Maybe you have received mail that gives a positive or negative spin on the candidates and their support of tax law changes. (Okay, maybe I should just say “negative”.) The curious side of me usually wants more information than what the cardboard flyer shares, in other words, “How will it impact me?”
The recent debate about estate taxes is one example. Currently you won’t pay any tax if your total estate is below $5.45 million, $10.9 million for a married couple. The tax is 40% on every dollar over that amount. Estate taxes were 0.6% of the total taxes collected by the US Treasury in 2014, approximately $20 billion. Candidates are recommending elimination, lowering the amount that is exempt, or top tax rates of 45% and 65%.
So what’s at risk for you? The positive side is only the wealthy are likely to pay even if the amount that is exempt is decreased to $3.5 million or $7 million for couples. The negative side is much of the estate that would be taxed has already been taxed when it was earned or created profit. In Iowa, land and a farming operation are examples of assets that are taxed in multiple ways. Estate taxes may be the third or fourth time, so the Agriculture community usually pays attention to the discussion.
Congress has stated that tax law changes are a priority. What are you supporting: lower tax rates, a flat tax, or changes in estate taxes? The Tax Foundation has published a non-partisan document that examines the positives and negatives of proposed tax changes; it might help you sort facts from fiction.
Entertaining preschoolers or school-aged kids while traveling can be a challenging. When my kids were little, we did not have DVD players or electronic games. Our favorite pastime (besides car bingo) was me, reading The Mouse and the Motorcycle or the adventures of Ramona, Henry and Beezus. I would read the Beverly Cleary series till I was hoarse. It always amazed me how attentive and focused my kids could be, for such a long time, when I was reading chapter books.
My daughter, in anticipation of a 9-hour Thanksgiving road trip has begun to download some children’s podcasts. She stumbled upon Storynory.com which has a generous selection of contemporary award winning authors AND classics like Aesop’s Fables and Grimm’s Fairy Tales. Then she found storiespodcast.com which she preferred because of the more animated voice delivery and songs.
Stitcher Radio for Podcasts is a great app for downloading and “stitching” together podcasts for listening to later, when offline…like driving across country in a car. The app will also suggest other podcasts based on your listening activity which saves you time searching for more child-friendly podcasts. By plugging your smartphone or tablet into the audio jack built into newer cars, the stories can be broadcasted over your car’s speakers.
The audio podcasts are free, and so is the app which will automatically download newly added stories without syncing or manually downloading. If you are looking for an inexpensive Christmas gift…buy your kids a set of child-size headphones and let them use an old smartphone or iPod to access an unlimited supply of free audio stories.
The Halloween decorations, candy, and costumes are in every store, and fall festivals are upon us! And so we head into “consumerism” season. Whether it is the apple cider donuts, bag of fresh apples, caramel apples and popcorn, pumpkins, or jug of cider, the smells of the season start our juices going.
Enjoy the season. And remember the costs. Remember that any purchase costs more than the money you pay. Opportunity cost means we need to make necessary trade-offs since we have a scarcity of resources. It means that when you purchase one thing, you give up the chance to purchase something else. You may want all of the items I mentioned, but your twenty-dollar bill only goes so far.
When you look at opportunity cost, think beyond the monetary cost of your choices. You have to take the time to go to an orchard, and stand in line for an item before paying. What else do you give up when making your purchases?
A student loan has two faces: it is a tremendous asset in making education possible, yet it can hold an individual back for decades afterwards. There are other ways to pay for post-secondary education (such as savings, earnings, scholarships or grants), but the reality is that most students take on student loans. Unfortunately, it is often easy to say “yes” to student loans without fully understanding the options.
A new set of ten brief fact sheets created by the national Extension system offers information designed to be clear and friendly for ordinary consumers. In most cases these fact sheets are just 2 pages, with information divided into manageable segments on these topics:
- Ways to pay for education. Some pieces address ways to save in advance for education, and ways to cover costs of schooling with your own money rather than borrowed money.
- Types of student loans. One fact sheet explains the critical differences between federal and private loans, and within the federal loan category it explains subsidized versus non-subsidized loans. These key distinctions will affect the cost and repayment terms of loans, so clear understanding is vital to sound decisions.
- Repayment issues. Several sheets address issues faced during the years of loan repayment: identifying and communicating with the loan servicer, understanding repayment options, recovering from default and more. Another highlights recent policy changes around student loans.
