Warren Buffett, in a now well known New York Times Op Ed Piece believes that he and other high net worth people like him, should pay more tax than current laws require. He says that his 15% tax rate is lower than his secretary’s tax rate.

At the 2012 State of the Union address President Obama invited Buffett’s secretary to the speech where he again mentioned the Buffett rule which he now calls the Millionaire Tax. He laid out some bold plans for making the nation’s wealthiest Americans pay more in taxes.

The Details

The Millionaire tax would set a flat 30% tax rate for anybody making more than $1 million annually. He also called for an end to deductions for millionaires on health care, retirement, child care, and home expenses in order to keep the 30% tax rate more difficult to circumvent. With nearly 25% of all millionaires not paying enough to satisfy the proposed Millionaire Tax, this is surely not going to sit well with some of the nation’s wealthy although some, like hedge fund manager George Soros believe the plan to be fair.

Alternative Minimum Tax

The Alternative Minimum Tax or AMT was supposed to be the answer to this problem. When it was originally enacted, it was designed to force high income households to pay a minimum tax rate but as time went on and the law was not adjusted for inflation, an increasing amount of middle class households were forced to pay the tax. More than 4% of individual taxpayers now pay the AMT with 27% of those having gross incomes under $200,000.

Congress has enacted numerous short term fixes for the AMT but they haven’t taken up a permanent fix. In this Huffington Post article, the author believes that the reason Congress doesn’t permanently fix the law is because it would make deficit projections look a lot larger when a large portion of the AMT revenue were taken away.

Obama’s new Millionaire Tax isn’t new. It would modernize the AMT tax rules and allow Congress to permanently fix the problems with the current alternative minimum tax although there has been no mention of taking up a permanent fix of this law in conjunction with the new Millionaire Tax.

Pushback

Because the AMT has been talked about in conjunction with the Millionaire Tax, some tax experts believe that it will add further confusion to the already complicated tax code. Currently, millionaires, and many middle income earners have to figure their taxes two different ways but if the Millionaire Tax were to go in to effect, this could require those making more than $1 million to complete their taxes three different ways. This, according to Roberton Williams, a senior fellow at the Tax Policy Center, is just further complication.

Warren Buffett has found a surprisingly large amount of support for his ideas but for every one high net worth individual in support of the idea, there are others, who aren’t as wealthy as Warren Buffett who don’t support the rule. Some believe that Obama is waging class warfare but for the majority of Americans who earn far less than $1 million annually applaud the proposed Millionaire Tax.

(Photo: johnnyvulkan)

The Millionaire Tax Explained from personal finance blog Bargaineering.com.

Most local currencies are based on service. Just like traditional dollars, you can earn local currency by performing a service or selling goods in your local community. By setting up a type of bartering system, a local currency serves as a type of trade barrier. This not only allows for compensation to those who may have otherwise not had a traditional job, it also keeps more local economic activity in the community since the currency is worthless outside of the local area. Still don’t understand? Here are a few of the local currencies in circulation right now.

Life Dollars

Life Dollars is a local currency based in the Seattle, Washington area. The exchange rate is based on the local hourly living wage making one Life Dollar worth between $10 and $12. This currency is almost completely exchanged in digital format to prevent fraud and to date more than $1 million in Life Dollars has changed hands.

Downtown Dollars

When weather wiped out one of the most important shopping days for local retailers, Philadelphia resident John Durso took action. Durso ran a non-profit, taxpayer funded organization and when the storm hit in 2010, he created Downtown Dollars. Residents can purchase 200 Downtown Dollars for $100 and use them at retailers in Philadelphia. Retailers take the dollars to Durso’s organization where they are paid $2 for every Downtown Dollar they exchange.

Potomacs

This currency was founded by Ecolocity, an organization focusing on urban development. Their goal was to shield Washington DC from any of the negative effects of the struggling economy. Although only a few merchants accept the currency, Ecolocity believes that this three year old way to pay will eventually take off. It as a 1 to 1 exchange rate if you are using it to make purchases but if you cash it out, you only receive 95 cents for every Potomacs dollar you submit. This incentivizes the holder of the currency to continue using it which stimulates economic growth.

