• Posts Tagged ‘income’

    Creative Ways to Tackle Debt

    by  • March 28, 2013 • Tagged: , ,  • Comments

    Many adults find themselves swimming in credit card debt, car debt, house debt and other types of debt. This can be very stressful and you might feel like you’re walking through every day with a gorilla on your back. Whether you’re dealing with unsecured or secured debt, eliminating it from your life will make a huge difference in your financial stress. Here are some easy ways to help you pay off debt.

    Three Debt Elimination Strategies

    1.  The Budget

    Probably the most important tool and strategy anybody can use to pay off debt is the budget. For you, the word “budget” might bring up thoughts of being poor or broke. A budget is just a tool and doesn’t say anything about how much money you have or don’t have. However, if you’re in debt, you are broke. This is just a fact. Whether you can afford the payments on your car, house and credit cards or not, you’re broke.

    The best type of budget to use assigns each dollar a place to go. For example, if you make $5,000 every month (take home pay) and your bills come out to $3,500, you have $1,500 left over. This money still needs a place to go, whether it’s to pay extra on a debt, savings for retirement, entertainment or something else. Give every dollar an assignment and you might just find money within your budget you can use to help pay down your debts.

    2.  Cut Back on Savings, Temporarily

    This strategy is a hard one for many to swallow, but it will answer the question, should I save money or pay off debt? If you already have thousands of dollars in the bank, why not use some of that money to pay down some of your debts? Of course, you don’t want to use it all because you need a little cash set aside for emergencies. Some experts believe an emergency fund of about $1,000 is enough, while paying off debt.

    Just imagine how much better you will feel and how much freedom you’ll find within your budget when the car is paid off, the credit cards have a zero balance and even when you’ve paid off your mortgage. Imagine what you could do with your paycheck every month if it wasn’t already spent before you receive it. You could really start saving towards retirement, make sure your children can go to college and take that vacation of your dreams, finally.

    3.  Sell Some Stuff

    The fastest and easiest way to eliminate debt is by selling some stuff. It’s just stuff and once you get out of debt, you can start saving money to buy some more stuff. If you have a TV, vehicle or anything else (other than your house) and you owe money on it, sell it and use the cash to pay it off. Anything you don’t need to survive, can be sold to help pay down debts until you get yourself out of this hole.

    Paying off debt frees up the money you need for other things and the faster you can eliminate all your debt (except the mortgage), the sooner you can experience the peace of mind that comes with financial security. Use a budget, cut back on savings (temporarily) and sell anything you really don’t needs to free up the necessary cash to pay off your debts.

    Income Insurance as a Way to Protect Against Debt

    by  • February 21, 2013 • Tagged: ,  • Comments

    If you have an income, you should be thinking about income protection insurance. Many of us protect our cars with car insurance, we protect our bodies with health insurance, and we protect our homes with home insurance. Nevertheless, many of us seem to overlook protecting our income.

    Most households rely on at least one salary coming in, to pay rent or the mortgage, to pay bills, to buy food, and to keep everyone clothed and happy. The problem is, bad things can happen, and those bad things can stop us from going to work. And if we don’t go to work, there will be no money coming in.

    Being out of work because of an accident, illness or injury can be devastating to a household. Bills start to pile up, debts accumulate, and stresses rise. It’s not a good situation to be in.

    However, having income protection insurance can help protect against these types of situations. Income protection can offer a substitute “paycheck” when you are unable to work because of illness or injury. It can help to cover bills, rent, and day-to-day expenses, and can stop debts from mounting up when there is no salary coming in.

    So, how does it work? When you take out income protection insurance, you will have various decisions to make on the type of cover you will need.

    First up, you need to decide on the “waiting period”. This is the period of time between stopping work and starting your benefits. This will vary depending on the insurance provider, but it can be between two weeks and three months.

    Next, you need to decide on the “benefit period”. This is the length of time you will continue to receive benefits when you are not able to work. Again, this will vary according to the insurer, but it can be one or two years, and sometimes last all the way up to retirement.

    Last of all, you will need to decide how much cover you need. You can usually cover up to 75% of your monthly income, but you will need to check with the insurer for their specific conditions.

    Having income protection can mean the difference between debt and stress, and paying the bills and allowing yourself to get back on your feet in your own time. It can help to protect you and your family, and it doesn’t have to be expensive.

    Suncorp offers a wide range of insurance options, including life insurance and income protection insurance. Compare life insurance and income protection insurance policies and prices at Suncorp. For quality insurance from an insurer you can trust, click here to find out more at Suncorp’s website.

    Small Savings Can Lead to Big Gains

    by  • September 26, 2012 • Tagged: ,  • Comments

    snowflake

    Snowflake your debt away

    When we started this blog in 2006, we had a little over $18K in credit card debt. That number was probably higher since we had already started paying down that debt. Also back then, our salaries were about 35% lower than they are now. Since our main goal back then was to get rid of our credit card debt, we needed a way to get more money to put down towards the debt. These days finding little bits of money to pay down debt is know as “snowflaking,” akin to the debt snowball method. The money we found was put towards our debt, and we finally paid off our credit cards in 2007. Here’s a few ways we made a couple extra dollars each month to get rid of that debt.

