When you’re young, you usually have very little money but a whole lot of time. You’re able to turn that time into money through your work and that’s generally where you make the bulk of your income. As you get older, your savings grow and are able to generate income and, hopefully, generates the bulk of your income. The more you can save when your young, the faster that capital accumulates and you can live off that income. You go from depending on your labor for income to depending on your capital. I’m frugal because I believe my dollars can work on my behalf if I can keep them in my wallet.

The second reason I’m frugal is because there are things I value and things I don’t. For the things I don’t value, I want to pay as little as possible. I don’t pay top dollar for a brand new car, I buy used and off Ebay to get the best deal I can on something reliable. I don’t need a $40,000 or $30,000 or even a $20,000 car (and the car loan that comes with it) because that isn’t important to me. I’m able to save there so that I can spend my money on the things I do care about.

As I’ve often said in the past, my lovely wife and I love to travel and when we do, I pay for quality and value. I don’t spend freely without regard but I certainly budget a large amount for the trip and spend close to it (if not more!). As Greg Karp once said to me, Experiences appreciate, things depreciate, and I fully intend to invest as much as possible in experiences.

Why are you frugal?

Your Take: Why Are You Frugal? from personal finance blog Bargaineering.com.

While the statistics are sobering, it does show how much the recession has hurt a lot of people. If you lose your job, the first thing to go after your emergency fund is probably going to be your retirement savings. Keeping a roof over your head and food in your stomach is going to take precedence over retirement tomorrow.

If you dig a little deeper in the statistics, you get a little more color on the situation and it’s not a good one. 56% of workers between 25 and 34 have less than $10,000 in savings, 46% between 35-44, 38% between 45-54, and a mind boggling 29% of workers over 55 have less than ten grand in their retirement savings. (on the other side, it’s pretty amazing that 10% of workers between 25 and 34 have over $100,000 in retirement savings, so it’s not impossible, which totally blows away both my expectations and what we know about average retirement savings)

If you’re one of the ones with less than $10,000 in retirement savings, don’t despair because 43% of Americans are there with you. We’re going through some tough times now but once we get back on our feet, retirement savings has to become a priority. Social security and other entitlement programs aren’t going to be here forever. It’s only a matter of time before they are replaced as defined benefit (pension) retirement plans are being replaced with defined contribution (401k) retirement plans (Math doesn’t care which political party’s name is written on your voter card, the current system is not sustainable).

If you’re in better shape, excellent, congratulations but don’t pat yourself on the back just yet. Share your tips with your working friends so that we can come back in five years and talk about how great it was we reversed the trend. We’re not getting many incentives to save for the future, just look at CD rates if you need a reminder, but that doesn’t mean we shouldn’t do it.

43% have less than $10k for retirement [CNN Money]

Working Americans Have Almost No Retirement Savings from personal finance blog Bargaineering.com.

Let’s have some fun facts!

Fun Facts about the $500 Bill

• Here’s your first fun fact – There were two designs for the $500 bill, a 1918 design with a blue seal and a 1928/1934 design with a green seal.
• According to the Bureau of Labor and Statistics’ inflation calculator, $500 in 1928 is worth approximately $6,335.88.
• Depending on the quality of the bill, the 1918 bill is worth as much as $35,000 and the 1928/1934 version can fetch as much as $15,000 on the collector’s market.




1918 Blue Seal Design



• John Marshall is featured on the face of 1918 blue seal design.
• Marshall has a distinguished career as a statesman. He was a member of the House of Representatives, Secretary of State under John Adams, and the longest serving Supreme Court Chief Justice, sitting from 1801 to 1835.
• Marshall was one of the non-Presidents to appear on a bill. Benjamin Franklin is on the $100 and Alexander Hamilton on the the $10 (Salmon P. Chase, Secretary of the Treasury, is on the $10,000 but that hardly counts). Washington ($1), Lincoln ($5), Jackson ($20), and Grant ($50) were all presidents. I suppose he didn’t do a good job because ten years later he was replaced by President McKinley.
• The Secretary of State that signed the bill was William G. McAdoo, who served from 1913 to 1918 under President Woodrow Wilson.
• On the back, there’s a picture of Hernando de Soto discovering the Mississippi River in 1541.
• Normally, the blue Treasury seal on the bill indicates it’s a Silver Certificate.