- Lifelong impact. Research has shown a clear connection: high student loan balances are associated with delayed or lack of home ownership and also with fewer business start-ups by younger adults. The potential impact on retirement security is also huge: those who forego retirement saving during their 20’s and 30’s may end up with savings reduced by $200,000 or more by the time they reach retirement age. A fact sheet titled “Later Life Impacts” highlights the potential costs to individuals and to society, and suggests strategies for paying student loans as quickly as possible.
If you are considering student loans, or if you are working on repayment, you’ll make better decisions if you rely on research-based non-commercial information that you can understand. Seek out information from credible sources like Extension!
What are you doing in February, March and April? If you don’t have plans to dip your toes in the warm sand of a tropical beach I have a suggestion for you. Find a local VITA program and volunteer to help.
VITA is the Volunteer Income Tax Assistance program supported by the IRS. A volunteer prepares returns for clients who have incomes at or below $54,000. If you like solving puzzles, then you would also enjoy the challenge of figuring out how to complete a tax return. Each one is different and because families don’t always fall into the Mom, Pop, and two kids definition, it can be challenging. Rewards come in the “thank you’s” and hand shakes of clients who have additional tax refund dollars to pay for other life expenses.
Training is available to help you certify. The IRS grants you exemption from liability for omissions or errors as long as you prepare returns within the scope of your certification. You can and should recommend a client take their return to a paid professional when it’s out of scope!
Volunteers also serve as greeters who schedule appointments and make sure the necessary tax documents and identification have been brought to the site.
A tropical island would be fun in the cold days of February, but you can generate a warm feeling inside by helping others. To volunteer visit this IRS site: https://www.research.net/r/vitatcesignup
Twice this week, the topic of conducting a time study was discussed. The first was a friend needing to provide proof to her employer that addition help needed to be hired. The second was to decide whether the time and energy spent on a specific enterprise yielded enough return for the dollar spent, to justify continuing that activity.
During a recent youth event, I was amazed at the amount of time the kids spent on their smart phone. As I looked through the photos of the event, I was disappointed to see nothing but the tops of their heads…they were all looking down at their phones. The planners of this event spent a lot of time and consideration into ensuring the actives were engaging and thought stimulating and until all the phones were collected and stored for the evening, there was no stimulating dialog occurring among the group.
Often times, the thing that annoys me most in others, is the exact thing that I am guilty of. This made me stop and think about the value I put on my time. When Pokémon Go first came out, it was a novelty that I admit to wasting some time on. Now, I only play that game when I am getting my daily walk. It occurred to me that prior to Pokémon Go, I listened to music or just enjoyed nature as I walked. Besides helping with weight management, my daily walk is a stress reliever. I can feel my blood pressure drop and my muscles relax as I walk taking in the sunrise or listening to my favorite instrumental music. During my last walk I tried to pay attention to those same physical conditions as I played Pokémon Go during my walk. The walk may have been entertaining but it was NOT relaxing or stress relieving. I think the best use of my time when walking is to be unplugged…Pokémon free.
I went to a meeting on Monday and silenced my work phone. It is a “dumb” phone…just a basic flip phone which serves my needs perfectly and is the most cost-effective choice for the job. I like the fact that it is small and sleek. I can tuck it into my purse, computer case, or a box of materials being transported. On Wednesday, I picked up my phone to make a call and noticed that I had 3 messages waiting for me on my phone. I HAD FORGOTTEN TO TAKE THE PHONE OFF SILENT MODE!
Today, I just spent 15 minutes looking for that phone…in the nooks and crannies of my car, in my purse, in pockets…then it occurred to me to call it and see if I could hear it. Sure enough, it was less than 2 feet away in a bag of program materials. I don’t remember putting it there. Thank heavens I had remembered to take it off SILENT MODE after yesterday’s meeting. Should I REALLY lose that phone, I am in no real danger of having my identity stolen…other than a list of phone numbers called, received and those in my address book, there is nothing of any real interest to a thief.
On the other hand, losing my personal phone, which is an Android phone, WOULD be a big deal. A thief could access names, addresses, phone numbers, birthdays, anniversary days, my schedule, probably my shopping and internet habits and much more. Unlike the “dumb” phone, I can easily find the Smart Phone even if it is on silent mode. Google.com/android/devicemanager is an online tool that helps me find my Android phone even if it is on SILENT mode. By selecting RING, my phone will ring loud enough that I can hear it buried deep in my purse, in another room under a pillow. If the phone truly is lost, this online tool will let you LOCK the phone or ERASE it remotely. If the phone is dead, this tool will tell you where and when it was last located. Apple products have a similar online tool available as well. Check out find my iPhone.