    Selling old items on Craigslist or ebay

    It’s incredible the amount of crap that follows us around. When Her and I moved in together, we had a lot of redundant items. Much of our stuff was low-quality, college level stuff, like no-name appliances or less-than-ikea furniture, and was easily sold locally on Craigslist. More expensive gear, like last-generation electronics, were put up on ebay to maximize what we could get.

    Having a garage sale

    Our apartment is on a well-traveled street on the way to a well-liked brunch spot, which made it a perfect location for a garage sale. Stuff that didn’t sell via Craigslist or ebay were sold here, in addition to clothing, books, bad art, and neighbor’s miscellaneous items. We definitely needed both Her and I to help out since there were so many people poring over all of our stuff. At the end of the day, we pulled up our car, loaded up everything that didn’t sell, and dropped everything off at our nearest thrift store.

    Checking account bonuses

    Back in the day banks were offering up to $100 to open a checking account, often with a small stipulation of having direct deposit for 6 months or a minimum balance. We each would open an account, doubling the reward. One bank even gave us pie!

    Sold original crafts on etsy

    For our wedding, Her made some incredible DIY crafts. She posted them on some websites for other females to ooh and aah, but she got an unexpected response: requests from other brides to make stuff for them. After testing the waters, she setup an etsy store to gain a larger audience. It was easy money to be had that she could be doing at the same time she watched a reality TV show.

    What are some ways that you’re getting some extra cash to meet your goals?

    image: Juliancolton2

    Giveaway!

    We’ve partnered up with SavingsAdvice.com to offer you the chance of winning $5 through PayPal or as an Amazon Giftcard. It may not seem like a lot of money, but when you’re trying to get out of debt, every little bit counts. Entering is easy – all you have to do it like our Facebook Page. You can get additional entries by doing any of the other activities. That’s it! Even if that takes a minute to do, your effective rate would be $60/hour – not too shabby. The contest is open today until October 5. Good luck!

    (more…)

    Who Knows How Much You Make?

    by  • April 20, 2012 • Tagged: , ,  • Comments

    $12,000 Salary?

    Don't spend it all in one place.

    image: J Wynia

    What would you rather tell people: your favorite sexual position or your salary? Which would you rather people knew?

    Of the topics of conversation that seem to remain forever taboo, revealing how much you make will always be controversial. If you make more than your companions, then they might think that you’re bragging. On the other hand, if you make less than them, you’ll forever be sizing them up and comparing yourself to them. However, there’s got to be some people in your life who know how much you make.

    Does My Wife Know How Much I Make?

    Of course Her knows how much I make. Lately it has become a point of contention because my salary has doubled in the past 7 years and she has only received modest pay raises of 25% of her original salary in the same time period. While Her has one more Master’s degree than I do, our fields of work are vastly different. Her is beginning to feel like she’s not pulling her weight in this marriage, but I don’t feel that way. Our paychecks are combined into one pot of money so it doesn’t matter whose dollars are going where.

    Do My Parents Know How Much I Make?

    No way. Well, if I told my dad probably nothing would change and he would soon forget. But I’ve written extensively about how my mom asks me how much my bonuses are, tried to ask Her financial questions when I’m not there, buys herself a huge post-engagement ring, expects too much at Mother’s Day, buys wine she doesn’t even like, and expects money because we’re asian. She already snoops around my life too much, and if she knew exactly how much my salary is or how much my bonuses are she’d be waaaay up all in my business.

    Do My Friends Know How Much I Make?

    None of my friends know how much I make. In fact, I’m not even sure what my friend’s ballpark estimates of what my salary might be. This can be good or bad depending on which group of friends I’m with. I think that we all can guess by our living situations, the stuff in our houses, our cars (or lack thereof), and our vacations. I think that this is the category of people I least care about knowing my salary. Friends should be friends, no matter if I’m unemployed or if I’m a 1%’er.

    Do My Coworkers Know How Much I Make?

    Nope. I work at a small company and gossip is king. Everybody seems to be in everyone else’s business, and not in a good way. My coworkers all seem to talk about each other behind each other’s backs. Once during happy hour (oh the pre-parenting days) I got our office manager to divulge the information that new hires generally start at $30,000 per year. She didn’t seem to regret telling me this as she didn’t really get along with the new hires. Another time a senior executive accidentally left his W-2 form laying around and someone else found it. It turns out that this senior executive was making significantly more than the other senior executives at my company, and everyone thereafter tried to give that guy the shaft. He still works with us.

    What about you? Who knows how much you make?