1928/1934 Green Seal Design




• The 25th President of the United States, William McKinley, is featured on the face of the bill.
• President McKinley was assassinated in Buffalo by Leon Czolgosz at the Pan-American Exposition in 1901.
• The Secretary of the Treasury that signed the bill was Andrew W. Mellon, who served from 1921 to 1932, through three presidents (Harding, Coolidge, and Hoover).
• The back of the bill has no picture, it just has an ornamental “500″ in the center.
• Normally, the green Treasury seal on the bill indicates it’s a Federal Reserve Note.

I hope you enjoyed these facts about the five hundred dollar bill. It was a little trickier finding many facts about this bill since it’s not large enough of a denomination to get the attention the $100,000 bill gets, but I hope there were a few gems in there. If you didn’t get enough trivia, here are fifty fun facts about cold hard cash that I guarantee will teach you something you didn’t know beforehand!

(if you know of a fun fact I didn’t include about the $500, be sure to share it in the comments!)

Fun Trivia Facts about the $500 Bill from personal finance blog Bargaineering.com.

Whenever you consider the financial trade-offs between buying something and renting something, it really comes down to a few a few factors and here’s what I think they are.

How To Decide If Renting Beats Buying

How much of a premium are you paying just for the right to rent rather than buy? This is best illustrated by a car lease. The typical car lease requires you to put down a significant down payment because you’re “paying” for the immediate depreciation of the car. That’s a significant premium over buying because, in theory, you can divide that cost over the life of the car. That’s one reason why leasing a car is a bad idea absent compelling reasons to do so.

How long will the product last beyond your regularly scheduled payments? The true value in owning a car comes in after year 5, or when the car note is paid off, and you can drive the car into oblivion. That “drive the car into oblivion” period is where buying is better than leasing because you’re getting the car for “free,” excluding gas and maintenance. With a lease, you are required to enter a new lease or begin a new set of payments if you buy the car directly from the company.

You have to look at how often you use the item. Your monthly payments won’t change but your usage behavior will dictate how much it costs per use (the same idea as maximizing your entertainment dollar). If you live in a city and use a lot of mass transit, it makes no sense to lease or buy a car. If you drive everyday, then you’ll want to consider buying or leasing a car.

With a car, it sounds pretty easy, right? It’s been analyzed to death because it’s such a major purchase. You know where it hasn’t been analyzed to death? Almost everything else! This is especially true for entertainment media like books, magazines, movies, video games, etc. I would argue that in almost all cases, you’re far better off renting or borrowing something instead of buying it. Let’s take each item and make a case for renting.

Rent Video Games

Video games cost around $60 a pop for the new systems like the XBox 360 or the Playstation 3. For $15.95 a month (plus tax), you can get one game a month (sort of like Netflix, but for games). That means each month you’re paying a quarter of a game’s value to rent it. At first that sounds ridiculous, because after four months you won’t actually own that game… but think about how many games you play for more than four months. I don’t mean play every once and a while, I mean hardcore play all the time. There probably aren’t that many games. How many games are in the deadpool part of your library? Probably a lot. How many of those did you play for at least four months straight?

Movies

Just look at all the DVDs you own… how many do you watch? (oh by the way, they’re obsolete, time for Bluray) This is why Netflix is popular. Enough said.

Books

We are fortunate enough to live beside a library so we hardly ever buy books, but books are another entertainment media you don’t ever really need to buy. How many books do you read once and then never again? I would argue you should get your books from the library but if you aren’t near one and want an online book rental alternative, Bookswim seems pretty slick but it pricey. The base plan is $19.95 for three books out at a time (about the price of three paperback books). If you’re a voracious reader, that might be a good option is a library is ridiculous far away… otherwise hit the library and “rent” your books.