Ithaca Hours

Ithaca Hours is one of the longest running local currencies and has served as a model for others including Life Dollars. Like most currencies, Ithaca Honors was created to provide an informal bartering system where community members support the economy by buying and selling locally. Ithaca Hours, like Life Dollars, are priced based an hourly wage of $10 per hour.

Although local currencies serve a valuable community service, their use isn’t widespread. In the United States there are only a few hundred local currencies in circulation and of those, a relative few community members and businesses participate. But as local economies struggle to balance their budgets, community members will find ways to prop up their local economies and one of those ways may be the use of local currencies. Want to read about other currencies in circulation? Check out this article.

Four Local Currencies You’ve Probably Never Heard Of from personal finance blog Bargaineering.com.

The current price is 45 cents.

This is the price of a first-class letter weighing no more than 1 ounce. If the weight is no more than 2 ounces, the price is 65 cents. No more than 3 ounces and we’re talking eight five cents. Postcards cost 32 cents. If you purchased a First Class Forever stamp, you don’t have to worry about the current stamp price because that will always cover letters weighing no more than 1 ounce.

The last postage rate increase was on January 22nd, 2012.

(Photo: queen_of_subtle)

Current Stamp Price – 45 Cents from personal finance blog Bargaineering.com.

Kiplinger recently offered some interesting tips about what you can do to improve your situation in terms of taxes by taking cues from Newt Gingrich and Mitt Romney. Some of the suggestions include:

• Invest in muni bonds: There are tax advantages associated with municipal bonds, including tax-free interest at the federal level. Both Gingrich and Romney invest in municipal bonds, although Gingrich takes better advantage of the opportunity.
• Donate appreciated assets: When you donate some of your assets to charity, you can get a deduction for the fair market value. Provided you have had the asset for at least a year, you can take this deduction when you donate an appreciated asset to charity. Make sure you understand the rules associated with the deduction. However, as long as you donate the asset, neither you nor the charity is required to pay taxes on the appreciation. You get the full value of the deduction, using it to offset your income.
• Tax loss harvesting: You can also harvest your stock losses, and carry over what you don’t use this year to another year. After you offset your capital gains with losses, you can offset other income. However, you are limited in the amount you can deduct against other income. So, you can carry it forward.
• Watch out for underpayment: Newt Gingrich underpaid one year — and was hit with a penalty. Make sure you have sufficient withholdings, and make sure that, if you pay estimated taxes, you are doing so in a sufficient amount. There are ways to avoid the penalty, by paying 90% of what you owe, or paying 100% of what you paid the year before.
• Get back overpaid Social Security tax: Only a certain amount of your income is subject to Social Security tax. However, if you have more than one source of income, you might have extra money withheld from the different sources. Add it all up, and if you have overpaid on your Social Security tax, you can reclaim it.
• Medical expenses: If you pay out of pocket for medical expenses, you can deduct the amount beyond 7.5% of your AGI. This is one way to offset some of the high cost of health care.

Double Check Your Deductions

Make sure that you double check your deductions. You want to make sure you can get what you are entitled to. You certainly don’t want to do anything illegal or evasive, but you can do your best to ensure that you aren’t paying more than you are legally required to.

Various tax prep software programs can help you check your deductions, and you can also get help from tax professionals who keep up with the latest changes to the law. In some cases, getting the help of a professional can be worth it, since the savings from your taxes can offset what you paid.

(Photo: alancleaver_2000)

What Can Newt Gingrich and Mitt Romney Teach You About Taxes? from personal finance blog Bargaineering.com.

We used Redbox a lot because we knew it was easy to find Redbox promotion codes. Even if we didn’t have a promo code, movies are only a dollar a day and we have multiple kiosks in the area, some within walking distance. Even if they are just a dollar a day, there’s something fun about getting it for free. I’ll explain how you can still get movies for free off Redbox.

