Last November, my brother-in-law’s vehicle was broken into at the nearby grocery store parking lot. He had done some banking prior to pulling into the grocery store to pick up a pizza for the night’s meal. While he was in the store, his money and cell phone were stolen. There was also damage done to both driver and passenger doors, his console, and the car’s paint. There were surveillance cameras in grocery store’s lot, but it was hard to identify the perpetrator.
When my sister and brother-in-law returned from the holidays, they picked up their held mail at the post office; while they were there, a man had money stolen from his vehicle parked outside the post office, also after a visit to the bank. Note: Both of these incidents occurred in daylight in a large U.S. city.
Based on his recent experience, my brother-in-law was able to encourage the man to call the police and file a complaint; this would help him to file a claim with his insurance company. Depending what was taken, he might also want to contact his bank, and/or place a fraud alert on his credit reports. In addition, he would need to make arrangements to have his vehicle fixed. These were all steps my brother-in-law had needed to take a few weeks earlier, plus he had to deal with the theft of his phone; fortunately, since my brother-in-law’s information on his phone was backed up in the “cloud,” he was able to be back in business soon after the phone was replaced.
We do not always think about who is watching us, but in both of these cases, someone was watching while they visited their banks. These incidents remind us: don’t let your guard down, and watch your surroundings. That guidance is especially important during the upcoming holiday season when many of us make more purchases than usual and may leave things in our cars.
How many times do we go somewhere feeling we are safe, and therefore do not pay attention to the environment around us?
We’re entering a busy time of year for charitable donations, perhaps because the winter holiday season brings a sense of gratitude followed by a desire to share our abundance. The availability of tax deductions for charitable giving may also contribute to the concentration of donations near year-end.
According to Giving USA, Americans donated a record $410 billion to charities in 2017. What’s more, over 70% of that giving came from individuals, rather than foundations, corporations, or bequests. However, tax law changes this year mean that for many people there will no longer be an advantage in itemizing deductions; many taxpayers will get better results using a standard deduction. For those households, the tax benefit of charitable donations will be reduced or eliminated.
Will Americans still give? I have always hoped that the main reason most Americans give is that they care about the organizations they are giving to, and that the tax benefits are just an incidental benefit.
If you are wondering whether you should continue making charitable donations even without the tax deductions, I offer two thoughts:
- If your standard deduction under the new tax law is larger than your itemized deductions would have been, then you are still coming out ahead. You can give, and still have more available funds than you would have had under the old tax law.
- There are other strategies that can enable some taxpayers to get tax advantages for charitable donations.
Clustering donations. Some taxpayers may be able to hold back all their 2018 donations until the beginning of 2019; if they then donate a “normal” amount throughout 2019, they will have twice as many donations as usual to report for the 2019 tax year, which may make itemizing worthwhile in 2019. Following this pattern of no contributions one year and double-contributions the next may enable you to donate the same total amounts as normal, and gain tax benefits by alternating years between itemized and standard deductions.
Qualified Charitable Distributions (QCD) from an IRA. If you are at least 70-1/2, you can transfer funds directly from your traditional IRA to a charitable organization; the distribution will not be taxable income to you, AND it can satisfy your required minimum distribution. If your RMD for the year is $5,000, and you are interested in donating $5,000 to a particular organization, then making the contribution through a QCD has the same ultimate impact on your taxes as a tax deduction would have had. IRS Publication 590-B provides details.
Donating as a business expense. If you are self-employed or own a business, you may be able to make charitable contributions as a business expense. For example, farmers can give commodities (e.g. 500 bushels of corn) to a charity. This reduces your business income, and therefore has impact similar to the impact of a tax deduction. Consult with your tax adviser for details.
As always, the best decisions about how to use your money are based on your personal goals and priorities. As you consider your charitable giving decisions, focus on why you want to give when deciding whether and where to make donations. Giving to organizations you know (often local organizations) can ensure that your gifts are used well; when considering larger national charities, check them out with organizations that evaluate charities, such as www.give.org, www.charitywatch.org, www.charitynavigator.org, or www.givewell.org.
In Iowa, this coming Friday and Saturday (Aug 3-4 2018) offers a chance to buy qualifying clothing items without paying any sales tax. For most Iowans, (depending on local sales tax), that’s a savings of 7% — not a huge windfall, but still an advantage. That savings is magnified by the many retailers who offer clothing sales on the same weekend.
Sounds like a winning proposition, right? It can be. But like anything else, it requires consumers to use good judgment! Why?
Well, if you’re like me, you’ve had experience with the risks involved in shopping simply because there’s a sale. Who among us hasn’t made a purchase because it was such a “great deal” and then never (or rarely) used it? Hopefully we learn from those experiences, but it always pays to exercise caution when shopping sales. Here are some ideas to help us avoid regrets:
- Have a list and prioritize.
- Plan a dollar limit that lets you fit your purchases into your budget without borrowing. When purchases are paid off over months of credit card payments, the benefit of the sale price quickly disappears.
- Know what the “regular” prices are, and consider whether items will be on a bigger sale later in the fall. In other words, ask yourself “Are they just giving a small discount to tempt me to buy now rather than waiting for later when bigger discounts will be offered?”