Clothing & Accessories

With the popularity of Netflix, plenty of other “things” are available for rent by mail such as handbags (Bag Borrow Steal) and fashionable clothes (Rent The Runway). If it makes sense for tuxedos, why not for women’s clothing and accessories? I’ve always wondered why they don’t rent bridesmaid’s dresses as often as they do tuxedos but you can rent handbags.

Think about some of the things you buy and use infrequently, see if there’s a way for you to rent it! Is there something else you can rent, rather than buy, that I missed? I’d love to expand this list.

When Does Renting Beat Buying? from personal finance blog Bargaineering.com.

Despite being considered an investment classic, I had never heard of it in part because it’s a classic in the sense that it gives a fantastic account of the financial system in the late 19th century and early 20th century. It’s more history than investing education though it has a healthy dose of both, especially with Markman’s annotations. You can preview it at Google Books and even the few pages of the preview give you a very good feel for how the book is.

Livermore, on which the book and the character Livingston is based, won and lost millions of dollars speculating on the stock and commodities markets during the early 1900s, even making ten million dollars over the course of a month. The annotated version links the fictional story of Livingston with the reality of Livermore to provide a much richer experience. Without it, and a clear understand of what is truth and what is fiction, I think the original probably would’ve fallen more into the fictional bucket for me. Having the annotations put the story into context and gave more credence to the story (did Lefevre make it up or did that really happy? Annotations make it clear what’s real and what was “editorial license).

For me, the book was an entertaining way to learn about some financial history. For example, on page 299, the Lefevre’s story mentions Ponzi and the annotations go into Charles Ponzi’s scheme in much greater detail. Ponzi promised 50% returns in 45 days by investing in “international reply coupons.” These international reply coupons were real coupons, they were created in 1906 to facilitate global shipping and redeemable into country-specific postage. Ponzi claimed to arbitrage postage rates… not an unbelievable idea right? Well, except he didn’t invest it and was outed in a Boston Post series. Ponzi only served 10 years (Bernie Madoff sentenced to 150 years!).

It’s a fun book to read, I learn something interesting every time I open it up (I didn’t read it cover to cover, though I feel like I should), and it’s a fun time if you like this sort of thing.

Reminiscences of a Stock Operator by Edin Lefevre from personal finance blog Bargaineering.com.

As I started to do more research on stock certificates, I finally understood why prices for stock trades had fallen so much in the last twenty years. The process for buying a certificate isn’t difficult, it just takes a bit of time, and there are a few options out there. Some of which are actually quite pricey, relative to the price of GM at the time (eighty five cents).

Did you know there’s a name for the “study and collection of stocks and bonds?” It’s scripophily and it’s a specialized field of numismatics, which is study and collection of currency. It’s appeal is in intricate designs and engravings of some stock certificates (and sometimes because of the signatures on the certificates, like John D. Rockefeller of Standard Oil Company).

The Process

Whenever you buy stocks through a broker, they’re usually registered in “street name.” The street name is the name of your broker and this facilitates the buying and selling of stocks on the open market. For example, if I were to buy a share of Coca-Cola, TradeKing take my money and buy the shares. They would buy the shares in their name and Coca Cola would recognize them as the shareholder, they would not know who I was. When Coca Cola pays out dividends, TradeKing sends them my way. When Coca Cola requests a vote, TradeKing sends me the proxy.

If you want the shares, you will need to employ the services of a transfer agent. Each company works with a transfer agent to issue shares of stock, you will need to work with one to get a stock certificate issued in your name. You can do this by buying shares through a company that will interact with transfer agents on your behalf (like OneShare), or you can do it yourself by either buying directly with a transfer agent or through a broker.

Buy Through a Transfer Agent

You will need to track down the transfer agent for the company whose shares you want. You can usually find this information in their Investor Relations section or anywhere they share their direct investment/purchase plans. For example, if you want to buy shares of American Express, you need to work with The Bank of New York Mellon and their BuyDIRECT program. Once you make a purchase, you can request that they mail you a physical stock certificate.

