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Archive for April, 2011

Thanks and a Round Tuit for you?

First, let us give a great big THANKS to Duane at HoCoConnect for posting about the importance of financial literacy!  Since jumping into the blogosphere just a couple of months ago, Duane has done a fantastic job of shining a spotlight on a number of non-profit organizations doing great work in Howard County.  I always enjoy the chance to connect with Duane — he is easy-going, thoughtful and reflective while at the same time full of energy and great ideas.  He is a runner, a thinker, a grandpa, a neighbor, an advocate and so much more.  If you ever get the opportunity to have coffee with him, take it.  You’ll come away better for it.  And while you’re there, ask him about his commitment to working to provide opportunities for youth aging out of foster care.  His dedication to the effort is nothing short of inspiring.

Next — our school system’s Academy of Finance program is looking for a few good businesses out there who might be willing to offer a summer position to a business student.  I serve on the community board for the program and we have 5 teens who have not yet been placed in jobs.  The Academy of Finance program is an intensive 2 year high school program for juniors and seniors looking to jumpstart their career in business.  The students take a series of classes (truly college-level material) in economics, banking, accounting, marketing and international finance. 

In the summer after their junior year, the students are expected to obtain a paid internship experience at a local business.  In this economy, it’s tough to come by those paid jobs though.  The internship should be 180 hours at minimum wage (or higher) — a total cost of just over $1,300 or so for the host business.  Check out what local law firm Davis, Agnor, Rappaport and Skalny said about their 2010 intern DARSLAW.

Our remaining five students have expressed strong interest in working with firms in the areas of:  law, marketing, accounting and finance.  All have indicated that getting experience with general business work would be helpful too.  So really any local organization could provide a perfect opportunity to learn the fundamentals of business.  I’m attaching the flyer with the contact information for the instructor of the Academy of Finance program. Flyer for Internships2011

If you have some pesky projects and no sign of getting a RoundTuit… perhaps working with one of these students this summer might be just the ticket. 

 

Categories: Uncategorized

Tax Wrap 2011

Another tax season is in the books and I’m wondering what the Liberty Tax guy that has been standing on the side of Route 40 for the past two months is doing today…  At one point a month or so ago, I rolled by with the window down and must have unintentionally had either the “are you kidding me?” look, or the “I feel sorry for you look” on my face.  I’m not sure which, but the guy leans toward the window and says “hey, I’m just a business man, trying to make a living.”   I suspect that business is tough for these guys — which got me started thinking about how the tax filing season has changed so dramatically in the past decade.

For all our criticisms of the IRS, the agency seems to embrace technology to make its operation more efficient and to better serve the public.   Some readers will certainly disagree — but I find it absolutely amazing that the agency will process over 82 million returns in what amounts to about 80 days.   And the public has embraced the techonology too.  About 80% of returns (either self-prepared or prepared by a professional) are now e-filed.   And, despite our image of the midnight run to the post office in Baltimore, most people file early — with about 3/4ths of returns in before April even hits.   I’m not sure the government loves this, though.  With the filers receiving an average refund of about $2,970, this is, in essence, a 244 billion dollar little loan from 2010 that the American public is calling due.

Ever wonder how the government is spending your taxes?  Here’s a great little tool/illustration:  http://www.wheredidmytaxdollarsgo.com/.  Plug in your income and roll over the pie chart. 

Last, I can’t sign off from this post without adding the old two cents on that refund the average household will receive.  I’m seeing news stories about giddy retailers hoping that (unlike last year when consumers held onto their refunds) we’re all going to enjoy some retail therapy after the tough economic times the past couple of years.   Given sky-rocketing gas prices (not to mention the resulting price increases on food), we all need to think twice about how we spend that refund.   Perhaps a good strategy would be to put the refund into savings for a few months before allowing yourself to spend it.  A few months of delayed gratification can offer a ton of perspective.  Alternatively, let yourself spend a small portion of it — perhaps 10% — on a splurge, and put the rest into an IRA or college savings account for your child.  I wonder how the Liberty Tax guy will spend his refund?  Maybe on a warm March day in 2012, driving down Route 40, I’ll have the chance to ask him. 

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Categories: Uncategorized

Politics, paychecks and being prepared…

Needless to say we were all relieved to hear that a government shutdown was avoided late on Friday.  Here in Maryland — and particularly in Howard County — the economic stability of our community would have been shaken to the core if there were a prolonged standoff.   Just look around at your own friends and neighbors to count the number who are federal employees, contractors, or receive services that might be affected.  How well would they (or you) be able to withstand a period of time without pay?  And that got us to thinking…  What can you do to be ready?

Got savings?