Redbox Referral Program

Redbox has been running a referral program for quite some time and you can sign up for it here. They will send you a unique URL that, if your friends use it, will give you credits for free Redbox movie rentals. If it’s the first time they’ve rented a Redbox movie online, they’ll get a credit for a free night too. You’ll get an email whenever someone signs up and when a credit is deposited, then you’ll have ten days to use it.

Promotion Codes

Promotion codes are the next best way to get free movie rentals from Redbox and you can get them in one of two ways. First, you can register with Redbox and they may send you SMS or email messages with promotional code.

There is, however, a better way – promo code sharing websites. My favorite code sharing website is Inside RedBox because they update their codes and tell you which ones have been successfully (and unsuccessfully) used.

Finally, with these promotion codes, you can usually use the code once per credit or debit card.

Enjoy the movies!

(Photo: kalebdf)

Rent Redbox Movies for Free: Referral Programs, Promotion Codes from personal finance blog Bargaineering.com.

If all of your investment capital is kept in a single brokerage account there are likely better ways to make your money work harder for you. You may want to consider setting up a Roth IRA but let’s assume that you set up a traditional IRA that allows you to forego paying taxes on that money until you retire. Knowing that, we want to keep our realized gainers in or IRA and our unrealized gainers in our brokerage account. Here’s how to use it to keep more money out of the hands of Uncle Sam and in your account.

Realized Gainers

If you loaned a buddy $5 and told him that he had to pay you back $10, you would have a realized gain of $5 when he finally paid you. If the IRS found out, you would owe taxes on that $5. In the investing world, you can have realized gains by selling your investment for a profit or by earning dividends on your stocks and bonds.

You want your realized gainers in your IRA because you don’t have to pay taxes on those dividends or sales until you start drawing money from the account. This allows those realized gains to compound more rapidly because the IRS didn’t take any of the proceeds in the year that you earned them.

Not only will you keep your dividend paying stocks in your IRA, any fixed income investments like bonds and bond ETFs should have as their home, your IRA—most of the time. A rule of thumb among financial advisers is never to put a tax shelter inside of a tax shelter so your traditional IRA should not hold municipal bonds in most cases.

As Motley Fool says, IRAs and dividend stocks are like chocolate and peanut butter so as a general rule, keep any investment that is paying out a dividend in your IRA.

Unrealized Gainers

What if you loaned your buddy $5 under the same terms but he hasn’t paid you back yet? In the simplest sense, your $5 is an unrealized gain. The IRS can’t tax you on it because you haven’t pocketed the gains. You know that McDonalds stock that you bought that you plan to hold for 20 years? Put that in your brokerage account because as long as your gains are unrealized, you don’t have to pay taxes on the rise in value until you sell the stock for a profit. (Although you will have to pay taxes on the dividends that your McDonalds stock pays you)

I’m Not Warren Buffett

When Warren Buffett buys stock, he claims that his time frame is forever but what if you’re the type that picks stocks to hold for a much smaller time frame? If you pick the right high growth stocks, they will produce more income than the dividend payers. As Morningstar says, placing these stocks in your IRA may be a better bet.

Finally

Constructing a truly tax efficient portfolio is a difficult task for retail investors. Some financial advisers will show you how to position your holdings for maximum efficiency and only charge you a one time fee. The small fee for professional advice will easily pay you back many times over as your money compounds. There’s no reason you can’t get started on your own. If you remember the few general rules above, this will give you a good start.

Basic Rules to Make Your Portfolio More Tax Efficient from personal finance blog Bargaineering.com.

However, it becomes necessary for many to interact with some sort of financial services provider, since many of the unbanked still have paychecks to cash. Some of the options available to the unbanked, though, are not very palatable.

Unbanked: Still Paying Fees

Many major retailers now offer check cashing services. You can have a paycheck cashed at Wal-Mart or Best Buy, usually for a fee. (Although Wal-Mart’s flat fee of $3 is definitely among the most generous.) Additionally, there are check cashing places that will also help the unbanked get cash for their paychecks. However, the transaction costs can be between 2% and 4% of the check, eroding how much is taken home.