Buy Through A Broker

As I mentioned earlier, if you buy stock through a broker it will be registered in street name. After you’ve made the purchase, you need to contact your broker to find out how to get the shares transfered to the transfer agent for the company. Once you’ve made the transfer to a transfer agent, the process is the same as working through a transfer agent.

Best Way to Buy a Stock Certificate

It comes down to why you want the physical certificates, since there is no financial benefit to having the paper certificates (in fact, it makes them more illiquid since you have to send them back in if you want to sell it). If you’re buying it to collect, you may want to go with a service like OneShare because then you can have it framed, not folded, and shipped in a way that preserves it’s condition (but it’s not cheap!). If you want the cheapest option, it’s probably cheapest to buy it directly from the transfer agent and have it mailed to you. You can get a nice frame from a local crafts store and still end up with a nice little keepsake.

Of, if having an actual legitimate certificate isn’t that important, nothing stops you from just searching for and printing out a high quality scan of a certificate.

I never did buy those shares of General Motors but I think I saved myself the 85 cents.

How to Buy a Single Share of Stock Certificate from personal finance blog Bargaineering.com.

At the core of many of these decisions, as sad as it may be, are taxes. It’s obvious in the case of the Roth IRA and Traditional IRA and less obvious in the housing (interest, property taxes, and such are tax deductible), but it’s present in many money decisions. Do I take that new job? Well, how much do I really get to take home? That will, in part, depend on taxes.

In the same way that it’s important for you to know the value of your time, it’s important for you to know your tax bracket.

Answering “What’s My Tax Bracket?”

You can see your federal income tax brackets here but you’ll have to go to your state’s Department of Taxation (or similarly named department) website to find your state income tax rate.

With the federal tax brackets, you have to do more than find the range your salary falls in. You need to also take into account deductions you may be taking, because that will give you a more accurate marginal tax rate, which you can use to help make decisions. For example, if John earns $35,000 a year, he appears to be in the 25% tax bracket. However, he can take the standard deduction of $5,700, putting him in the 15% tax bracket.

It’s important to know which tax bracket your in because you can use that information to help make decisions. For example, if you were planning on selling a stock you own, knowing your bracket will help you understand what you will pay on the gains. For long term capital gains, you pay 0% if you’re in the 10%/15% brackets and 15% in the higher brackets. You might want to sell a long term holding if you’re in the 15% bracket to lock in tax free gains.

I wouldn’t spend too much time calculating your exact effective tax rate, you won’t need that much detail unless you are making a very large decision and the decision hinges on knowing your exact rate. Usually a ballpark figure is good enough to help you make decisions.

What’s My Tax Bracket? from personal finance blog Bargaineering.com.

One of the important ideas behind dividend investing is that you should reinvest the dividends if you don’t need the income. Public companies offered dividend reinvestment plans, or DRIPs, that let you buy shares directly from them and have your dividends reinvested for free. Nowadays, many brokers offer this service for free and I take advantage of them.

However, just because everyone says it’s a good idea doesn’t make it a good idea. Why should I reinvest my dividends?

The main argument, as far as I can see, for reinvesting dividends is because you get to dollar cost average additional shares at no additional cast, assuming your broker offers free dividend reinvestment (and many do). It’s recommended that you reinvest dividends because it lets you buy more of a company you had confidence in at absolutely no cost.

You still pay taxes on the dividend income. So if you do reinvest, be sure to account for the tax you owe on the dividend because the entire dividend will be reinvested. For example, I own a few shares of Costco (COST) and get paid a small dividend of $0.18 a share every quarter. If I had 100 shares, I’d get $18 a quarter reinvested in the form of Costco shares. In turn, I’d owe 15% in taxes on the $18 so I need to set aside $2.70 in taxes.

If you read about the subject elsewhere, they’ll show you numbers about how reinvesting is better than not reinvesting but I think they’re unfair comparisons. If you reinvest dividends, you’re investing more of your money and so if it appreciates then you make more. If the stock falls, you lose more money. Over the long run it’s more likely that you will gain more but it’s not a 100% certainty, plenty of well-known and illustrious companies see their stock price fall to $0.