    Being the Breadwinner

    by  • April 17, 2012 • Tagged: ,  • Comments

    Bacon

    Bringing Home the Bacon

    Image: cookbookman17

    My relationship is not unlike many in my age-group. This is the time for figuring out your career, for going to graduate school, for living cheaply and on different sums of money depending on where you are. My husband and I try to base our relationship on a degree of equality – his graduate school is no more important than my career, for instance, and vice-versa. In a while, I’ll be doing a part-time graduate program for a masters, and for a summer (or two), he’ll be working at various positions that supplement the household income.

    We have varying levels of income – I work a full-time job, with benefits, and he’s currently in a program that alternately pays him to do research, and requires that we take out loans for his tuition. We’re in a luckier position than many, given our living situation, but we still have expenses and savings goals. And the fact that I work, and he is dependent on tuition loans, means that for the time-being, I’m the breadwinner.

    To be perfectly honest, I love being the wage-earner in the house. I love having disposable income, and feeling in-control of finances, and like a useful, contributing member of society (this is an entirely fabricated feeling, I know, and graduate students are also useful, contributing members of society, but allow me my irrational feelings). It’s not a power issue – I don’t feel that I’m in control of my husband, or that I get “power” over his finances or need to give him an allowance. Our finances are, for the most part, shared (another post, to come), and what isn’t shared is disposable on each of our parts. What I have leftover I can use for what I like, and he can likewise use his money (earned from tutoring and other related stipends) as he sees fit.

    And yet I know this feeling of “control” comes from a place of inequality. I’ve done a great deal of reading on feminist history, and have particularly strong feelings about women and money, and how we can take control (financial and otherwise) of our lives. I’m of the (unpopular, at times) opinion that it’s essential for women to have their own livelihoods and income sources, particularly in marriage and where dependents are concerned, because you never know what’s going to happen (divorce, death, layoffs, financial crisis, etc.). I like making money, and being able to put lots of it towards our savings. At the moment, I’m the one contributing to our savings accounts for a future home, for vacations and car expenses, etc. And this, perhaps, is where the equity comes in. My long-term career goals are lofty, but I work in an industry where the upper pay-ranges are not incredibly high. My husband, on the other hand, will likely ultimately earn more than I will at the height of his career, based on his industry. In a way, I’m comforted by the fact that when we buy a house, it will be with mostly money I’ve saved (even though, for all legal intents and purposes, all of the money going into our household is “our” money), because I know that there will likely come a time when many of our expenses will be covered by my husband. As warped a feeling as it is, I’m glad I have this decade to do my “part,” because I know he’ll be doing his one day (not that he isn’t now, in a different way – clearly there’s no way for me to write about this without putting my foot in my mouth).

    Is this a totally sensible feeling? Not really. But we’re part of a generation navigating changing terrain, with different careers and incomes and financial support systems.

    How have you navigated the “breadwinner” issue in your relationship?

    Better Late Than Never – 2012 Financial Goals

    by  • February 27, 2012 • Tagged: , , , ,  • Comments

    goals

    Number #1 is REALLY important.

    image: JohnONolan

    The last time that we made publicly available financial goals was in 2009. That’s like, before the dinosaurs in internet time. Sure it’s almost March, but that doesn’t mean that it’s too late to make goals for 2012. The goals this year won’t be too different from years past, which goes to show that we’re still struggling with the same things. Old habits are hard to break. Without further ado, here’s our goals for this year:

    1. Increase our savings to $30,000 to purchase a home.  If I ever get around to another net worth post, you’ll see that we have between $18K and $19K in the bank. Sad, because it around the same amount we’ve had for the last two years.  We’d like to put a substantial amount of money down on a home; considering home prices in Chicago, we’ll be able to make a 10% down payment with $30K. I still think that renting isn’t a bad deal, especially with our cheap $1,000 per month rent, but our family’s life situation has changed enough that buying a home makes more sense to us. I just hope that interest rates don’t go up too much in the next year.

    Stretch goal: Save $35,000. I may have to prostitute myself and Her and/or sell our baby.

    2. Pay off student loans that were transferred to a credit card at 1.99% for life, about $3,000. We made a transfer of $11,000 to a credit card that offered us a 1.99% APR for life  in 2007. We’ve been steadily banging away at the balance of the card, and we have a little under $3,000 remaining. This should be pretty easy and we could do this right away, but having it written down will help to ensure that we actually do it.

    Stretch goal: Get federal student loan debt balance to under $40,000. Truth is that it might be under that, I have no idea what the current balance is.

    3. Increase income by at least $1,000 per month. I’ve been diligently working my butt off in order to realize this goal. I’ve been making some crucial connections with people in my network and have been given some business opportunities from them. Ohmygosh that was so marketing-speak, so let’s try this again: I schmoozed with some people with crappy websites and they’re going to pay me to make them better. Also, this blog. It makes money. Yeah.

    Stretch goal: Increase income by $2,000 per month. I’ve done it before, I just need to do it again.

    So in the interest of transparency (which is the buzzword of the year, yeah?) I’ll post an update every month to let you know how these are going. Accountability, AMIRITE?

