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- 03/03/16--04:58: _10 Money Moves to M...
- 03/03/16--05:17: _7 Investment Accoun...
- 03/07/16--06:16: _Final Sales to Begi...
- 03/07/16--06:26: _Seven Unusual Tax D...
- 03/08/16--04:42: _Use These 3 Tax-Red...
- 03/08/16--04:57: _10 Ways to Reduce Y...
- 03/08/16--06:56: _Simple plumbing tri...
- 03/09/16--05:49: _Don't Skip These 8 ...
- 03/10/16--04:57: _Don't Ignore These ...
- 03/10/16--04:59: _10 Smart Ways I'm S...
- 03/11/16--07:13: _Waiting to File Tax...
- 03/11/16--07:47: _8 Surprising Things...
- 03/01/16--02:31: _Everything You Need...
- 03/01/16--11:36: _Saving and Investin...
- 03/14/16--05:28: _10 Surprising Ways ...
- 03/14/16--05:51: _25 Purchases You'll...
- 03/15/16--04:48: _Considering a Fixer...
- 03/15/16--05:57: _Retail Therapy Make...
- 03/15/16--06:20: _Get financially fit...
- 03/16/16--06:31: _10 Household Tools ...
- 03/03/16--04:58: 10 Money Moves to Make After a Promotion
- Keep track of mileage that you have to drive to off-site locations for job-related activities. You can deduct 54 cents per mile for business miles driven in 2016, down from 57.5 cents in 2015. Also, you may use that mileage to allocate a portion of your car expenses, such as insurance and maintenance.
- Being able to telecommute from home allows you to designate a portion of your home as a business office. Use the percentage from your total home space used used for business purposes to allocate allowable deductions using Form 8829.
- Having to dine and wine prospective clients may also be tax deductible.
- Health plans;
- Flexible spending accounts (FSA);
- Telecommuting devices (laptops, smartphones);
- Fund options in retirement accounts;
- Industry conferences; and
- Parking options.
- 03/03/16--05:17: 7 Investment Accounts All 30-Somethings Should Have
- 03/07/16--06:16: Final Sales to Begin at 143 Sports Authority Stores
- New Hampshire
- New Jersey
- New York
- Puerto Rico
- We do not expect there to be any impact on gift card balances or your ability to use gift cards at our stores or online at this time.
- There should be no changes to our return/exchange policies at our go-forward stores or our customer loyalty program, The League.
- If you have a warranty on a product you bought at Sports Authority, it is still in effect for the same period of time.
- This should have no impact on the way you use your Sports Authority credit card or pay your bill.
- 03/07/16--06:26: Seven Unusual Tax Deductions
- 03/08/16--04:42: Use These 3 Tax-Reduction Strategies of the Rich
- 03/08/16--04:57: 10 Ways to Reduce Your Housing Costs in Retirement
- 03/09/16--05:49: Don't Skip These 8 Tax Breaks for Students
- 100% of your first $2,000 qualified education expenses; and
- 25% of next $2,000 qualified education expenses.
- Required by employer of by law;
- Necessary to maintain or improve skills; or
- Indispensable to meet minimum requirements.
- 03/10/16--04:57: Don't Ignore These 7 Financial Time Bombs
- 03/10/16--04:59: 10 Smart Ways I'm Spending My Tax Refund
- 03/11/16--07:13: Waiting to File Taxes? You Might End Up Paying More
- 03/11/16--07:47: 8 Surprising Things You Need to Know About Retirement
- 03/01/16--02:31: Everything You Need to Know About Taxes and Social Security
- Individual filers with a combined income of between $25,000 and $34,000 will pay income tax on up to 50% of benefits.
- Individual filers with a combined income of more than $34,000 will pay income tax on up to 85% of benefits.
- Married filers filing jointly with a combined income (including both spouses) of between $32,000 and $44,000 will pay tax on up to 50% of benefits.
- Married filers filing jointly with a combined income of more than $44,000 will pay taxes on up to 85% of benefits.
- Married filers filing separately will most likely pay taxes on their benefits.
- 03/01/16--11:36: Saving and Investing for Early Retirement: 3 Basic Strategies
- The Massive Investments Method. Many early retirees are heavily invested in stocks, real estate, and other markets. A common benchmark for a couple, both of whom make $35,000/year or so, is $2000 invested monthly. With average market gains, this investment regimen can yield a nest egg of $1,000,000. By using the 4% Rule (controversial; we'll go through this more in a future post), this couple will be able to take $40,000 out of their investment accounts each year, to live on, never fully depleting the portfolio. Ideally, the portfolio just keeps growing and compounding all the live long day, forever.
- The Cash Flow Method. Similar to the method above, the cash flow method is about investing your time and energy in something that will pay off for years to come. Maybe you buy up rental properties, which bring in thousands of dollars each money. Managed by an independent management company who takes a small portion of the products, these properties could bring in more income than you would get from a normal career, with none of the work. Maybe you start a company that continues to pay off with minimal oversight. Maybe you write the 21st century equivalent of the Happy Birthday song, and get royalties for the next 60 years. Whatever the case, you will have created something that pays the bills, which doesn't require you to work for 50 hours a week to sustain.
- The Currency Coasting Method. Finally, many people retire early by leaving their country of origin, to live in a place where their wealth goes much farther. This strategy can (and must) be used in tandem with either of the above, but may require less capital than either. If you move to Ecuador from the United States, you may not need the same amount of investments you'd need to live a comfortable unemployed life in the United States. Your living expenses may drop by ⅘ in Thailand, enabling you to live like a king spending half of what you'd pay to live in London. Lots of people who do this don't retire, per se. They keep working 10-40 hours a week: translating, teaching, blogging, working as entrepreneurs doing this and that. It's not true retirement, but just as many older adults never totally stop working, it's a method of living a more pleasurable life without having to slave away so hard to sustain it.
- 03/14/16--05:28: 10 Surprising Ways Spring Is Gonna Cost You
- 03/14/16--05:51: 25 Purchases You'll Never Regret
- 03/15/16--04:48: Considering a Fixer-Upper? 15 Ways to Avoid a Money Pit
- Home prices are high in many cities, and a fixer-upper may be the only affordable choice in decent neighborhoods.
- Home decorating and improvement TV shows inspire many buyers to turn to remodeling to get a home perfectly suited to them.
- Lovers of period homes always want to restore older structures.
- Galvanized steel pipes: Sediment can build up in the pipes, and they may leak and corrode.
- Aluminum wiring: It's a potential fire hazard.
- It's expensive. Depending on the material you choose, new siding starts at $10,000 to $13,000. Costs increase with the size and complexity of the job.
- It may indicate other problems. Siding may be rotting, blistering or disintegrating because of rot or mold hiding behind the home's exterior.
- Insect wings left on sills (termites)
- Teeny sawdust piles along baseboards (carpenter ants)
- Urine stains, odors or scrabbling sounds (rodents)
- 03/15/16--05:57: Retail Therapy Makes 85 Percent of Adults Feel Good
- Entertainment (i.e., books, movies, music)
- Furniture/home decor
- 03/15/16--06:20: Get financially fit with a home gym -- Savings Experiment
- 03/16/16--06:31: 10 Household Tools Every Frugal Homeowner Should Own
By Damian Davila
Congratulations on your promotion! You've just made another step toward a successful future.
Still, this isn't the time to become complacent. A promotion comes along with new challenges and tasks. To help you make the very best out of your new job, here are the 10 money moves to make after a promotion.
1. Revisit Your Tax Withholding
Most promotions don't come with just a title upgrade, they come with a well-deserved raise. If that's your case, calculate whether or not you need to adjust your W-4 form and submit it to your HR department.
Let's assume that you file a joint return with your spouse and your combined taxable income was $90,000. Your tax due would be $18,293.75 ($5,156.25 + 25% of the amount over $37,450). After your promotion, your new combined taxable income is now $100,000. Your new tax bill is $21,071.25 ($18,481.25 + 28% of the amount over $90,750). Assuming no offsets to your salary bump and no changes to your W-4, you would be $2,777.50 short of your tax bill! (See also: Top Three Tax Facts to Know for 2016)
Use the IRS Withholding Calculator and determine if you need to update your W-4.
2. Calculate Vesting of Company Shares
Vested company shares are another way that your employer could reward you. Very often, these restricted stock units vest over time, meaning that you gain ownership of those shares the longer you stay. The idea is that your employer wants you to perform well and remain with the company. Contact your HR department to find out the vesting schedule of your company shares so that you know how much you would actually take with you if you were to part ways with your employer.
3. Time Profit Sharing and Bonus Checks
When your promotion includes a large bonus or profit sharing check, pay attention to the date that the
payment will be issued on. An elective deferral contribution to your retirement accounts must be deposited by the tax filing due date (April 19, 2016 for Maine and Massachusetts residents and April 18, 2016 for everybody else). For 2015 and 2016, the contribution limit to 401K, 403B, and most 457 plans is $18,000, and to regular and Roth IRA plans it's $5,500. If you're age 50 or over, you can make an additional $6,000 in catch-up contributions. When you haven't met the applicable contribution limit, take advantage of that windfall to fatten up your retirement accounts.
4. Identify Additional Costs
With great power comes great responsibility, Peter Parker! Take stock of the responsibilities of your new position and determine how much additional time you may need to perform those tasks successfully. Having to stay a bit longer at work may increase several costs, including paying higher fees for babysitters or preschools, and dining out more often than before the promotion. Your first weeks in your new position will provide you an idea of how much your budget will need to adjust.
5. Determine New Tax Deductions
The good news is that some of those new-job-related costs may also be tax deductible.
Consult your accountant for more details on allowable deductions.