Dividend reinvestment is a great way to accumulate additional shares in a company you believe in and those shares will, in turn, pay out dividends. It isn’t, however, some sort of fancy magic.

(Photo: epicharmus)

Why You Should Be Reinvesting Dividends from personal finance blog Bargaineering.com.

Unfortunately, even with all the strategies below, nothing replaces the dependability and safety of a high yield savings account. The days of exceptionally high yields protected by FDIC insurance are gone until we see the stock market reach its once lofty heights but hopefully some of these strategies can bridge the interest rate gap without introducing too much risk.

Fixed income investments are usually safe investments that give you a fixed rate of return. The safe part is really a relative term, as bonds are only as safe as the ability for the bond issuer to pay the fixed interest rate. The idea is that you pick stable companies or municipalities and you have a reasonable expectation that the interest will be paid. How do we use those principles to find similar “investments” to boost our savings rate?

Reward Checking Accounts

Reward checking accounts are checking accounts that offer a much higher than average interest rate if you satisfy certain conditions. You are usually required to use their debit card 10-12 times a month, use their billpay system, direct deposit your check, and sign up for paperless statements. The higher interest rate applies only up to a certain balance, usually around $25,000. They are able to offer this higher interest rate because it’s paid for by the debit card transaction fees.

How good are the rates? As of this writing, DepositAccounts.com lists the top reward checking account rate is 4.26% APY from NBRS Financial Bank for up to $25,000. While this isn’t strictly a fixed income strategy, it is an FDIC insured way to boost the interest rate on your savings.

Municipal Bonds

When your local or state government wants to borrow money, they don’t go to the local commercial bank. They issue bonds and sell them with the help of an investment bank. You can buy municipal bonds directly from the municipality/state, if you meet their minimum purchase requirements, or you can buy them on the secondary market. While there is a possibility that the government will default on the bonds, it’s still safer than a lot of other investments.

One of the benefits of municipal bonds is that the income from the bond payments are given favorable tax treatment. They are usually Federal income tax free and, if you live in the issuing municipality, state income tax free as well. Before you purchase a bond, be sure to confirm this as there are some exceptions.

Dividend Stocks

One of the benefits of researching fixed income strategies when you’re under 30 is that you’re able to take on a little bit of risk. That’s why lately I’ve been looking at dividend stocks and why I’ve been slowly accumulating shares in blue chip companies that consistently pay out dividends. You may remember the Dividend Aristocrats, companies that have increased their dividends each year for 25 consecutive years, and Dividend Champions, companies that have maintained or increased their dividends each year for 50 consecutive years, posts. Those two were written out of my interest for finding consistent dividend paying companies. It’s not a definitive list of what to buy but it’s a start.

Stocks are risky. Dividends are not guaranteed. A company like Integrys Energy Group (TEG), a dividend champion, is appealing because they offer a 6% dividend yield but remember they are still publicly traded and there’s no guarantee they will continue making payments.

Favorable tax treatment of dividends. One of the benefits of dividends is that the payments are taxed at long term capital gains rates. Whereas savings interest is taxed at your ordinary Federal income tax rate, dividends get a lower, favorable rate. For 2010, it’s 15% for those in the 25% and higher tax brackets and 0% for those in the lower brackets.

As is the case anytime you invest, and this is still investing even though it’s “safer” than buying penny stocks, you want to use diversification as your friend and always do a ton of research beforehand. You can’t predict the future but you can improve your chances through research and hard work.

Do you have any good ideas how to to tweak a few extra percent out of your savings?

(Photo: iain)

Fixed Income Strategies to Help Boost Savings Interest Rates from personal finance blog Bargaineering.com.

1. The credit reports are free, if you remember to cancel the trial (big if!).
2. Consumers have been educated by the FTC that they can get a copy of their credit report for free once every 12 months, no strings attached… except they have to go to AnnualCreditReport.com, not FreeCreditReport.com.
3. Consumers are, knowingly or unknowingly, signing up for the trial service, getting their free credit score and reports, and then not canceling.