On top of that, these services don’t offer the option to save some of the money, or to borrow money at a reasonable rate. The unbanked are often forced to go to payday lenders and car title lenders in order to get financing when they need it. That can be problematic, due to the high interest rates. It’s very difficult to make financial progress when you’re unbanked, unable to effectively save, and paying very high rates of interest on your loans. This type of existence will never allow the unbanked to move forward financially.

Prepaid Debit Cards

One of the options that is rising in popularity for the unbanked is the prepaid debit card. A prepaid debit card comes with a host of fees as well, but it is a little more flexible in some ways. It is accepted like a credit card, so there’s no carrying around large amounts of cash. Additionally, many prepaid debit cards allow direct deposits, so there is no check cashing needed.

Indeed, prepaid cards like those offered by Green Dot and American Express carry relatively low fees. And, even though the Suze Orman card has received a lot of flack, it is to be commended for offering an “emergency fund” option, allowing users to save some of their money (even though they won’t earn a yield). For someone who can’t qualify for a bank account, and is unbanked in this way, a prepaid debit card can bridge the gap. However, prepaid debit as banking is a last resort — not something that the “banked” should switch to because they’re unhappy with their bank fees.

Credit Unions

One way the unbanked can take some power, and get access to a host of financial services without paying a lot in fees is to consider credit unions. Low account minimums, and low fees mean that it is sometimes possible for the unbanked to transition to a financial institution. Additionally, it is worth looking into community development credit unions. These are credit unions that have the aim to specifically seek out the unbanked — especially those with low incomes — and help them find a home for their money. Many of these types of credit unions also offer financial counseling and helpful money management classes.

When you are unbanked, you do have options. Unfortunately, few of them are ideal. If you look around, though, it’s possible to limit your costs, and possibly find help for your situation.

(Photo: Steve Rhode)

Financial Options for the Unbanked from personal finance blog Bargaineering.com.

It’s soft because it doesn’t hurt, things that hurt are hard. Hard credit checks can, and usually do, hurt your credit score. (OK, I don’t know why it’s called a soft check vs. a hard check, I just made that “hard things hurt” bit up)

Soft Credit Checks

The two most common soft credit checks are the ones that you initiate yourself, whenever you request your own credit report or score, and ones that are done on your behalf to establish your identity. Have you ever tried to open an account somewhere and been asked some questions about yourself, such as the name of a street you formerly lived on? Or names of former employers? Those are identity questions from a credit report. Some less common soft credit checks include those from financial companies looking to pre-approve you for an offer, such as a credit card or a refinance offer.

When someone else requests your credit report, they won’t see these soft credit checks. This makes sense because you shouldn’t be penalized for being financial responsible and reviewing your credit report. You also shouldn’t be penalized whenever a credit card company pulls your report to send you yet another offer in the mail (incidentally, you can opt out of these using OptOutPrescreen)

Hard Credit Checks

Hard credit checks hurt. These are when you give a lender or company permission to request your report as part of a lending decision. When you fill out a credit card application, that will result in a hard credit inquiry. When you shop for mortgage rates, where you provide information and are getting a specific rate, that’s another hard credit inquiry. How many points it’ll cost you will depend on your current credit score but it’s usually in the single digits. There are a few unlikely places where you will take a hard inquiry hit like when you get a new cell phone or look to rent an apartment (since they are lending you services ahead of payment), but usually you’ll know because you initiated it.

Since soft credit checks don’t appear on your report when others look at it, they have no lingering effects. It’s generally believed that aard credit checks will hurt for six months and then disappear after a couple years.

Finally, while your credit score is important, don’t obsess over it. Knowing the difference between soft and hard credit checks is important whenever you are thinking about big lending events, like a car or mortgage, but you shouldn’t worry too much on a daily basis. That said, keep those checks to a minimum and you’ll keep that score healthy.

(Photo: stevendepolo)

Soft Credit Check vs. Hard Credit Check from personal finance blog Bargaineering.com.