Smart phones are expensive, portable, resalable, and concealable making them tempting and easy items to steal. The fact that it contains personal information makes it a high demand item to thieves. Educate yourself on how best to protect this asset. Check out Consumer Reports’ tips for smart phone owners: 5 Steps to Protect Your Smart Phone From Theft or Loss or watch their short video.
The fall gets busy, but you may want to take your family on a mini-vacation or day trip. It could be in the area or a short road trip. Whatever you decide, think of all the possibilities.
- Visit a local museum with a packed lunch and top off the day with ice cream
- Go hiking or visit your favorite bike trail
- Tailgate and take in a college football game
- A nearby national park visit during the 100th anniversary
- Go to a zoo or petting zoo
- Presidential Library and Museum (my preference is Abraham Lincoln in Springfield IL)
- Take in the tastes and sights of visiting an apple orchard – fresh pressed cider and cider donuts
- As the colors turn, leaf peeping – driving through the countryside can be fun
- Disc golf, putt-putt golf, boating and tennis can involve the family
- Family cookout or picnic followed with a walk
- Historic reenactments can share the history past
For the adults only –
- Visit a vineyard or Octoberfest celebration
- Spend time at a local spa
Try one of these activities with friends and family.
I have two good friends that are sending their first-born children to college. Are the college bound students ready to manage money on their own?
Their parents probably don’t want to sit down and give “the money talk” just before delivering the student to college. It is better to talk over time about earning, spending and investing. The gradual approach is more powerful. Helping students to experience spending money and planning for expenses will strengthen their money skills.
Everyone makes mistakes using money – share a few of your experiences from college or trade school and your first job.
Understanding who is paying for which expenses – Perhaps parents will cover textbooks and school related costs, and the student will be responsible for entertainment and gasoline if they have a car. Or perhaps you divide expenses differently. The key is that the division should be clear. When I was in college, I had a small part-time job cleaning professors’ homes that gave me a little spending money. It’s usually wise for students to limit the number of work hours outside of class to prevent work from affecting their school experience and success.
Each student is unique. You know your student better than anyone else does. If they have already been careful with money, you may not need to set limits. On the other hand, if they overspent during high school, you may want to give a limit on what they can spend. You could use a prepaid card, but there are reloading fees. You may want to look into overdraft protection for your child’s checking account, too.
What happens when your child gets in trouble financially? If your kids get in trouble financially, you are almost certain to bail them out. By encouraging your kids to be responsible and catching any problems early, you can fix the problem before it gets out of control. To make this possible, you will want to maintain an open dialogue with your student about money.
Weather has sure been in the news lately – nationally, and also locally. It’s a sobering reminder of the importance of having insurance on your home and possessions – whether you are a renter or an owner. Regularly reviewing your coverage, probably with your insurance agent, is a key to ensuring you have the coverage you need.
Some questions to consider:
- Homeowners: is your coverage high enough to replace your buildings? Building costs increase, and inadequate coverage can be a rude awakening following a disaster.
- Owners and renters: is your personal property coverage adequate? Look at your total coverage limit and compare that realistically to what it would cost to replace everything you own. In addition, consider whether you own any uniquely valuable items or collections. Standard policies have a maximum limit for certain categories, such as jewelry, antiques, electronics, musical instruments or tools, but additional coverage can be added at your request.
- Liability coverage protects you in case you are at fault for an injury or other loss. Do you have enough coverage to protect your assets in case of a lawsuit? If not, you may be able to increase your liability coverage on your home insurance and/or purchase an additional umbrella liability policy.
- Review which perils are covered by your policy and which are excluded. No policy covers everything (for example, acts of war are not covered), but it’s important to make sure you are aware of and comfortable with any exclusions. If not, you may be able to expand your coverage. See our post for information about flood insurance.
After reviewing your coverage, another key step in protecting yourself in case of disaster is to update your home inventory; photos or video recordings are generally recommended. A good inventory equips you to identify what was lost, so that your insurance can replace it.
Check out our Money Mechanics: Home Insurance publication for more information.