So, in early November, the Bucks blog on the New York Times wrote about how Senator Chuck Schumer of New York wants the FTC to force Experian to give you your free report and score before they ask for the credit card information. This was largely shelved because the CARD Act included a provision that required credit report services to include a disclaimer.

I understand the need to police overtly scammy negative option billing practices but how much intervention is too much? I think it was right for the FTC to force Experian to notify visitors to FreeCreditReport.com that they are not affiliated with the free credit report program. It’s also good that the site informs you that you are signing up for a free 7-day trial. It should also be clear that you will be charged for it after the trial because otherwise they wouldn’t ask for your credit card information! (to be clear, I’m fine with the regulation as it stands now… but I didn’t like Senator Schumer’s idea of forcing Experian to change their business practices in that way)

So at what point do we stop? At what point does common sense get completely thrown out and replaced with regulation? I’m curious to hear your thoughts on this.

Your Take: Common Sense vs. FreeCreditReport.com from personal finance blog Bargaineering.com.

Why Sallie Mae?

I’ve been racking my brain to come up with an explanation of why Sallie Mae has started to offer banking services and I was at a loss until I remembered one key insight – most consumers, until recently, were completely unaware of high yield online banks. It wasn’t until Ally Bank made front page news that online banks started to get respect and awareness for your average consumer.

It’s easy for “us,” readers and producers of personal finance blogs, for us to forget that because we get a daily dose of it. If you mentioned “reward checking accounts” to some of your friends, I bet you’d see some puzzled looks. Ultimately, I think Sallie Mae is leveraging their connection with students and parents to bring even greater awareness to the consumer.

Upromise 10% Bonus

If you use Upromise, you can get a 10% annual match on your earnings if you satisfy these conditions:

You must link your High-Yield Savings Account to your Upromise Account and, within 90 days of opening your High-Yield Savings Account, either: (1) set up an Automatic Savings Plan with a monthly deposit of $25 or more, or (2) fund the account with $5,000 or more. Upromise will match 10% of your Upromise earnings posted as ”funded” to your Upromise Account during the calendar year of January 1 through December 31. Your 10% annual match will be deposited into your High-Yield Savings Account in February of the following year provided that both accounts remain active and are in good standing at the time of transfer.

The Upromise bonus, a partnership that makes sense, is the differentiator for this account. If you earn a lot from Upromise, this normally dull 1.35% APY might be much much higher once you factor in the 10% bonus. If you don’t, then this account doesn’t really offer much else.

Pedestrian CD Rates

Their CD rates are competitive with the best CD rates but they’re not rate leaders (but they aren’t rate laggards either):

• 12 month – 1.50% APY
• 36 month – 2.20% APY
• 60 month – 3.00% APY

There are no minimum balance requirements on CDs and standard fees for closing a CD before maturity (3 months interest if it’s a 12 month or less CD, 6 months interest for CDs over 12 months). Pretty standard stuff.

Account Fees

While there are no monthly fees and no minimums, there are fees associated with the account, set out in the Fees and Charges section of the Terms & Conditions:

• Excessive Transaction Fee – $10 (The “Truth-in-Savings” section applicable to your Account(s) sets forth transaction limitations.)
• Returned Deposit Fee – $5
• Paper Statement/Statement Copy Fee – $5 per statement

If you do open an account, be sure to avoid excessive transactions (more than 6 transfers a month) and request paperless statements.

What are you thoughts on this account? I’m especially interested in hearing from people who use Upromise a lot to get a sense of how much they’re earning in a calendar year. If the most active people are earning $1,000 a year, then an extra $100 is going to be great. If most people are earning $100 a year, then $10 is… eh, so so.

Sallie Mae Bank Review from personal finance blog Bargaineering.com.

Her husband remembered that their American Express Blue offered Purchase Protection and decided to give them a call. Why not right? As it turns out, they’re protected by a consumer protection most people forget about – American Express Purchase Protection.

How does it work? Use your AMEX card when you pay and you get 90 days of protection against accidental damage or theft. You file a claim and the protection replaces the item or reimburses you up to the amount of the purchase price. There’s a limit of $1,000 per occurrence and up to $50,000 per cardmember account per year. You can file an American Express claim online or call 1-800-322-1277 and you’ll be asked to provide proof of theft, accidental damage, or vandalism.