6. Prevent Burnout
Several human resources experts claim that the first 100 days on the jobare critical, particularly after a promotion. To thrive in your new role - and to maximize your number of fully vested shares if applicable - take steps to mitigate additional stress related to your new job. Whether it's hitting the gym more often, signing up for a new class, or having "pizza day" with the kids once a week, you may have new costs to cope with stress. Make sure to include them in your new monthly budget.
7. Request a Credit Limit Increase
Now that you have a higher annual income, you may be eligible for a higher limit on your credit cards. If you've have been current in all of your payments for the last year, have an account in good standing, and haven't requested a limit increase in several months, contact the issuers of your credit cards to submit your request. Most financial institutions allow you to do this over an online portal, but some may request to contact them via phone.
With a higher credit limit, you can effectively improve your credit utilization ratio, which accounts for 30% of your FICO credit score.
8. Ask for Education and Licensing Subsidies
Most promotions are the result of hard work, and some of them are the result of an important investment that requires a recurrent annual expense.
For example, an architect needs to complete a series of hour requirements and exams to become licensed. Upon becoming licensed, an architect can choose to become a member of the American Institute of Architects (AIA), which has an initial cost of $442 per year and costs $600 each year thereafter to renew. Having the AIA in the title of a lead architect in a project bid makes a company more desirable to clients, so an architect could successfully argue that it's in the company's best interest to subsidize the annual cost of $600.
Similar scenarios take place in other industries, including accounting, engineering, and finance.
9. Inquire About Additional Company Benefits
Your promotion could unlock new or improved perks, including:
Find out what discretionary items are covered by your updated employment package.
10. Hire an Assistant
One time saving hack from the world's busiest people is to outsource non-critical tasks, such as researching travel options, transcribing audio, and scheduling meetings, to an assistant. If your new job doesn't include a personal assistant, then hire a virtual one for about $10 per hour through Upwork, Fancy Hands, or Zirtual.
You'll free up time to be able to focus on higher level priorities.
What are some other things that people should do after a promotion? Share with us in the comments!
By Tim Lemke
You're in your 30s now. If you're finally looking to get settled in your financial life, you may want to consider ways to build wealth over the long term. But that checking account alone isn't gonna cut it. It's time to examine the options out there for someone in their 30s who finally has a little bit of money to invest.
Here are seven essential investment accounts all 30-somethings should have.
1. 401K, If Available to You
If you're employed full-time, your company may offer a retirement plan that gives you access to a number of mutual funds and other investments, plus the great tax advantages that come with it. Under a 401K, 403B, or similar plan, contributions are deducted from your pre-tax income, and most employers will match a certain percentage of what you put in. Now that fewer employers are offering pensions, the 401K has become the primary vehicle for saving for retirement. Pumping cash into this account while you're still relatively young gives your investments plenty of time to rise in value and give you a sizable nest egg. Even better, your investment is tax-deferred until you begin making withdrawals.
2. Traditional IRA
You don't necessarily need a traditional Individual Retirement Account if you have a 401K with an employer match. But if you have 401K from an old employer, it might make sense to roll it into an IRA, because you have a much broader choice of investments to choose from - many with lower fees. With an IRA, you can invest in practically anything, including individual stocks, mutual funds, bonds, and even commodities. Traditional IRAs are also great for people who are self-employed or otherwise don't have access to a 401K. Like a 401K, your contributions are deducted from your taxable income. You can open an IRA at most discount brokers such as Fidelity, TD Ameritrade, and E*TRADE.
3. Roth IRA
This account is a little bit like a 401K in reverse. The tax advantage is on the back end, when you can withdraw money upon retirement without paying tax on the earnings. That's because contributions to a Roth IRA come from earnings after tax, unlike 401Ks, which draw on pre-tax income. Under a Roth IRA, you can contribute up to $5,500 annually, and you can withdraw contributions (but not your gains) before retirement age without paying a penalty.
4. Taxable Brokerage Account
While your main focus should be investing in tax-advantaged accounts that are designed for retirement, it's good to have some investments available in this type of account due to the flexibility. You don't need to wait until retirement age to access funds in this account, for one thing. That means you can use it to boost your income now, through the sale of stock or the gain of dividends. If you hold on to investments in a taxable account for a long time (generally over a year), you'll pay only the long-term capital gains tax (mostly likely 15%) when you sell.
5. 529 College Savings Plan (If You Have Kids)
College is pricey, so nearly every state enables people to save for college by investing money for education in a tax-advantaged way. A 529 plan is similar to a Roth IRA, in that investments will grow tax-free until they're withdrawn, as long as they are spent on higher education. In many states, you also get a tax break from the contributions. It's possible to open a 529 for your child as soon as they have a social security number. Even if you don't have kids yet, you can designate a beneficiary now - such as a niece or nephew - and change it to your own child later. (See also: The 9 Best State 529 College Savings Plans)
6. High-Interest Savings Account
Everyone knows you need a basic bank account, but if you want to boost your savings, it's helpful to have a savings account with a higher-than-average interest rate. These days, interest rates are extremely low, but you can still find returns of above 1% in money market accounts and online banks such as Capital One 360. (See also: Best Online Checking Accounts)
7. Peer-to-Peer Lending Account
In addition to making it easier to invest in stocks, the Internet age has also made it possible for individuals to invest in other people's debt. There are thousands of people who have hopped onto sites such as LendingClub and Prosper and report consistently solid returns. These sites generally work in the same way as banks, except that those in need of money are borrowing from individuals, who are seeking to make money on the interest. In most cases, people can invest based on the risk level of each borrower; those who aren't as creditworthy promise a potentially higher return - but more risk - to the investor. Popular personal finance blogger Mr. Money Moustache has reported more than an 11% annualized return since 2012, and many others report similar gains. (See also: How to Make Money with Prosper)
How many of these accounts do you have?
Filed under: Market News
By Karla Bowsher
Sports Authority won court approval Thursday to begin final sales at stores that are slated to close.
The store closings will happen over the next three months, the retailer said in a website announcement Wednesday.
Court approval of Sports Authority's proposal to close 143 stores came one day after the company filed the proposal as part of a petition for bankruptcy protection under Chapter 11 of the U.S. bankruptcy code.
By filing under Chapter 11, Sports Authority has the option to restructure its business to be able to pay down debts, rather than to liquidate the entire business.
The privately held company explained in its online statement, which is signed by Michael Foss, Sports Authority's chief executive officer:
We have decided to utilize the Chapter 11 process to implement a financial and operational restructuring that we believe is necessary to help us become an even better place for our customers to shop for sporting goods.
Due to the changing retail environment, we have a long-term plan to streamline and strengthen our business so we can continue to make necessary investments in our operations, including upgrading our in store experience and enhancing our website. As part of that plan, we have identified approximately 140 stores that we intend to close or sell in the coming months.
The 143 stores slated to close are located in the following 26 states and Puerto Rico.
The retailer also notes on its website that "customers should not be affected" by the restructuring:
Were you surprised by the news of Sports Authority's filing for bankruptcy, or by the number of stores slated to close? Share your thoughts below or on Facebook.
Filed under: Tax Deductions
We have all heard cases of strange failed tax deductions, such as writing off a personal racehorse as a business entertainment expense, a toothless actor being unable to write off his dentures, and our personal favorite - a business owner who had his store burned by an arsonist, claimed the insurance as income, and tried to deduct the arsonist's $10,000 fee as a business expense. Some people just don't know when to stop.
However, there are more than a few odd tax write-offs that do manage to pass IRS scrutiny, or are later approved by the Tax Court. They probably will not apply in your case, but who knows....
1. Addiction Treatment - Certain types of addiction treatments may be written off under Medical and Dental expenses. Examples include smoking cessation programs (but not nicotine gum or patches), weight loss expenses that are related to specifically diagnosed diseases such as obesity and high blood pressure, and inpatient treatment for alcohol and drug addiction.
For the majority of taxpayers, addiction treatment expenses (along with other medical and dental expenses) may be deducted beyond the threshold value of 10% of your adjusted gross income (AGI).
2. Breast Implants - While cosmetic procedures are not normally deductible, an exotic dancer successfully argued that her breast implants were a necessary part of her business, and that without the implants, she would lose income to other exotic dancers. Insert your own joke here.
3. Breast Pumps - Is anyone sensing a theme? Breast pumps as well as other devices to increase lactation for new mothers are deductible as necessary medical devices.
4. Clarinet Lessons - Clarinet lessons in general are not deductible, but if they are part of an orthodontist's regimen to help deal with an overbite, they may be deductible as a medical expense. The way a clarinet is positioned in the mouth decreases the pain of an overbite. Both the cost of the clarinet and the lessons may be deducted.
5. Guard Animals - If you use a guard dog or other animal to protect your property, you may be able to deduct some of the costs of caring for that guard animal. The Tax Court even allowed cat food to be deducted for a cat that was deemed necessary to a junkyard to keep it free of rats and snakes. Presumably, you would have a difficult time deducting a guard opossum or halibut.
6. Pet Moving Expenses - Moving expenses associated with job relocation include the expenses of relocating your pet, and all of those expenses are deductible above-the-line - meaning they reduce your adjusted gross income (AGI) and can be taken whether or not you itemize.
These expenses may not be much if your move is a relatively short drive but shipping your dog or cat across the country is relatively expensive - not to mention transporting your horse.
7. Lawn Care and Landscaping - You may be able to deduct lawn care and landscaping expenses if they are an integral part of your home business. You must be a sole proprietor who regularly meets with clients in the home office, and you must show why the landscaping is relevant - perhaps your business caters to upper-income clients that would be reluctant to do business with you, or your home business involves gardening or landscaping.