    Optimize Your Employment

    by  • October 18, 2011 • Tagged: ,  • Comments

    Engineering Department employees, 1962

    Back in the day, TPS reports weren't a big deal.

    image: Seattle Municipal Archives 

    In my 7 years of working for the man, I’ve more than doubled my income from $40,000/year to $81,000/year. It hasn’t been easy, and there’s some things that I would have done differently. Here’s a few thoughts on what has worked for me through the years, and what I wish I had done.

    • Results, Not Effort – If you’re at work from 9am to 9pm everyday and you’re still at the bottom of the totem pole, it’s probably you, not them. Your boss wants you to have the best answer, not a sob story of how hard you tried for a mediocre answer. Corollary: improving your workflow and efficiency is good to help you get to the best results, but is not necessarily an accomplishment itself. Remember, you want to be doing things that will ultimately look good on your resume: “Developed process to shuffle papers faster” is okay, but “Developed process to shuffle papers faster, leading to a 1000% increase in bling” is much, much better.
    • Improve Yourself – If your employer offers a stipend for you to take classes, you should take it. I’ve taken a few classes which has allowed me to add more fancy credentials to my name on my business card.  Even if the stipend doesn’t completely cover the costs, it’s probably a pretty good deal. I’ve dished out up to $300 out of my own pocket after I used up the stipend to take come classes – it’s paid off in dividends so far. I’ve become the expert in areas in which my company previously had weaknesses, making me look very valuable to my employer.
    • Don’t Hoard Information - Being the only one to know how to do a specific task or process can be stifling. You may think that you’re in a good position since no one else can do your work. However, you’ll quickly find yourself doing ONLY that task, which can prevent further growth in your career. I became the Excel and PowerPoint guy at my company for a little while and I got frustrated at all of the questions that I would be getting. I was, in essence, solving their problems, and helping them get good results, instead of focusing on my own work. After a while I decided to write up a cheat sheet and get some good resources for the office. I gained the goodwill of my co-workers, looked good to my employer, and got people to stop bothering me.
    • Sign Up for Retirement Plan and Contribute 10% RIGHT AWAY – A few years ago I struggled with choosing between paying down debt or increasing my retirement contribution. In hindsight, I made the wrong choice and focused on debt reduction. If I had known that my income would have doubled, I would have contributed 10% to my SIMPLE IRA instead of 3% to get the match. As my income went up, I would have had more cash to pay off debt. The instant that you’re eligible, sign up for your employer-sponsored retirement plan and contribute at least 10%.  This is easy if you can do this as soon as you begin employment as you won’t even know that the money is being taken out.
    • Participate in Office Politics – I hate that I’m even saying this, but the fact is that intra-company networking can be instrumental in getting a promotion or a raise. I’m not suggesting that you back stab or undermine (but it does seem to work for some people), but at the very least get chummy with those who are in the know. That little bit of knowledge may give you leverage to put yourself in a better position.
    Are you climbing the corporate ladder? Have you been a rock star at your job? Tell us how you did it in the comments.

    Money and power

    by  • June 29, 2010 • Tagged: , , ,  • Comments

    powertools.jpg

    photo: angusf

    Personal finance blogger Eilene Zimmerman had a post recently that really intrigued me: How Money Can Hurt Your Marriage.

    Eilene hits right on the head a thing that has always played, subconsciously, into my own relationship dynamics: the way finances become a power tool.

    Eilene’s then-partner significantly out-earned her. "One of the biggest problems in our marriage was his demanding job (that paid well) and that the power in our relationship was – at least from my vantage point – all economic," she writes. "I felt like I had no right to ask for anything I wanted – not material things, but more like time away from the kids, time to work, time to go out with friends, essentially time – because he was working so hard. And although money is empowering in many, many ways, it made me feel powerless, because I didn’t have much of my own. My income was tiny compared to The Husband’s, so how could I declare I would be taking a nap on Saturday afternoon?"

    Ding ding. That’s a thought process I suspect is common to a lot of women. Maybe it’s prevalent with anyone, of either gender, in an income-imbalanced relationship, but  my impression is that women are more susceptible to it. Including me — on both sides of the equation.

    Money matters because the most important thing it buys is flexibility. Greater financial resources means greater control over where you live, what you do, how you allocate your time, and a vast swathe of other variables that shape our lives.

    But it’s easy to let money become something else: a way of keeping score. Beyond the ubiquitous cultural programming that tells us money works meritocratically, with more flowing to those who work harder/better/smarter/longer than others, it’s just easy. It’s why people are drawn to sports. The results are black-and-white, simple to compare, to rank.

    And the kicker is that it’s very easy to say "money doesn’t work like that; incomes aren’t neatly correlated to effort," but like most things in life, this is a gray area. Sometimes they are and sometimes they aren’t.

    In college I made $7 an hour working the popcorn machine at a local movie theatre; now I make much more money doing a job I think is way easier and more fun. I don’t work "harder" now than your typical retail worker. And, of course, I make a tiny sliver of what your average Wall Street financial type pulls down; you can guess how much "harder" I think their job actually is. (I’m not talking about skills and qualifications; I’m simply talking about the strain and labor involved in getting through a typical day of work.)