They were sent a claim form to fill out and needed to provide additional documentation such as receipt of purchase, AMEX statement with the purchase, and description of the damage. Had the jacket been stolen, instead of damaged, they would’ve had to include a police report as well.

American Express has a reputation, among merchants, of having the highest processing fees out of any of the issues. Not coincidentally, they offer some of the best consumer protections like return protection and purchase protection.

Her husband told me that they make most of their major purchases using their American Express card because of these types of protections. Between the 90 day product insurance and the doubling of the manufacturer’s warranty up to a year (which many issuers offer), there are two excellent reasons why I can see an AMEX beating out a comparable cash back card.

Every American Express card I looked at on their site included this Purchase Protection insurance policy and I totally forgot it existed. Have you ever used it? Heard of a friend who used it?

American Express Purchase Protection Perk from personal finance blog Bargaineering.com.

So, like zombie attacks, the key to surviving a tax audit is to be prepared.

Keep Accurate Records

When you file your return, assume that you will be audited. Keep receipts of absolutely everything and keep them with your return. If you can’t produce proof of something you claimed and you’re audited, the deduction will be disallowed and you’ll be penalized for it. While the chances of you being audited are low, you need to retrieve the receipt now while it’s still fresh in your mind. If you get audited in four years, it’ll be hard to track it down.

Read the Notice

Read the notice carefully and respond as quickly as you can, though you generally have thirty days. Being proactive and helpful can turn the auditor into your ally. The audit will tell you what items on your return are being reviewed, prepare a copy of that documentation and bring it to the meeting (don’t give them originals, they might lose them and originals aren’t necessary). Bring only what they ask for! If they ask about certain charitable deductions, bring documentation of those deductions and nothing else. You don’t want them digging around and asking other questions. That’s not because you have anything to hide but because more questions mean more time and this is time consuming enough.

Also, you might have only received a CP2000 clarification letter, which is commonly known as a correspondence audit, which is the simplest type of audit. They call it a mail-order audit because a face to face meeting isn’t necessary, you only need to send in the documents they request.

Treat It Like A Trial

You should be cordial with the auditor but don’t treat them like your friend. At the end of the day their job is to find tax cheats and they’ve identified you as a potential cheater. It’s important that you review this IRS document that outlines your rights as a taxpayer under examinations and ensure that your rights aren’t violated.

The document also outlines the auditing process, or examination process, including a reference to Publication 556, which as details on appeals. If they disallow a deduction that you feel is rightfully yours, pursue it. Don’t let the IRS intimidate you, flex your muscles and arm yourself with the knowledge you need to prevail.

Consider a Tax Professional

If you have a particularly difficult situation that isn’t solved by offering up a forgotten 1099 or some other form, you may want to hire a tax professional who has experience dealing with audits. Audits can be very time consuming so you’ll have to select the tax professional very carefully but their expertise in dealing with numerous audits should aid you in getting as favorable an outcome as possible. It also helps that they aren’t emotionally invested in the process so they can make smart decisions.

In the end, getting audited sucks even if you don’t end up paying an additional cent in taxes. They are time consuming, stressful, and prevent you from doing something else (that you enjoy!). If you are well prepared and know how to respond, you can minimize both the cost and the time.

(Photo: wiredwitch)

How to Survive a Tax Audit from personal finance blog Bargaineering.com.

I’m honored and happy to share that Bargaineering was included in several categories and is up against very stiff competition. Many thanks to those of you who may have nominated Bargaineering but know that this site is as much a product of your contributions as it is my own. Without your comments, this place would be nothing more than my ramblings and would not be a place I’ve come to treasure. This recognition is as much a tribute to you as it is to me, so thank you.

If you have a few moments, please cast your vote for your favorites.

Thank you!

2010 Plutus Awards from personal finance blog Bargaineering.com.

Instead of throwing up our hands in frustration, I believe in the power of getting educated and making small changes with big impact on or health and environment. Here are three small changes that can improve the quality of life in your home sweet home.