These cases all illustrate one fact - if you can make a reasonable argument, the IRS will at least consider unusual tax deductions. Prepare your argument carefully and use common sense to the extent possible. We strongly discourage anything that involves arson!
Filed under: Taxes
By Brittany Lyte
Even more than a house or a top-notch college education, income taxes are probably the single largest expense you'll ever encounter in life. And you already know there are all sorts of little tax tricks that can be used every year to shave off a little of your overall debt to the IRS. What you probably didn't know is that there are a few more advanced strategies, mainly utilized by the millionaire's club, that can greatly reduce - and sometimes completely eliminate - your taxes. And they work just as well for the everyman (that means you!) as they do for members of the upper crust. (See also: 16 Great Tax Deductions You May Have Missed)
Intrigued? Read on for our guide to making the tax-reduction strategies of the wealthy work for you.
1. For People Who Own Stock
Warren Buffett's tax rate is effectively lower than the rate paid by the people who clean his office, and the strategy he uses to pull it off can also work for you. Most of Buffett's income is from dividends, which are taxed at a lower rate than ordinary income. But if he were to simply sell his shares for cash, he'd still get hit with a pretty hefty amount of capital-gains taxes.
For example's sake, let's say he has $200 million worth of stock that he wants to redeem for cash. If he sells, he'll be required to turn over a hefty $30 million, or so, in taxes. But if he borrows $200 million from an investment bank and uses the shares as collateral, he'll get the cash while avoiding having to fork over a small fortune to the IRS. Buffett's strategy of cashing in on stock without losing any gains is a smart one that you can use, too. In fact, Robert Willens, who runs an independent firm that advises investors on tax issues, told Bloomberg Business it's a tax-reduction ploy that's "alive and well."
Sound too complicated for you? Here's an easier trick: When you sell stock for profit, consider also selling any losers in your portfolio. This technique, known as "tax loss harvesting," can help you potentially shave thousands off your tax bill, since the IRS will subtract your losses from our gains for tax purposes.
2. For Commercial Property Owners
Here's a tip from the tax-avoidance pros, as explained by Bloomberg Business. The idea is to relinquish your property ownership in exchange for cash without getting hit by big capital-gains taxes. First, establish a 50-50 partnership with a partner for any properties you own. Then, allow one partner to cash out. If we're talking about a $100 million office building, a 50% cash-out would trigger about $7.5 million in capital-gains taxes.
Now, the partner who's cashing out needs to turn his ownership of the property into a loan. So the partnership borrows $50 million and puts it into a new subsidiary partnership, which contributes the cash to yet another new partnership. This newest partnership lends the $50 million to a finance company for three years in exchange for a three-year note. The partner cashing out now owns a loan note valued at $50 million, effectively liquidating his 50% interest. Three years later, the note is repaid and the partner gains ownership of 100% of a partnership sitting on a $50 million pile of cash - without triggering any capital-gains tax.
3. For Residential Real Estate Owners
Bill and Hillary Clinton use trusts to eliminate estate tax, and so can you. Here's the secret: create residence trusts and shift ownership of your home(s) into them. That's it! The advantage here is that any appreciation in the value of your property will fall outside the umbrella of your taxable estate. While your tax savings might not be huge at first, they could become quite significant a few years down the road. "The goal is really be thoughtful and try to build up the nontaxable estate, and that's really what this is," David Scott Sloan, a partner at Holland & Knight LLP in Boston, told a reporter for Bloomberg Business. "You're creating things that are going to be on the nontaxable side of the balance sheet when they die."
Filed under: Retirement
By Emily Brandon
1. Affordable housing
Housing is often your biggest retirement expense. But there are a variety of ways to cut your housing costs in retirement. Here are some ways to pay less for housing after you retire.
2. Pay off your mortgage.
When you pay off your mortgage, you eliminate one of your most significant monthly bills. While you will still have to pay for insurance, maintenance and taxes, those costs are likely to be a fraction of your mortgage costs. Your retirement savings will stretch much further if you no longer need to make a large housing payment every month.
There's no need for a large house with several stories and a spacious yard once your children grow up. Downsizing to a smaller home that costs significantly less can give a quick boost to your nest egg and eliminate many of the responsibilities of maintaining a large or aging home.
Once you retire, you don't have to live in a high-cost city because it's close to your job. You can choose to live anywhere in the world that has the amenities, weather and entertainment options you desire. Start dreaming about the beach, a golf community or a college town. Once you exit a large city, you might even be able to buy a newer or bigger home for less money.
5. Reduce property taxes.
Senior citizen homeowners who are older than a certain age and sometimes below a certain income cutoff qualify for property tax discounts in some jurisdictions. Find out when you might become eligible for property tax breaks in your area, and factor in property taxes and any exemptions provided to retirees before making any moves.
6. Become a renter.
Maintaining an aging home can be expensive and a lot of work. Selling your home and becoming a renter frees up the cash that was tied up in your home, makes someone else responsible for the upkeep of the property and might allow you to relocate to a city center that is walkable and close to shopping and entertainment options. However, renters could be subjected to significant rent increases or asked to move, which can be difficult to cope with in retirement.
7. Reverse mortgageRetirees ages 62 and older who are committed to staying in their current home can use a reverse mortgage to tap their home equity to pay for living expenses. However, reverse mortgages charge a variety of fees, and if you move or sell the home, the loan becomes due. Plus, your children won't be able to inherit the home unless they pay off the loan.
8. Move in with your children.
Multigenerational households can provide benefits to both adult children and retirees. Grandparents might be able to help with childcare and meal preparation, while also being provided with eldercare when it's needed. While there is certainly the potential for conflict, a thoughtful arrangement could reduce the expenses of all the involved family members.
9. Share your living space.
Many retirees end up living alone after a spouse passes away. But roommates aren't just for young people. Retirees can split the rent or mortgage payment and gain some pleasant company if they live with other retirees. While you'll need to decide who does which chores, it's often nice to have someone to share meals or watch TV with.
10. Rent out a room.
If you have more bedrooms than you need, you might be able to make some money renting out a room. Some retirees take on long-term tenants, while others might make some extra cash on an occasional basis when there is an event in town. There are now several web services that can connect you to short-term renters online.
Bonus. Sell your stuff.A family home accumulates a lifetime of equipment for discarded hobbies and electronics you seldom use. Gather up the things collecting dust in your basement and garage and try your hand at selling them. Your house doesn't have to be a storage container for children who have moved away, and you might be able to make some cash from people who can use the things you no longer need.
But there's hope: Some of these issues are actually easy and inexpensive to fix on your own. And if we can do it, so can you.
Leaky toilets are a common issue and can raise your water bill. But how do you know you if even have a leak?
Here's a simple test: Put a few drops of food coloring in the tank and wait 15 minutes. If you see any color appear in the water below, chances are you have a leak. The culprit may be a worn-out flapper in the tank. Luckily, they're easily replaceable for less than $3.
The water level is another thing than can cause some problems. If you're toilet's running, the level is too high. Weak flush? It's probably too low.
But that's an easy fix too. If you open the lid of your tank, in most models, you'll see a fill valve on the left side. Turn the screw on top of the fill valve to adjust how high or low you need your water to be.
Finally, don't be so quick to throw out that leaky showerhead. It could just mean you need a little plumber's tape. Remove the showerhead, and clean off any old tape from the ring. Then simply wrap new tape in its place in a clockwise direction so it doesn't come off when you screw it back on.
And there you have it! Now that you know these simple tricks, try them out -- and save the plumber for the bigger stuff.
Related: 10 cheap home fixes
By Damian Davila
Dear students, I'm sure that you have heard the news: Every single year the average student loan debt per borrower is increasing. For example, the average class of 2015 graduate with student loan debt will owe a little more than $35,000.
Still, there is a silver lining: College students and grads often qualify for significant tax breaks and deductions. To minimize your tax bill and increase your chances of a refund, here are eight tax deductions and breaks worth knowing about.
1. 529 Plans
If your parents or other donor started a 529 plan for you, you're in luck. Also known as qualified tuition programs, 529 plans allow individuals to save for education expenses on a tax-deferred basis and allow a designated beneficiary (ideally, that's you) to use those funds, including interest gains, for qualified expenses free of taxes or penalties.
But few people know that you can also start a 529 plan for yourself. Yes, if you anticipate returning to school for any reason, you can save for related expenses in your own 529 plan - at any age. The list of qualified education expenses goes beyond tuition and academic fees, including expenses for room and board, transportation, equipment, and accommodations for individuals with special needs, so adults can benefit, too. (See also: The 9 Best State 529 College Savings Plans)
2. Qualified IRA Distributions
Qualified distributions taken from a traditional IRA for use in qualified higher education expenses create no tax burden or penalty for you, assuming you only withdraw contributions, and not any earnings on the contributions. (Note: If your spouse, parent, or grandparent takes distributions from their own plans to fund your educational expenses, they would have to pay applicable income taxes on those funds, but don't have to pay the early distribution penalty which applies if under age 59 1/2.)
3. American Opportunity Credit
Replacing the Hope Scholarship credit, the American Opportunity Credit allows you to cover up to $2,500 of undergraduate college costs, including:
Keep in mind that you can claim the American Opportunity tax credit on your own academic expenses or on those of your spouse and kids. This means that you can claim up to $2,500 per student living in your household. However, to be eligible for the full credit, your modified adjusted gross income must be $80,000 or less (those making more receive a reduced amount of the credit).
Another advantage of this tax credit is that 40% of it is refundable, meaning that the IRS will issue a refund for that amount even if you don't owe any federal income tax.
4. Lifetime Learning Credit
The Lifetime Learning Credit allows you to deduct up to 20% of your first $10,000 in qualified education expenses, up to $2,000 per taxpayer.