    But then, there’s cases where income does reflect effort. One of my friends works about 70 hours a week, on two jobs; her less-employable (and, honestly, lazier) partner works half as many hours.

    This is where the gray sneaks in. There’s a ton of factors — some controllable, many not — that affect income. And when you have two people in a relationship with financially intertwined lives, the only way to avoid tension is for both to be in synch about how money, especially when it’s imbalanced, should affect everything else. Time, chores, goals, priorities, everything.

    David and I had our own wrangles with this last year. In the middle of an epically bad market, he quit the job he’d held for almost a decade. With nothing new lined up.

    While I understood and agreed with his reasons, I was still not what you would call 100% cool and supportive about the move. ("Shrill" and "cranky" would probably be better adjectives to describe some of my comments about it.)  Yes, we could scrape by with just my income, but did I really want to? I started expecting David to do a hell of a lot around the house, because part of me wanted him to "prove" he was doing as much work as I was. I was bringing in a paycheck, my little brain-voice said; what tangible thing was he doing? I was definitely using money to keep score, even as the rational part of my mind knew that wasn’t really fair.

    (Caveat: This equation becomes a very different thing when you add in kids, illness, dependent relatives, or other complications beyond a relationship of two fully functioning, equally competent adults — which is, of course, the situation most married couples face at some point in their lives. That’s a whole other column.)

    Then David got a new job, with a salary slightly smaller than his old one. That left our incomes even more out-of-whack than they’d been before.

    But that gap doesn’t faze me at all. We both work full-time, office-type jobs; mine just happens to be in a field that pays better than his does. He loves his new job and it’s a great fit for him. Since my income is higher, I cover more of our expenses, but it seems to me that it would be ridiculous to expect him to do more than I do around the house to "pay off" the salary differential.

    So … sometimes I keep score with money, and sometimes I don’t. And though there are times when it’s clearly, actively destructive — most times, I’d guess — it also feels like a thing humans will inevitably lapse into doing.

    How do you sort it out?

    I Don’t Feel Like an Equal Anymore

    by  • March 11, 2009 • Tagged:   • Comments

    When Him and I started our careers, we earned equal salaries ($40,000 each). It felt great! We were working our way up our respective ladders together as equals. I had read about marriages where one partner earns far more than the other, and honestly I was glad that we would never be like that. Or so I thought.

    Over the years, we both got annual raises. Except that Him’s annual raise was always higher than mine. And then this year, my employer froze salaries and I didn’t get a raise at all. So now my salary is $54,000 and Him’s is $69,000. He’s outpaced me by $15,000 in just four years! We’re financially stable so we weren’t depending on our incomes to rise, and financially we’re fine. But emotionally I’m not OK. I feel like I’m no longer pulling my weight and contributing equally to our finances. Given that all our debt is my student loan debt, I feel like I should be pulling harder to get that debt paid off and not burden Him with it. Him doesn’t feel like I’m burdening us, and I’m glad. But I don’t know how to stop feeling this way inside.

    Any suggestions?

    We Write For Other Blogs, Too

    by  • December 23, 2008 • Tagged: ,  • Comments

    We really like credit unions (hey, they give us pie) but because of travel it is more economical for us to bank with a national chain. It was to our surprise that during the summer of 2007 we were approached by the Credit Union National Association (CUNA) to be authors on a blog they were starting. We never made an annoucement about it because we were unsure of how it would all play out.

    Well, fast forward 18 months to today, and we couldn’t be happier with our relationship with them. The blog we write for, MoneyMix, is syndicated among the CUNA member’s websites (the link goes to the blog that is hosted on a credit union’s website in Indiana). The blog is aimed towards 18 to 30 year old individuals who are starting out their adult financial lives or who want to get a better grip on their finances.

    The topics we write about are varied: investing, insurance, housing, driving, borrowing, earning, and spending. We have written over 100 posts (hey, that’s 20% of the posts here) for that blog on these topics. Each week another post is submitted to them and published according to their schedule.

    Of course we don’t do this for free. However, in the grand scheme of things, the money we make from doing this isn’t all that much. But when looking at it from an hourly wage perspective, we make out like a bandit. It’s not just about the money though – we both enjoy writing about finances and welcome the opportunities that this gig may present to us.

    In the upcoming months we’ll highlight our posts from the MoneyMix blog. We hope you enjoy.

    Taxes: I Just Can’t Get Them Right!

    by  • November 6, 2008 • Tagged: , , ,  • Comments

    Earlier this year I posted about our tax situation from 2007, and what we would be looking forward to in 2008. Since Her and I just got married, we needed to do the usual adjustments for our lives, including the exciting tax situation! Here’s what’s been going on.

    I grossly UNDERESTIMATED how much money Her and I would bring in from all income sources: Her’s job, my job, and blog income. When I ran the numbers last February I must have been under the influence of something really good because I was really optimistic about a refund. Plugging the numbers again reveals that we’re going to OWE ~$4,500!!!1!1!1!!