- Keep all receipts. If you pick something up and later decide it wasn’t that important or that great of a bargain, you’ll simply be able to return it! Be sure to have the self-discipline to follow through on that… it may be “only” $10 or $20, but that adds up over time.
- If you are buying for people other than yourself (especially growing children) check out their current clothing stock before you make your list — find out what fits and what doesn’t. This will help you make sure that the items on your list are the most important items.
Iowa’s Sales Tax Holiday applies to most clothing and footwear items priced below $100. Most accessories are not exempt (such as jewelry or watches), but some items do qualify for the exemption (such as scarves). Certain specialty clothing items, such as clothing specific to a particular sport, are excluded as well. For a full list of items that are taxable vs. exempt, go to https://tax.iowa.gov/iowas-annual-sales-tax-holiday.
Happy shopping! Good planning means no regrets!
I recently participated in a meal prep event where a dozen women met at a local grocery store to make and take meals ready to cook. We came with empty coolers and each left with coolers filled with 12 meals in Ziploc bags and a copy of the recipe and cooking instructions. Each meal would serve 4 to 6 people. Each of the 12 women would assemble twelve of one meal. When everyone was done dumping all the ingredients for their meal, into a large gallon Ziploc, we walked around the room and grabbed one bag of each meal. Some of the meals were meant to be grilled; others were ready for the crockpot. These meals were healthy with lots of flavor. And…it was a fun social evening for us.
At first, I felt the per-serving cost was a little pricey. But, if you consider all the ingredients AND all the left overs of each ingredient I would have had to store (or toss because I didn’t use them) it wasn’t bad. For example, I paid for only the 1 cup of rice that was needed for the recipe…not the other 3 cups in the bag. The same is true for all the herbs and seasonings.
I recently helped a Veteran who was blind, figure out ways to stretch his budget. We talked about his struggle to shop and cook. He took advantage of the Meals On Wheels for one meal a day during the week; but what about the other meals of the week?
After a little research, I found that in Iowa, there are several businesses that prepare and delivers refrigerated meal. Naomi’s Kitchen, Mom’s Meals and Sisters Entrees are just a few.
A thought did cross my mind…what if I and a dozen of my friends volunteered our time to assemble meals for him. It would be a fun and he would benefit greatly. If we made only crockpot meals, it would make meal prep easy for him…just dump it a crockpot, and put it on high for 2 hours.
What other inexpensive ideas or options do you have access to for easy meal prep for individuals that have physical challenges in the kitchen?
Geocaching is an electronic treasure hunt. It is a great low-cost activity, and can be fun year-round. It is easy to catch on to and there are caches all over – literally around the world (2 million to be exact).
To get started set up a free account at geocaching.com, then download the free app to your smartphone or purchase a GPS unit. Search near you for a cache, use your app or plug the coordinates into the GPS to start hunting.
Many geocaches are found in safe places like rest areas, parks and cemeteries or near landmarks. What you will find may be very small like a pill fob OR it may be larger, like an ammo box. Some will be harder to find than others but they are never buried. Inside will be a log to sign. There may also be “swag” like geodes, stickers, patches, pins, marbles, key chains, lanyards, and geocoins.
- Dress appropriately.
- Let someone know where you are going or enjoy navigating with someone else – perhaps a child or grandchild.
- The caches are secret so don’t let passersby know what you are doing.
- If you take something, you should leave something of equal or greater value.
- Always return the cache to its hiding place.
- Bring your own pen to sign the log, then enter your find at https://www.geocaching.com.
Discover what is hiding near you today! How many will you find?
Written by Sandra McKinnon, Human Sciences Extension and Outreach family finance specialist and geocacher since 2009
(Photo by Christopher Gannon/Iowa State University)
Many students recently marked a big milestone by graduating from school. Looking back, what words of wisdom regarding personal finance would you like to have received when you left high school?
Personal finance does not have to be boring! The National Endowment Financial Education – www.nefe.org has a couple resources to help your graduate be an independent young adult.
On Your Own –is a blog with a range from credit score calculated, making better money decisions, and the pros and cons of college? This is a trustworthy site.
Another option is Smart About Money (SAM) is an in-depth, guided learning experience. There are five sections with valuable tools, worksheets, calculators and quizzes. Each course is about 45 minutes.
Cash Course targets college students. Some colleges and universities offer it especially for their students, but any student can enroll independently. It’s free, with no strings attached, but you do need to create a user account.
Forty Money Management Tips Every College Student Should Know – this Cash Course resource helps young people learn how to take control of their money instead of letting their money control them.
Let’s be truthful, some of us do an excellent job helping our 17-18 year old get ready for the real world even if we also remember situations when we hope they didn’t pay too close attention to our bad habits. Adult finance is complicated by some natural tendencies toward spending and savings. I’ve heard more than one parent wonder out loud how a child could grow up in their house and manage money the way they do.
Whether you have full confidence in their money management skills or expect to get several calls asking for guidance when the issue is totally out of hand, here are some tips that may help you and the 17-18 year old in your life:
Reduce their risks-
- Review your insurance policies and find out if the coverage extends to include their property while they are living away from home temporarily. If they are leaving home permanently, pick up information about renters policies and explain it to them.