Unlike the American Opportunity Credit, the Lifetime Learning Credit isn't refundable. You can use it to reduce any tax that you owe, but won't receive a refund for the unused portion when your tax bill is already zero.
However, the Lifetime Learning Credit doesn't require you to be working towards a degree like the American Opportunity Credits does. A single class makes you eligible for this tax credit.
To claim the American Opportunity and Lifetime Learning Credits, file Form 8863 with your federal return.
5. Business Deduction for Work-Related Education
The IRS allows you to deduct the costs of qualifying work-related education as business expenses as long as the education is:
You can also deduct qualifying transportation and travel expenses necessary for completing the education. For example, you can deduct 57.5 cents per mile driven and 50% of meals when traveling overnight for education purposes throughout 2015.
Make sure to keep all records, such as transcripts and catalogs of coursework, and receipts from all of your education expenses to provide sufficient support, especially in case of an IRS audit. A best practice is to obtain a statement from your employer providing details about your required education and reimbursements.
For more details, consult Chapter 12 from IRS Publication 970.
6. Coverdell Education Savings Account
Students under age 18, or of any age with special needs, don't pay any tax on distributions from Coverdell Education Saving Accounts for qualified education expenses at eligible institutions.
While there is no limit on the number of Coverdell Education Savings Accounts that can be opened for the same beneficiary, the total cash contribution to all accounts on behalf of the beneficiary cannot exceed a total of $2,000 per year. Contributions can only be made in cash.
7. Education Savings Bond Program
Series EE bonds issued after 1989 and Series I bonds qualify for the Education Savings Bond Program, allowing you to not pay tax on the interest earned on those U.S. savings bonds. While you can take the tax deduction for your own education, you must be at least 24 years old before the bond's issue date.
For additional eligibility criteria, such as modified adjusted gross income tiers, consult Chapter 10 from IRS Publication 970.
8. Scholarship and Fellowship Grants
Last but not least, the IRS exempts students from any taxes on funds from scholarship or fellowship grants that don't exceed qualified education expenses or represent payment for teaching, research, or other services.
To increase the combined value of educational credits and other types of educational assistance, the IRS recommends to coordinate Pell grants and other scholarships by including some or all of the additional assistance in income in the years it's received.
What are other tax deductions and breaks available for students?
Filed under: Budgeting
By Geoff Williams
It's a question everyone asks when they end up paying an unexpected and expensive bill. What went wrong?
Too often, what went wrong is that a problem was ignored until suddenly there was no ignoring it. Almost of all of us, unless we're highly organized, are susceptible to financial time bombs. In the spirit of keeping these from decimating your bank account, here are seven big ones to consider.
The dryer vent. Forgetting to empty a dryer vent, something that costs nothing but time, can, over time, lead to a home fire, which, of course, can do hundreds or thousands of dollars in damage, says Jonathan Heuer, co-owner of Home Square, a professional home maintenance company in Stamford, Connecticut.
Heuer isn't being an alarmist. According to the U.S. Consumer Product Safety Commission, more than 15,000 fires are started every year by clothes dryers.
The sump pump. The average cost to purchase a sump pump is $442.53, according to Angie's List, and if you have someone install it, expect to tack on a few hundred or more dollars.
Still, that's far cheaper than dealing with the results of a neglected sump pump. Heuer says a colleague of his had a broken sump pump and a blocked drainage line. The colleague didn't fix either and ended up with $15,000 in damage.
The air filter in your furnace. A filter costs about $7, says Mike Catania, co-founder of the coupon and promotion code website PromotionCode.org. But neglecting to change your filter - generally recommended every other month or so - "can cause debris to build up that can shorten the life of your furnace by five years, cause a myriad of respiratory problems and make you lose out on up to 15 percent savings on your electric bill," Catania says.
Water spots on your wall. "You may see the smallest leak on your drywall and think that it is isn't a big deal at all," says Ron Schmedly, who lives in Cincinnati and became an unwitting expert on financial time bombs at home.
He and his spouse didn't think a minuscule leak in the family room by the chimney was a big deal, and they ignored it for a couple of years.
But the leak and the resulting damage got worse. What probably would have been several hundred dollars for a handyman to fix became something much more expensive.
"We had to replace 25 percent of the chimney this year at a cool $12,000 because we waited too long to repair the initial damage," Schmedly says.
Gutters. Cheryl Reed, a spokeswoman for Angie's List, says you really should clean your gutters.
"Ever see little trees growing in the gutter? ... Ignoring the gunk collecting up there will lead to serious water damage, not to mention the gutters," she says.
According to Angie's List, homeowners spend, on average, $125 to $175 to get gutters cleaned. Judging from various home improvement sources on the Internet, gutter replacement would likely cost about 10 times what it would to get gutters cleaned - and, of course, water damage to your home can easily set you back thousands of dollars.
Insurance. Not buying any or enough insurance is a big mistake, says Holly Wolf, chief marketing officer at Conestoga Bank in Chester Springs, Pennsylvania. (Her bank doesn't sell insurance, nor does anyone in her family.)
"It's just something I believe in," Wolf says of insurance, and she makes the observation that frequently people will get, for instance, cheap car insurance, but then if they're unlucky enough to have a claim, "they get no support and battle [the insurer] every step of the way."
Your car. As a general rule, regular car maintenance is smart, and if you hear a suspicious sound or your vehicle acts weird, you'd do well to check it out.
Thomas Wooldridge, a marketing consultant in Atlanta, says that last summer, his car engine was making odd noises. And while he thought the sound was strange, he ignored it.
"I knew I had to get it checked out but kept on delaying. Then one day last summer, I was 50 miles away from home and heard a loud bang in the engine," Wooldridge says. "I immediately lost all engine power and was only on batteries. The car was slowing down by itself, and the gas pedal was not responsive. The power steering wasn't working either and [the] only thing I could do was pull over on the side of the road."
It turned out to be a faulty water pump.
"A simple $200 water pump repair that I should have done weeks earlier cost me over $2,400 worth of engine damage," Wooldridge says.
Of course, your life may have many realms: home, car, health, kids, pets. If you have a lot going on, and especially if you're on a tight budget, it can be hard and seem impossible to anticipate all the potential problems that could drain your finances.
Still, it's worth trying. As Heuer says, "Take care of the small stuff early, and it won't kill you down the road."
Filed under: Taxes
By Mikey Rox
For the first time in what seems like ages - at least six years - I don't owe the IRS one red cent on my taxes. In fact, this year the government is going to pay me. I have grand plans for the extra influx of cash, mostly to tie up several financial loose ends. Take a look at this list of where my refund money is going, and make a plan to spend yours just as smartly.
1. Paying Off an Outstanding Medical Bill
Very annoyingly, I received a doctor's bill many weeks ago that was well above what I was expecting. I let it go for a while because I needed to call the doctor's office and cross-reference the fees with my insurance company to make sure everything was legitimate. Unfortunately, the charges were valid (not the outcome I was hoping for), so I have to pay up.
If you have outstanding medical bills, consider using all or part of your refund to tackle this debt. One bonus: Many hospitals and physicians will allow you to create interest-free payment plans to tackle your bills, making it unlikely you'll need to drop your entire tax refund on them.
2. Scheduling a Car Maintenance Appointment
The last time I had my oil changed, the mechanic told me that my car needed an alignment. It wasn't something I was prepared to pay for at the time, but I'll have it done now that I have the extra dough. While I'm there, I'll also have a few other issues taken care of, like a recently burnt-out headlight and the buffing of a dent that someone put in my car in the mall parking lot.
3. Pet Expenses
In the winter, I let my babe's fur grow a bit longer than I normally do throughout the rest of the year - cold weather and all. But spring is just around the corner, so it's time for a trim. And maybe a treat or two.
More importantly: Is your pet overdue for a trip to the vet? Spending some of your tax refund on your furry friend's health might be much appreciated - and save you from bigger vet bills in the long run.
4. Household Maintenance
It's not smart to let household maintenance go, and with your wallet is flush, now's the time to cross those to-dos off your list.
Stocking Up on Household Necessities
I host a lot of guests on a regular basis, so not only am I constantly cleaning the house - causing me to burn through cleaning supplies rather quickly - but I also go through a decent amount of kitchen and bathroom paper products. To cut costs and trips to the store, I buy these items in bulk and store them so I always have them on hand. And since they're not exactly cheap, now is the right time to stock up.
Having the Carpets Professionally Cleaned
I totally dread having to replace my upstairs carpeting (I wish I didn't have it at all!), so I'm keen to keep it in good shape. That means having it professionally cleaned (which isn't as expensive as you might think) to combat the wear-and-tear of constant human and animal traffic.
Hiring a Landscaper to Clean Up the Yard
I love the outdoors, but I hate doing yard work. Thus, a portion of my refund will go to my friendly neighborhood landscaper who will clean up the fall and winter gunk so the my property can shine when the weather gets warm again.
Making Minor Fixes Around the House
We all have those tiny things that we need to fix around the house, but sometimes they're so insignificant that they don't warrant a trip to the store for supplies just for that one little problem. Refund time is a perfect time to make a list of what's dead or not working - like light bulbs, remote batteries, and other easy, inexpensive fixes.
Completing Forgotten or Overlooked Home Projects
I plan to hire a handy person - likely a student looking to make a quick few bucks - from Craigslist to help me finish a few put-to-the-side projects, like fixing a hole in my bathroom wall, hanging shelves, and cleaning up the basement. Much cheaper than hiring a professional company at professional prices.
5. Paying for My Spring/Summer Sports Leagues and Gym in Full
I enjoy staying active physically and socially, so I participate in several leagues, including shuffleboard (don't laugh!), bowling, and trivia. While I have some extra padding in my pockets, I'm paying for all those upcoming fees in full, mostly so I don't have to stop by the ATM several times a week. The same goes for gym or fitness class expenses. Pay for those suckers in full for a year, and save big on membership costs.