For most retail investors, they know of some of the more popular ETFs like the SPDR S&P 500 or the SPDR Gold Shares with the really cool vault full of Gold in an undisclosed location in the UK. What they don’t know about is the less flashy but equally important bond ETFs. Fixed income may not be exciting to watch but a large portion of the gains in a long term portfolio come from fixed income products or dividend paying stocks. Here’s how to add Bond ETFs to your portfolio.

What’s Wrong with Bonds

Why buy ETFs when you could just as easily buy bonds? Because buying bonds isn’t easy at all. First, bonds are often out of the price range of individual investors. Most bond brokers require a minimum purchase of $5,000 which may be out of the price range for most individual investors. Even if that’s within your capital level, it’s difficult to keep a diversified portfolio with that much money tied up in a single bond. Second, bonds are more difficult to buy and sell, and understanding the mechanics of bonds may be outside the scope of part time investors.

What’s a Bond ETF?

A bond ETF is a product that tracks the performance of a certain basket of bonds, a bond index, or other benchmark relating to bonds. The best reason to add these products to your portfolio is the advantage of giving you exposure to the bond world at any weighting you would like. If you only have a $5,000 portfolio but you want $1,000 of it in bonds, you can do that with bond ETFs.

You also get a level of diversification that you wouldn’t get purchasing individual bonds. Some Bond ETFs invest in hundreds of bonds so if one bond defaults it has little impact on the fund as a whole. No individual could achieve this kind of diversification and risk mitigation purchasing individual bonds.

Bond ETFs are also less volatile than individual stocks or stock based ETFs. Investors purchase bond ETFs to gain the dividend stream that comes as frequently as monthly on some ETFs but don’t expect a lot of capital appreciation.

How Do I Invest?

Although you don’t need an academic understanding of the mechanics of bonds, before investing in a bond ETF you should know how bonds work, how they’re priced, and the market conditions that affect their performance. Also understand bond ratings and how an investment grade bond differs from a junk bond. Click here to learn more.

Once you learn the basics, consider adding an investment grade bond ETF, an emerging markets or other foreign markets ETF, and a below investment grade or junk bond ETF. If you’re nervous about investing in below investment grade bonds remember that because these funds invest in so many bonds, the risk is largely mitigated.

With any ETF, you have to look at the fees. Some of the passively managed ETFs have very little fees where the more actively managed funds may have fees that are as much or more than some mutual funds. In general, keep the total fees below 1% although some actively managed funds may be worth a little more depending on performance.

Remember

All portfolios with the goal of long term growth should have some fixed income as part of their holdings. Bond ETFs are rapidly becoming the way to cash in on the yield that comes with fixed income investing without the hassle or diversification problems that accompany buying individual bonds.

Why Your Portfolio Needs Bond ETFs from personal finance blog Bargaineering.com.

Scholarships can provide a way for your child to get free money for college. A scholarship can reduce the burden on you, as well as reduce the burden of student loan debt for your child. If you want your child to get a scholarship, though, you both have to start preparing ahead of time.

It’s important to work hard for decent grades, as well as to consider extracurricular activities and involvement. If your teenager starts at the beginning of high school to prepare to be eligible for scholarships, he or she is more likely to find success down the road. You can also start looking around at different scholarship options so that you know what your teen needs to work on.

You also need to start applying before your teen goes to school. Applying late in the junior year of high school, and in the early part of the your teen’s senior year, is often a good idea. Check scholarship deadlines to make sure that you are on track, and make sure to fill out the applications in order so that you don’t miss options.

Where to Look for Scholarships

There are a number of opportunities for scholarships. You can start by looking in your own community. Many civic organizations, retailers and even banks offer scholarships. Find out about the eligibility requirements, and what tasks (some scholarships require that certain items be accomplished) are needed. You might be surprised at what is available in your own hometown. These types of local scholarships are a good place to start.

Also, look at the schools that your teen has been accepted to. If your child has decided to enroll with a particular school, call the financial aid office and find out what scholarships are available. There are usually different scholarships, based on need, merit or even offered to those who will study in a certain field. Get a list of available scholarships, and apply through the university.