    After finding out how much we are going to owe, I went into super action mode to see what we could do to reduce our tax burden. They are as follows:

    • IRA – We’re at the point in our lives where we’re making too much money to take the deduction for contributing to a Traditional IRA. No luck there.
    • Adjust withholding – To cover our tax burden, we would have to increase our withholding by $450 per pay period. Since it is close to the holidays and we’ve already made travel plans, this doesn’t seem too feasible. Plus, what about the presents?!?
    • Spend money – A large part of our tax burden is due to the increase of blog income this year. We haven’t put too much money back into the business, but we could easily change that….
    • Increase 401(k)/SIMPLE IRA contribution – yeah we could do this as well, but we’d have to contribute $18,000 to erase the tax burden. Again, the travel, the presents, the humanity!
    • Open a SEP IRA and contribute to it – Again, we would have to contribute a LOT of money to substantially reduce our tax burden. The maximum amount that we’re allowed by law to contribute is not nearly what we’d need to offset our taxes.
    • Open a Solo 401(k) and contribute to it – Once again, we’re going to have to contribute MUCHO DINERO to lower our owed tax. The solo 401(k) has a substantially higher contribution limit which would allow us to put in what we would need to make a dent in the tax burden.
    • Gift tax – we’re going to see a tax guy to confirm whatever plan we have, and to PUT THIS TOPIC TO REST.

    So what action are we going to take? We’re going try and reduce our taxable business income. We’re going to open a solo 401(k) with Fidelity and will contribute a good amount of business cash there. We are also going to put some money into our business and expanding. The expenses incurred with that will further reduce our taxable business profit. After all this is said and done, we will owe ~$500.

    Looking ahead to 2009, we’re going to once again try and not owe or have a refund. We’re going to change our withholding to cover our expected 2009 salaries. For this, we’re going to assume that we have no other income. The taxes on our business income will be paid from those funds quarterly. We’ll contribute a small amount into the solo 401(k) to reduce our taxable income to be eligible to contribute to Roth IRAs, which we will max out.

    To make sure that our 2008 and 2009 plans were indeed feasible, we decided to see a tax guy. First things first: WE WILL NOT OWE ANYTHING FOR THE GENEROUS GIFT GIVEN TO US. Second, we had a good chat with our tax guy and he did confirm that our plan was sound and that we were taking advantage of all of the tax benefits available to us.

    Since we’ve returned from our honeymoon, I’ve spent many hours looking up tax topics and figuring everything out. I hope that the knowledge I gained will help us to make better tax decisions in the future.

    Miscellaneous Tax Stuff

    by  • February 5, 2008 • Tagged: , ,  • Comments

    No cohesiveness in this post, just tax stuff that’s been on my mind…

    1. It’s the beginning of February, and all of our W-2′s, 1099′s, and other weirdly numbered tax documents are in. Right now they’re sitting in a pile with all of our other financial crap – I get the feeling that neither Her or I don’t really feel like dealing with it. In years past, we usually run to the computer and do a quick run of our numbers (this and last year using TaxAct) to see if we will owe or receive a refund. With all of the extra paperwork, we’re a less enthusiastic.

    2. While we are less enthusiastic, I ran the numbers for all of my paperwork only. It seems that when I filled out the w-2 calculator last year after I received a raise I may have goofed a little; preliminary calculations are projecting for me to receive about a $4,000 tax refund. Hey Uncle Sam, I’d like some interest on that! No?

    3. Speaking of the IRS w-2 calculator, it seems that it has been unavailable for a little while now. I’d like to adjust my withholding so that I don’t overpay my taxes. We also need to see if Her’s withholding is sufficient as well. Since we’ll be married this year, we have to figure out how that will affect our tax situation.

    4. We need a tax guy. While I’m fairly confident that I ran the numbers correctly, things are starting to get a little more complicated that I’m comfortable with. Revenue from this website has forced us to turn this into a business operation; therefore we’d like to get the eligible tax deductions. Also, as stated above, we’re getting married this year and will need to account for that in this year’s tax planning. I’ve asked around, and surprisingly enough one guy’s name did pop up more than once. I didn’t expect that since there’s a billion tax guys in the city.

    5. After we get married, our income will be too high to collect the full student loan interest deduction. Heck, we may even go over the income amount to collect any of the deduction. That means we have a bigger incentive to pay that sucker off more quickly.

    6. When the hell did tax planning becoming something I worried about? Must…continue…to…resist…getting…older…

    What’s been on your mind about taxes lately?

    Credit Cards In The Cold, Weekly Roundup

    by  • January 10, 2008 • Tagged: , , ,  • Comments

    The weather in Chicago has been pretty crazy. Last week, we went from temperatures in the single digits (with biting wind chills) to 60F+ days. Of course, I chose one of the super cold ass days to leave my credit card at a bar, necessitating a frosty trip back to get it.