Cleaning

To maintain a healthy eco-friendly kitchen the first place to start is to get replace any products that contain ammonia and bleach. Both of these ingredients are clearly labeled as toxic and do not belong in the same room where you prepare food. While small exposures to these toxins may simply irritate your breathing, skin and eyes, it can be very harmful to young children and anyone with a compromised immune system. There is a reason the labels say “poison”. There are better, safer ways to clean up in green style.

Another very important reason to skip the commercial brand in your kitchen is that they wreak havoc on our environment. Just think of the runoff into our drains, water supply and eventually our local water systems, lakes, rivers and oceans.

Here are some safer alternatives that I use in my very own kitchen. Not only will you turn your kitchen green, but you will save some ‘green’ along the way.

• Borax – aka sodium borate, is a naturally occurring compound that disinfects when used as a cleaning agent– Simply use anywhere you would use commercial brand abrasive. You can make a pretty fabulous cleaning paste by mixing together a paste of borax and natural liquid soap.
• Distilled White Vinegar
• Baking Soda
• Plant-based liquid soap (with no fragrance)
• Lemons
• Olive Oil

Eating

The food choices you make every day can help to create a greener kitchen for you and your loved ones. One of the most profound changes you can make is to begin to educate yourself about what you are REALLY eating on a daily basis. The best tool you have to create a green healthy eating life is to read the labels on everything you buy and to choose more things that don’t even have labels, other than those cute little stickers, i.e. fruits and veggies.

When it comes to buying produce, there is a coding system that is universally used in the industry to indicate whether an item has been grown organically, conventionally (read: with pesticides), or in a lab. Here are the codes you will find in all stores:

• Organically grown food has five digits and starts with #9
• Conventionally grown food always has four digits
• Genetically grown food has five numbers and will start with the #8 or #3

To keep it simple, I always remember to look for the nine! And whether you choose organic or not, always remember to thoroughly wash your fruits and vegetables with either a store bought natural produce wash or simply use a bit of plant based soap and wash any residue or dirt away before eating.

Storing

When it comes to storing food in our fridge or pantry, we have been taught over the years that plastic is the way to go. We’ve learned that the “burp” of the trusty Tupperware is what we need to watch for to keep foods fresh and healthy. Today, we know about some of the dangers of plastic when it comes to food storage. The two main words that have come to light are Phthalates and BPA.

Phthalates are a type of additive that is used to make plastic softer and more flexible. They are also found in a wide variety of other places like cosmetics and cleaning materials. They are even found in some foods like milk, meat and butter! There has been much controversy as to the safety of phthalates and its effect as an endocrine disruptor, especially in younger children.

Personally, I understand that we are exposed to so many toxins in our environment, and you may ask “does this REALLY make a difference”. Well, as the mother of a young child I am always looking for ways to reduce the toxic burden in my home and in our lives. Choosing to eliminate plastics is a simple way to create a cleaner, greener kitchen in my home.

BPA – Bisphenol A – is used to make plastics such as water bottles, food can lining and sports equipment. BPA, another endocrine disrupter has been linked to obesity, neurological issues, and because of its levels of estrogen levels, has even been linked to breast cancer, among other conditions.

Yes, this seems like a pretty bad situation. However there is good news. Choosing alternative storage is healthier and actually less expensive. Here are some great ways to eliminate Phthalates and BPA in your kitchen.

• Choose stainless steel and glass containers – I like to keep glass jars from food products such as olive and pickle containers. These make wonderful storage containers for grains, nuts and anything else you can think of. I even use an apple sauce jar for my daily green smoothie on the go.
• Mason jars make great cups and storage jars.
• There are non-leaching PBA free plastic alternatives showing up at markets around the country due to high demand. If your store doesn’t carry one, make sure to let the manager know you are interested.

What are some ways you are “greening” your kitchen?

(Photo: elanaspantry)

3 Easy Steps to a Greener Kitchen from personal finance blog Bargaineering.com.