You can also turn to the Internet. There are a number of web sites online that compile different scholarships that you can compete for. Two of the most popular sites you can visit for information on scholarships from around the country are:

1. Scholarships.com
2. Fastweb.com

You should also visit the FAFSA web site. This is the federal government’s student aid web site. It features information about grants, and work study programs, as well as information about federal student loans. If you want to apply for federal financial aid, you need to fill out one of these forms. Visiting this site is a definite must, in addition to checking into your other scholarship options.

These days, it’s harder to just get one big scholarship to cover everything. Instead, you will likely need multiple funding sources. The more scholarships your teen applies for, the more likely he or she will be be to get the help needed.

(Photo: Christopher S. Penn)

Kids & Money: When to Look for Scholarships from personal finance blog Bargaineering.com.

Consider this – you can buy shares of blue chip companies with yields greater than 1-2%. You can start by looking at the dividend aristocrats but ultimately you can easily find safe companies who have stable cash flows capable of supporting dividend yields much greater than 1-2% (and you’re taxed at a much lower rate!).

In the end, both are financial tools that serve a specific purpose. Knowing which to use can be crucial in getting a little more out of your money.

Principal Risk

There’s no such as a free lunch. In return for those higher yields, you put your initial investment at risk. Here is where knowing your financial needs becomes crucial.

Are you looking at a 5 year CD because you need income? Or do you intend to buy a house in 5 years and you’re simply looking for a good home for your cash until then? If protecting your principal is goal one and interest is simply gravy, then CDs are the answer. Never let the hope of more money (greed!) distract you from the importance of protecting what you already have. If you’re looking to generate income and the principal is less important, at least in the short term, a dividend stock might make more sense.

If you can hold it for five years, or longer, chances are you can weather the ups and downs that come with a publicly traded company. As we’ve seen, a lot can happen in five years and it’s crucial to avoid knee-jerk reactions (which is possible if you’re not as worried about principal).

On the flip side, you also benefit from stock appreciation and dividend increases, which can be significant.

Transaction Costs

Buying a CD is very simple and it only costs your time. You’ll need to open an account, if necessary, and then deposit funds into the CD. When you get paid interest, you’ll add a few seconds to tax preparation to deal with the 1099-INT the bank will send you.

When you buy shares in a company, it’ll cost you both time and money. In addition to the account setup, if necessary, you’ll pay a commission when you buy the stock. You’ll also get a 1099 from the broker at the end of the year detailing the ordinary and qualified dividends. Alternatively, you can avoid some of these transaction costs by investing in a mutual fund like Vanguard Dividend Growth Fund (VDIGX), but you trade transaction costs for expense ratios.

Taxation

Here’s the big kicker – interest from a certificate of deposit is taxed as ordinary income. Dividends from a company, assuming they are qualified dividends, are taxed at long term capital gains. Ordinary income is taxed at your tax bracket whereas dividend income is taxed at a much lower rate.

Assuming you’re in the 25% tax bracket, a 1% APY CD is really a 0.75% APY CD, after taxes. A 5% dividend yield company is actually a 4.25% dividend yield company, after taxes. That’s a significant difference.

For the last few years, I’ve been building onto the inner wall of financial fortress and adding blue chip dividend companies. These aren’t the trendy hot tech companies like Pandora or Zynga, we’re talking nice boring companies like Diageo, Conoco Phillips, and Kimberly Clark. I like boring, especially if it pays slightly better than a CD.

Why Certificates of Deposit Suck & Dividends Rock from personal finance blog Bargaineering.com.

Although not a hard and fast rule, it’s best to save $5,000 or more before putting it in the stock market. This allows you to diversify your portfolio without the broker commissions eating away a large portion of your gains. If you don’t have that much money ready to deploy, keep reading but start saving. We aren’t going to head to the market just yet, there are a few more steps to take before putting real money to work.

Learn About the Markets

Learn about the stock markets and how they work. Know what it means to own a share of a company and what causes the price of a stock to go up and down. The short version is that owning stock means you own a company and prices go up and down based on supply and demand. After you gain a basic understanding of the markets, learn how to evaluate the health of a company. Learn how to read a balance sheet, income statement, and their annual report. Understand what the P/E ratio, beta, and PEG rates mean? Finally, learn some basic chart reading skills.