6. Buying Gifts for Upcoming Events
Wedding and baby shower season is coming, and if you're not careful, these events can really hit you where it hurts - your wallet! I know I have a few coming up, so I'm buying the gifts in advance. That way I'm not caught off guard in a few months when I've forgotten that I need to buy yet another toaster oven or playpen.
7. Taking Dry Cleaning and Alterations to the Cleaners
All winter long I keep separate clothes hampers in which I put my wool and other dry-clean-only garments along with any items that need alterations or repairs (like missing buttons). Since the cold season is coming to an end, I plan to have it all cleaned/repaired in one fell swoop so I can put everything away in perfect condition so it's ready to go for next year. This prevents me from making unnecessary new clothing purchases by keeping my existing wardrobe in good repair, year after year.
8. Paying Off Upcoming Trip Expenses
I have a spring birthday, and since I'm not a fan of public displays of birthday affection, I try to travel by myself when it rolls around. This year, I'm headed to three previously unvisited Major League Baseball stadiums (my goal is to see a ballgame in all of them by age 40), for which I'll need airfare, lodging, and a rental car. While it's not a super expensive trip, it's not exactly a drop in the bucket either, so my tax refund is a good way to fund this excursion now, so I can relax when it's actually time to depart.
9. Settling Long Overdue Debts
Interestingly, I have a smallish tax bill from 2013 that keeps popping up every now and again, and until recently I didn't know what it was for. I called the IRS and figured it out, so I plan to pay it off with my refund. If you have any bills like this - perhaps a credit card bill - you should think about doing the same. Get it out of the way and off your back. You'll instantly feel better.
10. Putting the Rest in Savings
Whatever remains of my refund will go straight to savings. I've wrapped up a lot of items on my to-do list, so if there's any excess cash, I plan to save it for surprise expenses in the future or to continue building my fund for a future investment. You can never go wrong with putting some money away for a rainy day.
And of course, it goes without saying that if you don't have a rainy day fund, likely the best thing you can do with your refund money is to put most or all of it toward an emergency fund.
Are you receiving a refund this year? How do you plan to spend it smartly? Let me know in the comments below.
Filed under: Taxes
By Karla Bowsher
Filing your tax return late in the season doesn't just add to your stress level. It can also add to your filing costs.
Some do-it-yourself tax-filing software companies charge procrastinators higher rates, a practice known as "price surging." Bloomberg Business reports that they include TurboTax, H&R Block and TaxAct.
The publication explains:
They offer cheap, sometimes even free services to early filers. Then, usually in late March, they slap customers with price hikes of 30 percent or more. Sometimes they continue ratcheting prices up in the days before the deadline.
Even free filing options aimed at taxpayers with the simplest of tax situations dry up toward the end of the tax season.
For example, TurboTax ended its "Absolute Zero" offer in mid-February last year, according to Bloomberg. This free service is for taxpayers who can file using the simple tax forms 1040EZ or 1040A and meet other criteria.
A spokesperson for TurboTax's parent company, Intuit, tells Bloomberg that charging lower prices earlier in the tax season encourages taxpayers to file as early as possible, which helps the company ensure it can provide good service during the busiest parts of the season.
This year, though, TurboTax was still advertising its Absolute Zero service on its website home page as of this morning.
TaxAct, which has matched its competitor's offer of a no-cost federal and state filing option, was also still advertising the service on its website homepage as of today. (Please note that our link to TaxAct is an affiliate link. That means that we may get a commission if you decide to purchase anything from TaxAct.)
Click here and learn to slash your taxes with our new tax course!
Additionally, TaxAct offers what it calls a "Price Lock Guarantee" that allows procrastinators to lock in early-season prices and still file later on. Here's how the company describes it:
We guarantee that if you complete your return using any of our online products, you will pay the product price listed for that product at the time you started your return.
If we charge you more than the price listed at the time you started your return, we will reimburse you for the difference.
H&R Block did not respond to Bloomberg's requests for comment on its online price strategy, according to the publication.
To learn more about how to keep as much money in your pocket as possible when filing with Uncle Sam this year, be sure to check out Money Talks News' new course taught by Stacy Johnson: "Mastering Taxes: Slash Your Taxes and Have Fun Doing It!" (Readers can save 28 percent via that link.)
How do you avoid added stress and costs when filing taxes? Let us know what works for you below or on Facebook.
Filed under: Retirement Plans
By Rachel L. Sheedy
As you advance toward retirement, it's a good idea to start sharpening the focus of your retirement vision. You need to figure out how you'll spend your time, what your retirement budget will look like and where your money will come from in retirement.
But as you build your retirement plan, you may discover a few unexpected twists along the way. The sooner you confront them, the better you can prepare. Here are eight surprising things you may not know about retirement.
Social Security Benefits and Retirement Savings Are Taxable
Once you start receiving Social Security checks, it may come as a surprise at tax time that Uncle Sam wants some of that money back. As much as 85% of Social Security benefits are taxable, depending on your income. In 13 states, you'll owe state income tax on your Social Security benefits, too.
Withdrawals of pretax money that you contributed to a 401(k) or a traditional IRA throughout your working years also will trigger a federal and possibly a state income tax bill. (The one bright spot: Withdrawals from a Roth 401(k) or Roth IRA will be tax-free in retirement. After-tax 401(k) contributions and nondeductible IRA contributions can be taken out tax-free, too.)
When devising your retirement income plan, take taxes into account. By having taxable accounts, tax-deferred accounts and tax-free accounts, you'll have some flexibility in managing and possibly reducing your annual tax bite in retirement.
Retirees Get a Lot of Tax Breaks
Although retirement-account withdrawals and Social Security benefits are subject to tax, there is some good news for retirees when it comes to taxes: A lot of tax breaks are available for retirees. Taxpayers 65 and older, for instance, qualify for a bigger standard deduction on their federal tax returns.
Many states offer tax breaks on all or part of your retirement income. Mississippi, for instance, doesn't tax any retirement income. Tennessee and New Hampshire, which only tax dividends and interest, both offer breaks on those taxes to seniors. Some states offer special breaks for retirees on sales taxes and property taxes. Check out the tax breaks your state offers by using Kiplinger's Retiree Tax Map.
Medicare Does Not Cover All of Your Health Costs
When you hit age 65, it's time to enroll in Medicare. But just as with the health insurance you've had throughout your working years, you'll have to pay premiums for Medicare coverage and co-pays on covered services. And some services -- such as long-term care -- aren't covered at all.
The average 65-year-old couple will pay $240,000 in out-of-pocket costs for health care during retirement, according to Fidelity Investments. And that does not include those potential long-term-care costs.
Buying a medigap supplemental insurance policy can help cover some of your out-of-pocket costs. Or instead of traditional Medicare and a medigap policy, you can enroll in Medicare Advantage, which provides health coverage through a private insurer.
Also consider buying a long-term-care insurance policy, which can help pay for home health aides or care in an assisted-living facility or nursing home.
Senior Discounts Aren't Always a Good Deal
You know you've made it into your golden years when you have earned the right to a senior discount. Usually these discounts are offered to folks 60 or older, though some (such as AARP member discounts) may be available starting at age 50.
But buyer beware: Sometimes other discounts can save older consumers more money. Comparison shop before accepting a discounted senior rate. For instance, if you're booking a stay at a hotel, find out if the hotel offers a senior rate. Then double-check with a discount travel Web site, such as Hotels.com, to see if you can score a better deal on the price. Also determine whether other discounts, such as an AARP or AAA member discount, might beat the hotel's own senior rate.
Turning Half a Year Older Matters
Many youngsters like to cite their age in half years, such as "five and a half" or "seven and a half." In retirement, you'll resurrect that thinking because two key milestones rely on half years. And if you aren't mindful of them, you could end up getting socked by Uncle Sam.
Once you hit age 59 1/2, you are no longer subject to the 10% early-withdrawal penalty if you take money out of your IRA or 401(k). Withdrawals of your earnings from a Roth IRA will no longer be subject to that penalty, either (assuming you've owned a Roth IRA for at least five years).
And starting in the year in which you turn 70 1/2, you must take required minimum distributions from traditional IRAs and 401(k)s. More on RMDs in a moment . . .
You Must Withdraw From Your Nest Egg
Once you turn age 70 1/2, Uncle Sam mandates that you take required minimum distributions from traditional IRAs and 401(k)s (except from the 401(k) of your current employer if you are still working and own less than 5% of the company). If you haven't taken your first RMD by April 1 of the year following the year you turn 70 1/2, Uncle Sam will sock you with a hefty penalty -- 50% of the shortfall. For instance, if your RMD was supposed to be $10,000, your penalty will be $5,000.
But just because you have to take money out of the tax shelter doesn't mean you have to spend it. If you don't need the money to live on, you can instead reinvest the money in a taxable account.
Your Nest Egg May Need to Stretch for Decades
Workers saving for retirement are often focused on their retirement date. But that's only the beginning of potentially decades that your nest egg is going to have to provide your income. If you retire at 65 and die at 95, that's 30 years of annual income you'll need -- which could be almost as long as your working career. Life expectancies are increasing, and the odds are good that at least one spouse, if not both, is going to live into his or her nineties. (You can check out your estimated life expectancy with online calculators.)
When creating your retirement income plan, there are a number of ways to protect against "longevity risk" -- that is, the risk of living longer than your money lasts. Consider keeping stocks in your nest egg, which can provide growth over the long term and help protect you from the risk that inflation will eat up your money.