    Here’s what I’ve found to interesting reads this week…

    Jonathan at My Money Blog revamping his asset allocation. See how he’s allocating his funds according to which account. His style of asset allocation and number of accounts closely resembles ours.

    Clever Dude reveals how he monetizes his site. As you can tell we’re not exactly ad-free either. We should put up a post detailing our strategies as well.

    Million Dollar Journey
    is considering building a home gym. We have well-used memberships to the health club.

    Making money as a blogger? You may want to check out these 46 tax deductions that bloggers often overlook. (via BeanCounter)

    It’s Your Money tells what he did with his website income in the year of 2007. His isn’t quite the enviable position to be in, is it?

    Are SMART goals really smart? Millionaire Nuemes loudly opposes the prevailing trend towards SMART based goal setting, and challenges you to make and accomplish some Real Goals.

    The Honest Dollar writes a post in defense of personal finance bloggers who write mostly about retirement. Yes, the PFblogosphere is inundated with posts about retirement, frugality, and saving. Here’s a little secret: we try and write about the fun stuff about finances. Read the archives if you don’t believe us!

    Happy 2nd Birthday, Make Love, Not Debt (With Roundup Included!)

    by  • January 3, 2008 • Tagged: , , , ,  • Comments

    candle2.jpg
    photo: LensENVY

    On January 1, Make Love, Not Debt had its 2nd blogoversary! I really can’t believe that this project took off the way that it did. I couldn’t have done it without all of you, the readers and pfblogosphere!

    Here are some posts that are pretty interesting:

    2 Million is finding out the difficulties of managing cash flow as a newlywed. Her and I have had our finances intertwined for almost 3 years and we’re still figuring it out.

    Lazy Man has posted his alternative monthly income status report. He raked in an incredible $2,200+, mostly from his blog income!

    Money and Values asks if you go the long way to avoid tolls. We dont – in Chicago tolls aren’t too expensive and we hardly drive. Plus, with the addition of open road tolling we just bite the bullet and go the toll routes.

    eFipo tells how he splurges on the big nights, with a good story from his New Year’s celebrations. We tend to do a lot of small things since we’ve found many cheap forms of entertainment.

    Five Cent Nickel answers a reader question on Roth IRA limits being reached after marriage. This is of particular interest since Her and I will be tying the knot this year, and pay raises may put us close to the income limit.

    We’re in Debt muses: when can you have too much credit? Interesting that they ask, since we’re still wondering what to do with all of our credit cards with no balances.

    Another Raise: How Bitersweet It Is

    by  • September 14, 2007 • Tagged: ,  • Comments

    This past month marks the third year I will have been working for my company; it also marks the date of my annual salary adjustment. When I opened up my pay stub I was pleased to note that my salary has been increased by 10.5%. I certainly have nothing to complain, as that is well above inflation and is pretty generous considering I got two raises last year.

    I now earn 57.5% more than when I first started my job three years ago. While the per-paycheck net take-home pay increase isn’t that significant, if we’re careful the extra cash can certainly go a long way.

    With this raise, though, comes a saddening realization: I now make what I consider more than an entry-level salary. Why is this sad? Because for the first time in my life, I feel locked in to this one job in one particular niche field for financial security. In the past few months I was lightly considering a career move into a related field, but in order to do that I would have to start at a near entry-level position, presumably with a salary to match. Before this raise, the financial hit, if any, wouldn’t have been too severe. What this raise has done has, in effect, limited my career options.

    Thankfully, I really do enjoy my job and the people who I work with. My job also doesn’t demand too much of me outside of regular work hours. Not to mention the nice perks that we get. My life outside of my job remains fulfilling and joyous.

    But now I am beginning to realize the whole depth of the term “financial freedom.” It really all boils down to having choices and options. It may take us a long time to truly achieve that freedom, but in the meantime I hope I can have a fulfilling life so that I can be most happy with the options and choices that I’ll have when I finally get there.

    Payroll Error In My Favor

    by  • August 31, 2007 • Tagged:   • Comments

    I got overpaid on my latest paycheck by several hundred dollars. When we had guests at our house this month I took off some days without pay because I had run out of vacation days. I filled out my time sheet correctly, but it looks like payroll wasn’t paying attention. At first I was delighted, then confused, then dismayed. I considered keeping the money (it’s their mistake and obviously nobody had noticed, maybe I could just not notice either?) but my conscience compelled me to do the right thing. I sent a note to payroll and expect the money to be deducted from my next paycheck.

    Le sigh.

    Follow up: Raise and Taxes

    by  • September 13, 2006 • Tagged: ,  • Comments

    Last week I wrote about my awesome raises that I was fortunate enough to receive this year, and how I hadn’t adjusted my withholding accordingly.

    This weekend, I played around with the IRS Withholding calculator, and plugged in the numbers that I had now. According to the calculator, I would owe Uncle Sam $1,721 at the end of this year. Ouch. That’s even worse than last year’s taxes owed.