- Share tips about auto insurance coverage. Remind them that valuables in the vehicle are not insured. Consider whether it makes financial sense to have them insured through their own policy. If the premium will exceed 10% of the value of the vehicle, it may be time to switch to liability only.
- If they will continue to be covered by your health insurance plan: 1) confirm they will have access to the network providers; 2) make sure they are carrying an insurance card; and 3) share a quick reminder of typical preventive services and what to plan for co-pays.
- Recommend filling out their W-4 with a 0 for withholding exemptions until they have filed their first tax return. Several part-time jobs combined together can result in underpayment of taxes due.
- Consider giving them a list of the records you save, electronically or on paper, for financial reasons.
- Give them a shredder. Not an exciting gift, but important to keep their identity intact.
Keep the door open for conversations without judgement. We’ve all done stupid things with money – why not make sure the young adult learns some lessons from you and not the hard way.
Happy America Saves Week! We’ll be celebrating all week with special posts focused on ways to make saving happen for real.
One key is to have a PLAN. While I could write more, I want to focus on just 3 parts of a savings plan that can make a big difference.
- Save with a clear REASON in mind. And make sure it’s a reason you care about. If you’re just saving because someone said you should, it may be difficult to succeed. After all, finding money to save means letting go of something else you used to spend money on. It will be a lot easier to give up that “other thing” if the reason you’re saving is truly important to you.
- Figure out in advance HOW you are going to come up with the money to save. If you simply say “I’m going to save $20/week” and don’t answer questions about when, where and how, then it probably won’t happen. (Not sure how? stay tuned the rest of the week for more ideas!)
- Plan for MOTIVATION. Most savings goals take time; you might need a morale boost along the way, especially when obstacles arise. Think about what motivates you, and plan to build that motivator into your life. Maybe it’s a graph that shows your savings growth. Maybe it’s a cheerleader – an encouraging friend you recruit to your “team” – someone who will remind you of your positive progress even in a week when you did not succeed in making a savings deposit. Maybe it’s a special reward for when you reach certain milestones, or for each week or month you take a step forward; low or no cost rewards like bubble baths, or coffee with a friend, or an evening of reading can help keep your enthusiasm up.
Starting any new habit can be challenging. If you want to start (or increase) a savings habit, making a plan will help you succeed!
In a 2017, a T. Rowe Price survey, found parents are talking to their children about shopping, but are skipping conversations about household budgets, savings and financial goals. Close to 75% of survey respondents say they regularly have conversations with their children about money, but the focus is on spending—not the family’s current financial situation.
Are we sheltering our children from money?
The survey found that many parents think they strongly encourage their children to talk about money, the children only agreed 19% of the time. One in four parents discouraged their children from talking about money.
Children want to learn the financial basics – 34% want to know how banks and credit cards work; and 29% want to learn about managing money.
Protecting children from the financial challenges and decisions faced by adults may not be giving them an opportunity to form habits that can prevent financial stress when they are older. Understanding the source of money, choices involved with use, and it’s limitations form a basis that will impact attitudes and skills in management.
There are places to teach money management – the grocery store, or when paying everyday utility bills. Lessons taught by parents will reinforce and strengthen school based lessons in financial literacy. Basic skills become stronger when practiced. It can include balancing a checkbook, keeping spending records, comparing returns from savings to other investment options.
The T. Rowe Price survey shows that only half or fewer of parents have strong financial habits. One example – more parents save for a family vacation than have an up-to-date will. One in ten do not save regularly for retirement, purchase life insurance or save for a family vacation.
Where does your family fall in the 10% or 90%?
We generally budget by the month or by the week — we plan our spending in relation to our income, and that’s how we meet our regular expenses. It makes sense.
A tax refund is different, however. It’s a “bonus” that only comes once a year; it’s often the biggest single chunk of income we receive during the year. If you expect a sizeable tax refund, I suggest you consider the whole year as you plan how to use it. Here are a couple of ways you might do that:
- In a typical year, are there some big expenses that throw a wrench into your financial routine? Perhaps your tax refund can help you be ready for those expenses. Examples: holidays, back-to-school time, car maintenance (planned and unplanned), summer weekends away,… it could be anything. Setting aside part of your refund to help cover those costs can be a great way to remove stress and unwanted drama from your financial life.
- Tax refunds are often the way families make special purchases, such as furniture, a computer, or new appliances. Your refund can help you meet an important family goal. Again, though, it makes sense to consider the whole year before deciding. That might mean thinking ahead to all the possible special purchases you might want to make during the year, and prioritizing which of them is/are most important. An example from my imagination: I can imagine getting to summer and realizing you need a new lawn mower, and really wishing you had used your tax refund to buy a lawn mower! Thinking about the whole year can help you get the most value from any special purchases!
No one can foresee the future, and trying to plan for the year doesn’t guarantee you’ll think of everything that might come up. However, if you make an effort to consider the needs of the coming year, you are more likely to be satisfied in the long run!
What are your plans for your tax refund? We’d love for you to share!