A smart move to maximize lifetime Social Security income is having the higher earner delay his or her benefit until age 70, which will boost that benefit by 32% a month for those whose full retirement age is 66. That boosted benefit will last the lifetime of the surviving spouse; it can't be outlived, and it comes with an annual inflation adjustment, too.
Another option to make sure you have money to live on in your old age: Consider a longevity annuity. This annuity requires a smaller investment up front in exchange for bigger guaranteed annual payouts that typically start around age 85. New government rules allow you to invest in one through retirement accounts.
You Can Keep Saving for Retirement
If you are still working later in life, even part-time, you can still save in tax-advantaged retirement accounts. If your employer offers a 401(k), you can contribute to that plan; consider socking away at least enough to get any company match.
After you hit age 70 1/2, you can no longer contribute to a traditional IRA, but if you have earned income you can still contribute after-tax money to a Roth IRA. If you are self-employed, you have a few other options, such as setting up a solo 401(k).
Since Social Security checks are a federal government benefit, it seems odd that you'd have to pay taxes on this income. But the fact of the matter is that some people do owe taxes on Social Security.
The good news is that if you're living off of Social Security retirement benefits and not much else, you won't likely have to pay taxes on this income. However, if you have income from wages, self-employment, interest, dividends, or other taxable income in a given year, you may need to pay taxes on both that income and your Social Security income.
There's a ceiling here, though. You can't be required to pay taxes on more than 85% of your total Social Security income for the year. So no matter how much money you make otherwise, at least 15% of your Social Security income is tax-free.
How much of that 85% of your income you'll pay taxes on depends on how much your combined income is for a year. The current rules operate off the concept of "combined income," which is actually not as straightforward as it sounds.
For IRS purposes, your "combined income" when using Social Security benefits is equal to your adjusted gross income plus any nontaxable interest plus ½ of your Social Security benefits. So if your AGI from a part-time side job is $10,000 in a year, you earn no nontaxable interest, and your Social Security benefits total to $16,020, your combined income is actually $18,010.
So what are the rules for taxing Social Security income? They're as follows:
How to Pay Your Taxes
If there's a good chance you'll earn enough money in 2016 to pay taxes on some of your Social Security benefits, how do you ensure those taxes get paid? You've got two options. One is to have taxes withheld from your benefits as they come in each month.
You can have the Social Security Administration withhold taxes when you apply for benefits originally. If you're already receiving benefits and want to change your withholding situation, fill out IRS form W-4V to have the SSA start withholding taxes from your monthly checks.
The other option is to pay quarterly estimated taxes. This is similar to paying quarterly estimated taxes on your self-employment income. If your income during the year is variable, or you're just not sure how much you'll make, quarterly estimates might be a better bet for you. Each quarter, you can look at how much you made in combined income, and figure out if you'll likely need to pay taxes on your Social Security benefits. When you file your taxes for the year, you can get a credit for any over-payment, or catch up if you underestimated.
Understanding how your overall income affects taxes owed on your Social Security benefits is an important piece of the puzzle when deciding whether to continue working while you draw on these benefits.
You should take time to understand how much you'll pay in taxes before deciding to continue running your business or working part-time. This calculator is one good option for figuring it out. In addition, tax preparation software will walk you through how much tax you'll owe, if any, on your social security retirement benefits.
Everybody wants to retire early. Sure, you might like what you do. But if you're 98% of people, you'd like to have more time to yourself, with your family and friends. In the years following the global recession, early retirement (or even regular retirement) seemed like an impossible dream for many. But there has been a growing contingent of young people online who are making it happen. In the upcoming weeks, we're going to look closely at some of these different strategies, and try to help you identify the best way to leave the working world behind, for a reasonable lifestyle of your choosing.
What Does Retiring Early Even Mean?
First of all, Early Retirement isn't the same thing as "Financial Independence". The latter refers to creating wealth so large that the sky is the limit to how one can spend time and money. Financially independent people buy sports teams, travel the world by hot air balloon, and run for President. Unless you have a lot of family wealth, a kickass job, or some outlying factor, you're not going to be able to achieve true Financial Independence. Early Retirement is about living a Frugal, Sustainable life, with enough savings and investments at play to pay for it until you're dead.
Can Someone With a Normal Job Retire Early?
Yes. You don't have to have a "Wolf of Wall Street" job to retire early. But you do have to be willing to live in a way that most other people don't. This means being neurotically careful with your money, living beneath your means, and making certain sacrifices others won't. The thing is, when you look at the numbers, this stuff is doable! Like I said, I'm going to do deep write-ups of each of these methods as we go into the weeks ahead. For now, just know that you can probably achieve one of the following goals, or at least improve your financial standing in big ways.
JUST TELL ME HOW TO RETIRE EARLY!!!!!
All right, all right. Here are the basic three ways that people retire early. Understand that there are endless variations and combinations of these methods. For our purposes, let's look at these as totally different strategies.
IT'S NOT THAT SIMPLE!!!!!
Lest you think that retiring early is that easy, let me stop you right there. It takes a lot of effort and consistent determination to pull this off. You'll also need luck to maximize your efforts. Over the next couple of months I will break down each of the above methods, showing how a combination of saving, investment, entrepreneurship, and strategic living can make early retirement possible, if not for everybody, for many more people than presently achieve it. Good luck, and keep reading!
Filed under: Budgeting
By Tim Lemke
If you live in a colder part of the country, you probably can't wait for this winter to end. The New York City area, for example, has experienced its second-coldest February in history. But before the warmer months hit, it's important to understand how the change in seasons will impact your finances. While winter brings its own financial burdens, spring and summer can empty your pocketbook, as well.
Here's how to stay within your budget as the temperatures warm up.
1. Go Green With Transportation
You'll probably drive more when it gets warmer, and may even take long road trips. You can expect gas prices to rise as demand increases and fuel companies switch from winter to summer fuel blends. Gas prices will remain low by recent standards, but it might help to consider walking or biking to work, or using public transit.
2. Register Early for Summer Camp
Summer can be a challenge for working parents, as the kids are out of school and need someone to look after them during the day.This means that many families explore summer camps and other activities. A week of summer camp will set you back an average of $304, according to the American Camp Association, with some for-profit camps costing more than $500 weekly. It helps to register in the winter to take advantage of early bird registration deals, and you may get a discount by signing up for multiple weeks at the same location. There may also be discounts for families with multiple children at the same camp.
3. Start Saving for New Family Additions
If you or your partner are not pregnant already, you can probably disregard this one. But statistics show that more children are born during the spring and summer months than other times of the year. The Centers for Disease Control and Prevention report that August is the top month for new babies. New arrivals aren't cheap, and you can definitely expect to spend some money in the months leading up to the delivery. Now is the time to start banking as much cash as you can.
4. Travel Within Your Means
With an improving economy, the American Automobile Association expects more people to take trips this summer. According to American Express, an average vacation will set you back $1,145 per person, or $4,580 for a family of four. The good news is that gas prices are lower than in years past, and a strong dollar means that it's cheaper to travel overseas.
5. Budget Home Expenses
When it's cold and snowy outside, there's no lawn to mow (and you're probably postponing the construction of that backyard patio until the thaw). Warmer weather is when you whip out the lawnmower and make the call to that contractor. It's also when you might make any repairs necessitated by the snow, ice, and wind of winter. Various sources suggest that a homeowner will spend about 1% of their home's value on maintenance each year. Much of this expense will happen during the spring and summer, so be sure to budget accordingly. Consider saving a few bucks here and there by watering your lawn less and attempting landscaping projects yourself.
6. Be Patient With Investments
There's an old saying that investors should "sell in May and stay away" until October. This is not perfect advice, but there is evidence to suggest that the stock market's slowest months are in the spring and summer. Since 1950, the Dow Jones Industrial Average has averaged negative returns during the months of May, June, August, and September. It has seen positive returns during all other months.
7. It's the Thought That Counts for Mom and Dad
Undoubtedly, people spend more money on gifts around Christmas than any other time of year. But the holidays of spring and summer can also add to your expenses. Americans were expected to spend $162.94 on Mother's Day in 2014 and $113.80 on Father's Day, according to the National Retail Federation. If you want to save money on these holidays, consider some thoughtful, but less expensive gift options, such as a great home-cooked meal.
8. Skip the Theater
The summer months are when Hollywood's biggest blockbusters hit the theaters, and many of us go, even if it's just to sit in an air conditioned environment for a while. Six of last year's top grossing movies at the box office were released during the spring and summer. Going to the movies is not cheap; the average cost of a movie ticket is $8.17, and many recent top films have extra charges for 3D or IMAX screenings. Want to save a few bucks? Get a Netflix account or go to RedBox and watch movies at home.
9. Don't Buy a Car
Generally speaking, the best time to buy a car is the end of the year when sellers are looking to meet their sales quotas. And you might get some good prices on older models in the fall when new models come in. Though you won't see as many deep discounts in the summer, you can still do okay at the end of months or quarters.
10. Take Advantage of the Real Estate Market
No one wants to move in the winter time, so there's more competition for homes during warmer months. This places upward pressure on home prices. In 2014, the median price for homes sold in the U.S. between May and August was about $220,000, according to the National Association of Realtors. That's about $20,000 more than the median price of other months. On the positive side, this is good news if you are selling your home, and buyers are more likely to see a larger selection of homes for sale.
Filed under: Spending
By Marla Walters
Over the years, I have made many a purchase. Some were big-ticket; some were under $15. Of course, there were occasions when buyer's remorse soon followed my shopping trips, but there were several purchases that I still stand by.
Here are 25 purchases that I think you would never regret.