Seem a little overwhelming? It will take time to learn everything you need to know but isn’t that true of everything? If you want to do it right you have to put in the time.

Fake Money!

There’s no reason that you can’t put some money to work in the stock market today. In fact, give yourself a $10,000 loan and trade on paper. Sites like Yahoo! and Google allow you to set up virtual accounts where you use virtual funds to invest. If you make a mistake, (and you will) you only lose fake money, not real money. What you gain is an education and experience that is every bit as valuable as all of the reading you’ve been doing to learn about the markets.

Ideally, trade virtual money for one year before putting real money to work. Markets and each individual stock have a personality of their own. As you spend time buying and selling stocks, you’ll learn to find these behaviors. Don’t be in a rush to use real money, you can afford to wait a year.

Other Tips

Avoid the weekend seminars that will show you how to make big money because it’s probably a scam. They’ll charge you a “reasonable” price of sometimes more than $1,000. If it worked, everybody would do it and there would be a seminar about it. You can’t be a top producer in anything after one weekend of schooling, unless you’re the one teaching the classes and collecting the fee.

Avoid penny stocks. As a new investor, avoid any stock under $5 and always stay far away from stocks under $1. There’s no doubt that there are some penny stocks that will one day become big companies but your chances of finding them are slim. It’s better to buy fewer shares of a proven, high quality company than to buy hundreds of shares in a penny stock.

Don’t use the investment markets as a casino. If you want to gamble in the hopes of a big payout, go to Vegas. Although a lot of people try to use the investments markets as a way for quick money, it doesn’t work for long term capital growth. Invest with the idea that your money will grow relatively slowly over a long period of time.

Use ETFs along with individual stocks in your portfolio. Studies show that it is nearly impossible to beat the market so purchasing an ETF that tracks the performance of the overall stock market is a great investing strategy.

Try to have a minimum of five types of investment products in your portfolio. Your positions could be two stocks and three ETFs (Learn more about ETFs here) or three stocks and two ETFs or another combination but never put the majority of your money in one product.

Finally

Don’t be in a rush to put your money to work. Wait until you not only feel comfortable evaluating companies but your virtual account shows more successes than failures. Make highly conservative choices at the beginning of your journey.

(Photo: safari_vacation)

How to Start Investing from personal finance blog Bargaineering.com.

Indeed, if you can find a heartfelt, sincere way to express your love, you don’t need to spend a lot of money. A good relationship doesn’t have to be based on expensive things and grand gestures. Instead, here are 9 ideas that will cost you less, and help you show your love more:

1. Play hooky together: Instead of going in to work, take the day off. Or, take a half day. Either way, you can play hooky together and have a great time. This is especially effective if your kids are in school. You don’t have to pay a baby-sitter and you can spend some quality time taking a walk, watching a movie at home, or going to lunch (which is much less expensive than going to dinner).
2. Save on flowers: Instead of getting flowers for Valentine’s Day, get them a couple of weeks early, or a couple of weeks late. My husband almost always gets me my Valentine’s Day bouquet sometime around the end of January. The flowers are just as beautiful, and just as romantic — but at half the price.
3. Share your feelings: Write little notes expressing how you feel, or sharing the good qualities of your significant other. Leave them for your partner to find in unexpected places like the purse or wallet, inside a frequently used drawer, or some other hiding place. Best of all: If your partner doesn’t find them all on Valentine’s Day, s/he will get a fun reminder later on.
4. Cook dinner together: You don’t have to go out to have a romantic dinner. If possible, cook dinner together. Make something you both like, and enjoy it — add candles for a special touch. It’ll provide you with some quality time as you cook together, and then eat slowly.
5. Use deal specials: If you must go out, use deal specials. Look for discounted gift certificates online, and get your meal for cheap. Just remember that the tip is supposed to be on the original cost of the meal.
6. Go for dessert instead: If you want to get out, but don’t want to spend the money for dinner, consider just going for dessert. You can pay a sitter to come for a couple hours (less expensive than an entire evening) and head to the local pastry shop or coffee shop. Share a dessert and have some coffee or cocoa, then head back home.
7. Get your candy for less: Don’t worry about having candy on the day-of. Instead, consider how much you can save if you head to the store on February 15th. Go shopping together and pick out your favorite chocolates for 50% to 75% off. Yum!
8. Memory box: Decorate an empty box, and then fill it with favorite memories. Use items that remind you of times spent together, including photos, ticket stubs, and small trinkets. Your partner can go through it and remember all the loving times you’ve shared.
9. Homemade goodies: You can make homemade goodies for Valentine’s day together. Heart-shaped cookies, chocolate-drizzled popcorn, and other tasty treats. Create a special dessert for dinner, that you two can share with a special drink and a movie later. No need to go out.