    I played around with the calculator for a bit, and I decided that raising my contribution to my SIMPLE IRA would not lower my income enough to really make a huge dent in the amount that I would owe. I followed the directions that the calculator page gave to me – decreased allowances to “0″ and withheld $130 in addition – and hopefully I won’t owe or be refunded more than $25.

    This won’t set us back financially, although we were going to put the extra money towards the credit cards. Maybe next raise.

    Are there any other alternatives to lowering that tax bill?

    Promotion and a Raise!

    by  • September 8, 2006 • Tagged: , ,  • Comments

    A few weeks ago I was promoted! There were a hints dropped by my supervisor, as well as rumors from the higher-ups at my company. Hey, when you work at a small company of 30 people, word tends to travel pretty fast. It was pretty awesome to get a new batch of business cards with my new title on it.

    With the promotion came a salary increase. In fact, this would be the third pay raise in a little under two years. Since I’ve started, my pay has increased by 42.5%. This year alone my pay has increased twice, I got a bonus for referring a co-worker, a summer bonus, and I’m expecting another bonus in the winter. Including all of these bonuses, Her and I will breach a six-figure gross income this year. Whoa.

    The downside to all of this? I haven’t checked to see how these pay increases will affect the amount that I owe on taxes. I’m going to run all of my numbers through the IRS Withholding calculator and see how I’m doing. I’ll provide an update on Monday.

    One-Year Update: The Joint Checking Account

    by  • April 14, 2006 • Tagged: , ,  • Comments

    About a year ago we decided to combine all our income, assets and debts. This was because we were moving in together for the first time, and it seemed it would be impossible to fairly divide all the shared expenses. Not wanting a big hassle, we held our breath and jumped into the pool of joint finances. One year later, I have to say it was a great decision. All our income (salaries, bonuses, tax refunds, eBay profits, rebates, etc) goes directly into the joint account. We each divert $75 per paycheck into our own “allowance” checking accounts, so we each get $150 per month to use toward our individual wants. Individual gifts (from birthdays etc) gets divided up so that $100 goes into the allowance account and the remainder goes into the joint savings account.

    All our joint expenses are paid from the joint checking account. Every Saturday we sit down toegther, gather up the bills, decide how to allocate the funds available (which credit card gets an extra payment etc) and pay bills. We leave around $100 in the joint account to cover any additonal expenses during the week, and put any leftover money directly into our online savings account. We do this knowing we can always get the extra cash out of savings if we need it, however just having it out of sight has always prevented us from going over budget.

    Other joint account expenses include things we can both use, such as dinners out, date nights, household items. groceries, etc. We also sometimes use the joint account to pay for some new clothes if we both need to stock up on necessities and are out shopping together.

    Expenses that come out of our allowances include personal indilgences such as trendy clothing, lunches out, happy hour with coworkers, hobby supplies, etc.

    This arrangement has worked out so well that the only time we argue is when we miscommunicate about our intentions. For example, a few times I have been trying to decide whether or not I should splurge on an expensive item with my allowance. I ask him what he thinks, and he assumes I’m asking because I want it to come from the joint account. That has happened a few times, so now I’m better at being clear about where the money will come from.

    Money is All Relative

    by  • February 19, 2006 • Tagged: ,  • Comments

    In college, everyone is poor. That makes it pretty easy to just make friends regardless of how much money one has. Sure, there are a few people who seems to have an endless supply of beer money, but they are usually the exception and not the rule.

    Then comes graduation. Many of my friends had jobs waiting for them right away. Others weren’t so lucky. Some went to law or med school. She and I choose grad school.

    Two college roommates/great friends had very different post-graduation financial lives. One didn’t find a job out of college, and lived at home. He eventually found a job outside of his field that didn’t pay so well; he eventually worked his way up the ranks, bought and paid for an SUV, and is now looking and saving for a house. He doesn’t go out so much to bars or restaurants, but when he does, he sticks around home in the suburbs where it isn’t so expensive.

    My other friend found a really good paying job out of college. He actually bought an SUV in college when he had a high-paying internship. He travels extensively, goes out to expensive bars most nights of the week, and eats out all the time. Weirdly enough, he didn’t know what an expense ratio was when we were talking about mutual funds.

    It is weird how money has changed my relationships with my friends. With the first friend, I don’t feel so…poor? uncomfortable?…when we go out. With my second friend, I sometimes feel inadequate and cheap, and that I can’t keep up. The MightyBargainHunter reminded me of an article I read this week at CNNMoney about the discrepancies of the incomes of recent college grads. From the article:

    Wealth disparity can drive a wedge between even the closest friends. This is increasingly a fact of life in today’s winner-take-all economy, where some skills are in fevered demand and others are, well, not. And it can make a friendly lunch feel weird.

    There is nothing wrong with either of my friends’ lifestyles, but the differences in income have dictated how they are spending (pun?) their young adult lives, and have had the potential to change the way that we all handled our relationship with each other. A few nights ago we went to an event where money wasn’t even a consideration, which gave us the opportunity to have a lot of laughs just like the old days. It reminded me that our friendship is based on everything but money.