Home ownership is still a sound financial idea. You can build up equity, claim mortgage tax deductions, and build a good credit history. I was a renter before I was a homeowner, and would never go back, but that's me. I like being able to put holes in walls where I want them, own pets, or dig up part of the yard for a garden. When you own a home, you are able to create the living environment you want - not your landlord's.
2. Four-Wheel Drive Pickup Truck
Not too long after my husband and I became homeowners, we bought a truck. It is now 18 years old and still runs well. Need green waste hauled? Buying large stuff? Going somewhere adventurous, where you need four-wheel drive? A truck enables you to do a lot of things that are especially handy if you are a homeowner. Ours isn't going to break any land-speed records, but we don't care. It's as handy as heck.
3. A Safe
There are paper records, and then there are really important records like birth certificates, marriage certificates, title to cars, valuables, etc. If it is important, it needs to be put somewhere secure. Sure, you could get a safe-deposit box, but it's handier to have things around - where you can get them when needed - and not subject to a bank's hours.
4. Fruit Trees
There is no instant gratification in planting fruit trees, but they are well worth the effort. Every time we pick avocados, oranges, bananas, or lemons, we are grateful we took the time to plant those trees. We cannot begin to eat all of what they produce, but part of the fun is to share the bounty.
5. Leather Furniture
When we began buying furniture, I thought leather would be bad to have, with kids and pets, but I was so wrong. It is extremely durable, and with leather cleaner and a little elbow grease, it cleans right up. Ours has survived beautifully, and we'll never go back to upholstered furniture. It is also easy to re-decorate with different throws or pillows.
6. Gas Stove
If you are interested in energy efficiency, gas is the way to go. It takes nearly three times as much energy to deliver electricity to your stove, according to the California Energy Commission. Savings aside, if you like to cook, it is so much easier to regulate stove temperatures with gas instead of electric. Plus, if the power goes out, you can still cook.
7. Outdoor Fire Pit
An outdoor fire pit was a bit of an impulse buy, but we have gotten so much use out of it. If you like to entertain, break out the marshmallows. Even if it is just my husband and I, it makes for an extremely relaxing evening - sitting in the yard with a glass of wine in hand.
Have you ever regretted spending money on a vacation? Even when things don't turn out the way you expect, there were fun memories and good stories. Plus, they're good for you. People need breaks from work and time for fun and relaxation. And vacations do not have to break the bank - try camping, a road trip, or renting an RV.
9. Plug-In Artificial Christmas Tree
We bought the plug-in artificial tree during a year when I just couldn't, for sad reasons, handle Christmas. For 16 years since, we have plugged it in, and it's bright, cheery, and works perfectly. We live in a climate where fresh trees are ridiculously expensive, so this tree paid for itself long ago. Amusingly, it has become a collector's item on eBay and is worth much more than we paid for it years ago. Now, I wouldn't trade it for a 10-foot Silvertip.
After a particularly bad storm, we lost power for a week and a half. We also couldn't get enough ice, and eventually lost the contents of our freezer and refrigerator. That was motivation to purchase a generator. They are noisy and give off exhaust when being used, but having weathered even more storms, we're glad we bought it.
11. Knife Sharpener
If you have a scout merit badge in the fine art of knife sharpening, and the proper whetstones, you don't need one of these. If, on the other hand, you have a drawer or cutting block full of mostly dull knives, like we did, get a good knife sharpener. It will make life so much better. Scout's honor.
12. Label Maker
People who know that we own a label maker actually ask us to make labels for them. Talk about a handy little contraption! You can go a little nuts with them. If you are into organizing, they are a must-have.
13. Meat Smoker
If you like tender meat, poultry, and fish with a smoky flavor, look into buying a smoker. We have a traditional charcoal-burning one (quite inexpensive) as well as a new electric one. We will never eat Thanksgiving turkey another way, and we're about to try salmon and bacon. I worried that cleanup would be a pain, but it's really quite easy.
14. LED Flashlights
Not only are LED flashlights longer-lasting than regular flashlights, but they are more energy-efficient, and they cast a very bright light. We have a more traditional, battery flashlight that is very heavy, and the tiny LED outshines it every time. It is now our favorite.
15. Good-Quality Multi-Tool
Do some research and invest in a quality multi-tool that will last. Mine contains 10 tools: Needle nose spring-loaded pliers, a wire cutter, a fine edge blade, a package opener, scissors, two screwdrivers, a bottle opener, tweezers, and a file. Although I would like to carry mine in my purse, I am afraid I will lose it to the TSA when I fly, so it lives in my car. And I have another in my desk at work.
16. French Press
We paid under $20 for our French Press coffee pot about five years ago. Not only is the coffee from a French Press really delicious, but if there is a power outage, you can still make coffee! That's basically the same as having superpowers. This is a very important thing, when you really need coffee. It even goes camping with us.
17. Ice Chests
I just went outside and counted, and we have three, in varying sizes. Since we live a distance from Costco, we take the big one along when we do bulk shopping. Another has wheels, making it perfect to drag to picnics. The smallest one is perfect for beverages. During power outages, they have also been used to store food.
18. Alternative Education
Not all kids fit into the same mold, and sometimes they do better in a setting that suits their interests and pace of learning better. My mother, a longtime public school teacher, recommended we try the Montessori method for our daughter. She was right, and that was a great fit. Eventually there were others, including charter and public. In retrospect, I think it was good to mix it up.
19. Camping Equipment
If you like the great outdoors, odds are, you enjoy camping. It's an inexpensive vacation, if you own your own equipment (or can borrow some). A site with no frills should be around $10; state parks with water and bathrooms can be around $15. Even if you go to a private campground, you should be able to get a site for less than $50 a night. Most of our equipment was purchased at yard sales. Our big splurge was to buy new, good-quality sleeping bags - which are worth every penny on cold nights.
20. Ceiling Fans
We are not fans of air conditioning, but needing to move air around, we invested in ceiling fans. They don't actually lower the temperature of a room, but air movement makes a room feel cooler. In the winter, you can run the fan in a clockwise direction, and bring that warm air down.
21. KitchenAid Mixer
The KitchenAid mixer is a beast. Mine will not only mix, but also knead bread dough, and whip cream. It is about 15 years old and works perfectly. One of these days, I'll invest in some of the attachments and make ravioli, pressed juice, or core apples.
22. Revere Ware
My mother-in-law, who burned, um, everything in the kitchen, taught me the value of buying Revere Ware. I have owned many sets of "celebrity chef" pans, and I'll tell you - nothing, absolutely nothing, has held up as well as this brand. I still have one of her stock-pots, and it's a treasured item.
If you burn something in one of these pans, no problem. Let it soak overnight, scrape it, and out it comes. If it's really major, there is a cleaning product called Bar Keepers Friend that will remove any residual gunk. If I were getting married and had a registry, I'd choose Revere Ware.
23. Wine Refrigerator
It's a shame when a good bottle of wine is ruined due to being overheated. The wine fridge also ensures that you drink wine at the proper suggested temperature. I had initial concerns about energy usage, but that has not been an issue on our bill.
24. Sewing Machine
If you want to save money, and think you might enjoy getting in touch with your creative side, a sewing machine is a great thing to have around. You can make repairs, cover pillows, make curtains or blankets, or even sew some of your own clothes. To be honest, I'm not very good at sewing, but I really like it. My daughter recently bought herself a machine on Craigslist and taught herself to sew. We get a kick out of copying trendy catalog stuff and making it ourselves.
25. Good Books
Despite having the ability to download books and use e-readers, I have never really enjoyed that kind of reading experience as much as a paper page-turner. I also like to re-read favorites as well as classics. Reading can be an inexpensive pleasure, and you will never regret the books you buy.
Filed under: Home Buying
By Marilyn Lewis
Fixer-uppers are back in style. During the housing boom, few homebuyers wanted to bother with renovation projects. New homes and those in move-in condition were the ideal.
That's still true for many buyers. But others are finding that, done correctly, remodeling a fixer-upper can save a lot of money. Fixers are getting attention because:
However, the wrong remodeling project can become a money pit that strips your bank account right down to the studs. Here are 15 ways to identify the fixer uppers worth your time and money:
1. Make cool calculations
Bring a cold analytical eye when shopping for a home to renovate. Put your emotions in the back seat while you assess each home's possibilities.
2. Love the floor plan
Look for a floor plan you can live with. Moving load-bearing walls is an expensive proposition and generally to be avoided. SFGate tells how to identify load-bearing walls.
3. Start with the basement
Inspect a home thoroughly, inside and out. Check inside and outside the basement or foundation for exposed wires and pipes, cracks in the foundation, or water pooling around the home.
"The biggest problems in a house typically arise as a result of poor stability in the structure or foundation," contractor Tyson Kunz told Bankrate.
Wise Bread says:
HouseLogic and About.com offer more details on inspecting basements.
[A basement] can provide valuable clues on the quality of construction; condition of the HVAC, plumbing and electrical systems; and how well previous owners have maintained the building. Avoid sagging floor joists or unstable supports, ancient heating and AC systems, leaking water heaters, and electrical panels with loose wires.
4. Inspect the roof
Get a home inspector or trusted roofing specialist to tell you if the home needs a new roof, which costs $20,000 to $40,000 and up.
In an article on assessing fixer-uppers, Consumer Reports says:
5. Scrutinize bathrooms
Runaway water can wreak havoc on any home, and a leaky roof is its quickest way in. If the home has an asphalt roof, look for cracked, curled and missing shingles. Gutters, downspouts and leader pipes should also be in place to collect rainwater and channel it away from the house.
Bathrooms deserve special attention because leaks cause rot and structural damage.
"Sloppy showers lead to repeated occurrences of water on the floor that seep through into the floor of the bathroom and adjacent rooms," says HowToManGuide.com.
