an important part of keeping a handle on your finances. Because there is so much turmoil in today’s economy, maintaining a healthy personal budget is more vital than ever. Crafting a personal budget begins with determining how money comes in, and how money goes out, but there is a lot more detail that has to go into the personal budget planning process if you want to get the most out of it.

When you consider your income, for example, you should have both a monthly budget amount and a monthly actual amount so you can make sure that you are earning the income that you are expecting. Your income should include not only standard wages and bonuses, but also income from interest, income from investments and income from miscellaneous sources. Budget for all “money in” scenarios, including tax refunds for example.

Because taxes are an important part of your finances, you should also track your income taxes and other taxes in your personal budget planning process. Track your federal income taxes, state income taxes, local income taxes, Medicare taxes and social security taxes by tracking both a budgeted amount and an actual amount each month. These numbers fluctuate, so make sure to track them.

Next, when it comes to tracking your expenses for personal budget planning, there are a lot of categories that you need to consider. You need to consider your mortgage payment or rent, homeowner’s or renter’s insurance, property taxes, home repairs, HOA dues, maintenance costs and home improvements, for example. Utilities that need to be considered include electricity, water and sewer, natural gas or oil, cell phone and land line telephone. Food costs should not only include grocery bills, but also snacks, lunches, eating out, and whatever you spend at the vending machine.

There are also family obligations to budget for that may normally be forgotten, such s child support, daycare, baby sitting and alimony payments. If you have to contribute to your health insurance, don’t forget about monthly health, vision and dental premiums. You also need to consider un-reimbursed medical expenses like co-pays.

There are other expenses to include in your budget planning, including transportation costs like car payments, gasoline, auto maintenance and repair fees, oil, auto insurance and other methods of transportation like bus and taxi costs. If you have debt like loans, student loans or credit cards, or you have debt payments, then you need to include these as well.

If you intend on saving a specific amount of money every month, it would be wise to treat it like a bill, making it a mandatory expense every month rather than something that you remember to do at the end of the month when you’re low on cash. Don’t forget occasional expenses in your budget, like entertainment and recreation costs, subscriptions, vacations, pets, clothing and other investments. If you leave something out of your budget during the personal budget planning process you may end up with no money to cover it at the end of the month.

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Originally posted 2008-11-28 05:01:12. Republished by Blog Post Promoter

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