(Photo: Sugar Daze)

Frugal Love: 9 Low-Cost Valentine’s Day Ideas from personal finance blog Bargaineering.com.

This was right after winning a few bucks that Kelly Clarkson’s singing of the national anthem lasted a hair under one minute and thirty five seconds. Oh, he rolled that over into a bet that the final scoring touchdown would be made by Ahmad Bradshaw (I bet the little hesitation made him nervous… but at that point he was playing with house money). So while I didn’t make a single bet… sitting by him, and winning vicariously, was awesome. Oh… and he is a Giants fan, so his team also won the Super Bowl. Not a shabby Sunday!

So now the real question remains… does he owe taxes on those gambling winnings? Yep.

Form W2-G

If you win:

1. $1,200 or more in gambling winnings from bingo or slot machines;
2. $1,500 or more in proceeds (the amount of winnings minus the amount of the wager) from keno;
3. More than $5,000 in winnings (reduced by the wager or buy-in) from a poker tournament;
4. $600 or more in gambling winnings (except winnings from bingo, keno, slot machines, and poker tournaments) and the payout is at least 300 times the amount of the wager; or
5. Any other gambling winnings subject to federal income tax withholding.

then you will receive a Form W2-G from the payer. In my friend’s case, none of his bets had a payout of 300x the wager so had he made the bet with a sports book at a casino, he would get cash and no Form W2-G. He made his bet with an online outfit, likely located offshore, and they surely won’t send him a Form W2-G.

No Form, Still Owe Taxes

Even if you don’t receive an official Form W2-G, you are responsible for declaring those winnings on line 21 of your Form 1040, labeled Other Income. At this point, you would also be able to deduct any gambling losses under Line 28 of your Schedule A, but that would require you to itemize your deductions. As for supporting documentation of your losses, you can just keep a record of your gambling wins and losses in a log. Plenty of poker professionals do this, as a matter of record keeping anyway, but it’s important if you want to be able to reduce your tax liability by offsetting your wins from your losses. Unfortunately, if you lose more than you win, you can’t offset other non-gambling related income.

Now that you’ve heard the official word and what you should do, the reality is that the Form W2-G was created for those crazy long shot winnings on progressive slot machines and keno games. You won’t get one for playing the money line on a game and few people expect you to claim the $20 you won betting your sucker New England Patriots’ fan friend. While my friend should claim it on his taxes, I doubt few people would fault him for omitting it. (that said, I don’t know if he’d be ahead if he kept a log!)

(Photo: cpardue)

Paying Taxes on Gambling Winnings (Like Crazy Super Bowl Bets) from personal finance blog Bargaineering.com.

I first saw this strategy over ten years ago in The Motley Fool’s Money Guide (published 2001) and they called it the Fax-a-thon method. The same idea as the above except you do it by fax, never talking to anyone and doing nothing more than faxing a few requests. You will need a way to receive faxes with their method (it relies on not including your phone number so you don’t get bothered), but you can always send free faxes using online tools. I next saw it in this video about how to buy a car using this same idea, except over the phone rather than over fax:

Have you tried this with any success?

(Photo: aldenjewell)

How to Buy A Car from personal finance blog Bargaineering.com.