6. Avoid ancient plumbing and wiring
The presence of these elderly building materials is a sign of trouble:
Replacing a home's plumbing and wiring are budget-killers involving thousands - if not tens of thousands - of dollars.
7. Back away from funky smells
If your nose wrinkles when you enter a home, that's a sign of problems. A home that emits bad smells may have a dangerous gas leak, sewer or septic problems, or mold - all of which require expensive remedies. Save your money for improvements you can enjoy.
Musty and dank smells come from mildew or mold and disqualify a home from consideration. Mold is not always visible; it may be inside walls. Don't assume you won't find mold in a dry, arid climate. It can be caused by condensation inside walls.
8. Watch for rot
Rotting wood is another red light. Use a pencil to push on trim and the wood around windows, and look for soft or crumbling wood.
9. Inspect drywall and floors
Keep an eye out for stained, uneven or warped, discolored or peeling flooring or drywall. These can indicate rot or mold.
10. Run from bad siding
Deteriorating siding raises a red flag for two reasons:
If you want to replace old windows with new, energy-efficient ones, and it's a priority in your budget, that's cool.
But be careful of committing to a home with leaking windows. Water seeping into a home through window leaks can cause untold - and unseen - problems from rot and mold. You can't tell how bad the problems are without removing the windows.
12. Spot a bad location
Become an expert on the neighborhood. Bargain homes are often in less desirable areas. Knock on doors on the street and chat with neighbors about crime. Your job is to assess how bad a neighborhood is and whether it's really going to turn around.
Even if you don't have children in school, your home's next buyer might. So learn about the quality of local schools. Get neighborhood crime statistics from the city police. Assess the home's proximity to jobs, stores, banks, cafes, restaurants and playgrounds.
13. Look for pests
You'll need an expert to tell for sure if a pest infestation is present. But you can spot some telltale signs, including:
14. Hire a home inspector
Once you've found a home that passes muster, hire a well-regarded home inspector to professionally look at the structure from top to bottom. (Cost: $300 to $500, on average, according to FoxBusiness.) Don't buy a home without a professional inspection.
You can locate inspectors in your area on the websites of these national home inspector organizations:
Note: Don't try to search for lead paint and asbestos. These are dangerous substances, so let the inspector do it.
15. Inspect after a rain
See if you can schedule your home inspection right after it rains. Visiting at that time lets you and the inspector see if water accumulates around the foundation - a bad sign, as it can cause leaks and foundation problems.
Have you bought a fixer-upper? Tell us about it in the comments below or on our Facebook page.
Filed under: Spending
By Karla Bowsher
Nearly all Americans admit to using shopping as a pick-me-up, a new survey shows.
The survey results recently released by Ebates.com, a cash-back portal, indicate that 96 percent of American adults admit to participating in retail therapy - and 85 percent of adults admit that it does make them feel better.
Ebates.com CEO Kevin H. Johnson states in a news release:
"Our survey confirms that Americans enjoy shopping and that buying things makes them happy."
Nearly 1,100 adults were polled this month for the survey.
More than one-third of the adults surveyed said that shopping makes them feel better than indulging in pizza, eating sweets like ice cream or working out. Fourteen percent even prefer shopping to sex.
Certain types of purchases make consumers feel better than others, though, the results show.
The top five purchase types that make American adults happiest are:
For 87 percent of adults surveyed, a trigger motives them to shop. Their triggers most commonly include the changing of the seasons and advertising.
When it comes to online shopping in particular, most adults said they do it when they need something specific or when they find a great deal they can't pass up.
For more ways to save online, check out "5 Super Easy Ways to Save Money Shopping Online."
Do you participate in retail therapy? Does it make you feel better? Share your thoughts on the topic with us in a comment below or on our Facebook page.
Filed under: Savings ExperimentWe all need exercise, but that doesn't mean you need a pricey gym membership to stay in shape. We've rounded up 3 essential items you can use to get fit without ever leaving the house.
Let's start with a little strength training.
If you're aiming to gain functional strength rather than big muscles, try using resistance bands. The bands may look simple, but they're actually very versatile. Just hook them on a door, table or any immovable object and you can do a whole range of full body exercises.
Sets can cost anywhere from $10 to $150, so shop around to see which type works for you.
But all the muscles in the world won't help you without a little endurance, which is why a good jump rope should also be on your list.
They've been used by athletes and boxers for years to build conditioning, speed and core strength. And best of all, they only cost about $10 and travel easily.
Last but certainly not least, there's the stability ball. It's one of the most important things to have in your home gym and you can find it for as low as $10. Ab crunches, squats, hamstring curls - this simple ball can do it all, while improving your core strength and balance.
So depending on what your goals are, you can still get fit and save big by incorporating these fitness essentials into your home gym.
Just don't let your favorite TV show distract you!
Related: 6 low-cost aids for your fitness program
Filed under: Spending
By Paul Michael
If you have a home, you need a tool kit. It's an essential for any household. But what to put in it?
Well, the good news is you can get by with just essential 10 items. You will of course need more tools as time goes by, but this list is a great starting point. (Oh, and you will need a sturdy toolbox to store them all. You can find used ones for cheap, or even free, on Craigslist. Or try your local thrift store.)
1. Multi-Bit Screwdriver
There are many variations of the multi-bit screwdriver. On the cheaper end, the bits come in a separate holder or case. You can also find ones called "auto-loaders" that contain at least six different varieties of bit. You want one that fits both Phillips head and slot head screws. With this one tool, you have a starter set of screwdrivers that will work for most jobs around the home. (See also: 10 Easy Plumbing Repairs That Don't Require a Plumber)
2. Power Drill (Go Cordless)
There are so many different jobs around the home that require a power drill, so your frugal tool kit should include one. If you want to save the most money and have something much more handy, go with a cordless drill. They don't have as much power as an equivalently-priced corded drill, but for everyday needs, they're just fine. Ideally, get a good, refurbished brand rather than a cheap new one. DeWalt or Makita are reliable, and will last you many years. This will definitely be the most expensive tool you buy in this kit, but it's worth it. You will also need a variety of drill bits. Luckily, many drills come with a starter selection.
3. Claw Hammer
There are several types of hammer available to the DIY enthusiast. A ball peen hammer, a tack hammer, a club hammer, and even a sledgehammer. But for the basic, frugal tool kit, your best bet is a claw hammer. Its two uses, driving in and removing nails, are ideal. When you get into more specific tasks, other hammers for specific jobs are much better, but for a starter kit, the basic claw hammer is just fine.
4. Adjustable Wrench
The key word here is adjustable. As you're building a frugal tool kit, you want your tools to have as many uses as possible, whenever possible. The adjustable wrench can fit a wide variety of nuts and bolts, and is therefore perfect for your kit. Buy a wrench that is big enough to cover a large array of sizes, without being so big that it will be cumbersome on smaller nuts and bolts. Anywhere from eight to 12 inches is good.
5. Retractable Tape Measure
You probably know this as the Stanley Measuring Tape, but they are available from many different manufacturers. However, Stanley has been making these for decades, and they're very good at it. In particular, the PowerLock model is a great tape measure for having around the house. They're available in many different sizes, but for the minimal price difference, go for the 25'x1" model. It's sturdy, long enough to cover most jobs, and very reliable.
6. Needlenose Pliers (AKA Long Nose Pliers)
Again, there are so many different types of pliers available on the market, all doing slightly different jobs. For the frugal starter kit, you are better off going with a pair of sturdy needle-nose pliers. We're looking for tools with more than one function, and these include a wire-stripping tool whilst also having a long reach and the ability to twist small wires and objects. When you start building up your kit, you can add locking and adjustable pliers. But for the basic kit, these will serve you well. Stanley's eight-inch long nose pliers are solid, and usually sell for under $10.
7. Retractable Utility Knife
Just like the tape measure, Stanley has also become synonymous with the utility knife. In fact, many professionals and amateurs still refer to it as the Stanley Knife. You will need a sharp knife for a countless array of DIY jobs, whether it's cutting carpet or vinyl tile, to wallpaper, wood veneer, or even sharpening a pencil. With a good retractable knife, you have safety as well as versatility, with a variety of different blades on the market available.
There will be more than a few DIY experts screaming "No!" at this next statement, and I would usually concur - but this is a frugal toolkit, after all. Instead of buying a wood saw and a hacksaw, simply buy the hacksaw and use it for both purposes. There. I said it. If you only have the money for one saw, a hacksaw is at least multi-functional. It cuts through metal and plastic beautifully. It can also cut wood, although it's inefficient, slow, and clogs the small teeth - but, it will do it. Try cutting metal with a wood saw and see how far you get. There are several different blades available, so if you do need to cut wood, opt for blades with the fewer teeth per inch. For instance, 14 will perform way better than 32.
9. Level (AKA Spirit Level, Bubble Level)
For so many jobs around the house, you will need to make sure something is straight, or level. This is why a level is an essential part of your toolkit. They come in various sizes, from as small as three inches, all the way up to several feet. For your purposes, anything from nine inches to three feet is a good bet. Make sure your level has three different bubbles inside, for vertical, horizontal, and 45 degrees. If you really don't want to spring for a level, and have a smartphone, you can find an assortment of free level apps. The phone is not as good, but it's better than nothing at all.
10. Rechargeable Flashlight
Finally, the flashlight. When the lights go out, or the fuses blow, you'll need a flashlight. When there's a leak in the corner of the basement, you'll need a flashlight. When there's a wiring issue under the counter, you'll need a flashlight. Basically, without a flashlight, you'll be groping around in the dark, and that's not safe at all. Now, regular flashlights are fine, but most people will tell you - the batteries die at the worst possible time. So, go with a rechargeable one. They stay plugged in, and are ready to go whenever. Plus, they're affordable, starting at around $10.