Far too many don’t.  (Or don’t have nearly enough.)  The standard for emergency savings used to be 3-6 months of expenses.  These days the recommendation is to have at least six months.  Unfortunately, this typically means finding a way to accumulate tens of thousands of dollars — a daunting task to say the least.  But in the end, finding a way to start funding your savings for emergencies will likely mean the difference for your ability to successfully withstand crisis.  Start small and start today.  Ask your employer if you can direct deposit into two accounts.  Then, open a small savings account and begin allocating 5-10% of your take home pay into this account.  For most folks, putting the money directly into the separate savings account is an easy way to save — and most find they don’t even miss the money!

Pay down your debts!

You’ve got some credit cards with a big balance, right?  But, you pay at least the minimum every month and you pay on time — so no dings on the credit report.  So what’s the big deal?  Well — besides the obvious money flying out the door toward interest on the debt — there’s another, even greater risk.  By maxing out on the cards, you don’t leave yourself any cushion to use the cards in times of crisis.  That’s right — if you have a sudden loss of income, you’re going to need to be able to use those cards without going over the limit to pay for necessities like food and fuel.  The rule of thumb says you should never carry a balance more than 30% of your available credit.  And, although we always suggest limiting the number of credit cards you carry, it’s probably better to spread your balances out over a couple of cards — even if it means having 1-2 extra accounts.  The key is to avoid the temptation to spend the extra cards up to the limit. 

Don’t be fooled when they say… “You CAN afford this…”

Whether it’s a house, or a car — or any big purchase you borrow for — recognize those tricky words.  Just because you CAN afford it, doesn’t mean you SHOULD buy it.  Your house payment shouldn’t be more than 30% of your take home pay.  (And, perhaps only 30% of the net income of just one of the earners in the house for extra security.)  Your total transportation costs (car payment, plus gas and maintenance) shouldn’t be more than 12-15%.   The housing costs are particularly tough in Howard County — but keeping the guideline in mind will help you shop smarter. 

Student Loans

During times of crisis you may be eligible for deferment of your student loan.  Contact the lender who holds the loan to inquire.  This should only be undertaken for short periods of time.  According to FinAid, deferring a student loan for 3 years, doubles the cost of the loan — so this should only be a short, stop-gap measure.  It is, however, critical that you not just ignore your student loans in times of crisis.  Student loan debt appears on your credit report and will stick with you forever — it’s one of a just a few types of debts that even bankruptcy will not dissolve.

Be Reflective…

This is probably the toughest one for most people.  Go through your monthly expenses and write them down — ALL OF THEM!  Then, multiply them to see how much you are spending on the little stuff over the course of a year.  This may be just the reality check you need.  How much of your money is going to Comcast or Verizon?  How much is going to Starbucks or Panera?    Once you add all this up — you may find that the $5,000 a year you are paying for TV’s and phones just isn’t worth it.  Are you really creating fulfillment for you and your family with the choices you are making?

While it’s great to start taking action to prepare for a crisis today.  Chances are you’ll not only sleep better at night knowing you have a solid plan in place to deal with emergencies, but you may make different choices that make the days more enjoyable too.  And, the next time Congress decides to play political badminton your paycheck — and we know they will  — you’ll be ready.

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Categories: Uncategorized

Making Money Fun!

The Money Matters financial education event hosted by Council Chairman Ball on Saturday was a huge success.  The event grows every year and this year was nothing short of fantastic.  The hands on activities by each of the participating organizations were a hit with both kids and parents.  If you didn’t have a chance to attend, check out the pictures on the library’s flickr stream at:  http://www.flickr.com/photos/hocolibrary/sets/72157626288571439/

We offered a scavenger hunt for kids at the fair this year – and thought you might enjoy testing your money trivia skills on a few questions.  Might be a fun way to celebrate Financial Literacy Month at the dinner table with the kids tonight!

1) Which President’s face is on the dime?

2) What building is on the back of the nickel?

3) What materials are used to make a one dollar bill?

4) Where are U. S. coins made?

5) Where is the best place to keep your money?

6) The amount you pay to borrow money is called…

7) Where did the piggy bank get its name?

8 ) A U.S. $1 bill usually lasts how long in circulation?

9) According to history, the first banks and loans were recorded in what century?

10) Who made the first credit card?

11) All U.S. bills (any dollar value) weigh the same.  How much?

12) How many out of every 10,000 U.S. bills are counterfeit?

13) On an original Monopoly game board, what is the total value of all the property? (No houses or hotels.)

14) How many times does the phrase “The United States of America” appear on a $100 bill? (Note this is the pre-2010 issue of the $100)

15) True or False? It costs more than a penny to create a penny at the mint.

16) The highest value U.S. bill currently printed is the….

Answers here: Money Trivia Answer Key

So how did you do??? 

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Categories: Uncategorized