Changing our financial situation is not easy. But if taken in small steps, it may not seem so overwhelming.  Do just one thing today to help improve your finances.  Maybe you order your credit reports.  Or you open up a savings account  Maybe you decide to stop using your credit cards.  It doesn’t matter what you pick as your one thing as long as you pick something and act on it.

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With the economy still floundering, you and your spouse may be fighting about money more.  In a recent poll, 61% of couples said that money conversations were turning into arguments.  A year before it was only 45%.

Recent studies show a correlation between financial feuds and marital problems.  So how can you tell if your money fights are a problem or just normal part of marriage?

Here are some signs to watch for:

1. If you are arguing often, be wary.  Couples who argue about money at least once a week are two times more likely to get divorced than couples who only disagree about money once a month.
2. If the disputes carry over to other areas, this is a red flag.  You should be concerned if the money fights cause you and your spouse to withdraw from one another.
3. If debt, savings or spending is the main topic, watch out.  These topics are big trouble.  A couple with $10,000 in debt and no savings is two times as likely to divorce as a couple with no debt and $10,000 in savings.  Also, there is higher marital discourse when one spouse disapproves of the way another spouse handles money.

Money fights are often about more than just money.  They are about the differences in what money means to each of you.  If the financial disputes in your home are increasing, it’s time to attack the problem and get financial counseling.

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You desperately need your tax refund.  The car needs repair, the kids need new shoes, the electric bill is high.  But your refund check never shows up.  Instead the IRS notifies you that your tax return has been rejected.

You refund was already claimed by someone else.  You’ve been a victim of identity theft.  A growing number of taxpayers are experiencing this problem.

Identity thieves are stealing personal information, filing bogus tax returns and claiming the refund.  The thief files the tax return early in the tax season before the victim has a chance to file their own return.

There were over 650,00 active identity theft cases at the IRS at the end of 2012.  It is taking the IRS over 6 months to resolve these cases and to provide the victims their refunds.

The IRS has a special unit to deal with identity theft issues:  IRS Identity Protection Specialized Unit.  You can reach the unit at 800-908-4490.  If your return is rejected, contact the IRS right away.

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At some point, you are likely to have a dispute with a vendor or creditor. It may be that the new television you bought stopped working as soon as you got it home or there were extra charges on your credit card statement that you don’t think belong to you. Unfortunately, most companies have leverage when it comes to coercing you to pay. They may threaten to report the outstanding amount as a negative item on your credit report, thereby dropping your credit score. While there are ways to handle such disputes with creditors, the disputed amount may show up on your credit report in the interim. If the credit bureau receives enough proof from your creditor that you owe the amount, it will remain on your report for 7 years. Try to resolve disputes with your creditors quickly to avoid this situation. It may take repeated letters or phone calls to the company but it is worth the time and trouble.

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You may be considering taking some or all of your old debt and roll it into a new consolidation loan. You want to refinance debt to a lower interest rate and to lower the total monthly minimum payment. While both of these results can help your overall financial picture, getting rid of older debt can hurt your credit score. A portion of your credit score is determined by the length of your credit history. Open accounts that have a long track record of on-time payments will boost your credit score. Closing them and rolling them into a new loan can drop your credit score significantly, especially if it reduces your overall available credit. If reducing the interest rate you pay on loans and credit cards is the goal, try to negotiate a lower rate with your existing lenders before choosing consolidation.

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You may think that the best way to manage your finances is to close credit card accounts that you’re not using. Resist the urge to do so. A portion of your credit score is determined by the amount of revolving debt you have compared to the total amount of credit available to you. The lower the ratio is, the more positive impact it has on your score. It shows that you have access to credit and aren’t using it carelessly. If you close some of your available credit, the ratio goes up and your credit score goes down. This is especially true when you close a credit card that still has a balance. The balance will remain on your report and the available credit disappears. Spread out your credit card usage among all of your cards and be sure to make payments on time to keep your score high.

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From the USA Today article “The cost of financial illiteracy“:

Studies show that a majority of young people in the United States have poor financial literacy, a trend that has been consistent over the past decade and shows few signs of improving. This at a time when young adults face a difficult job market and more personal debt, and yet must take greater responsibility for their financial future.

Today’s twentysomethings hold an average debt of about $45,000, which includes everything from cars to credit cards to student loans to mortgages, according to a PNC financial independence survey released last month.

How bad is the problem? The Treasury Department and Department of Education have teamed the past three years to assess financial literacy in U.S. high schools, and the results haven’t been pretty: the average score of almost 76,900 students in 2010 was 70%. Last year’s testing of about 84,000 students and this year’s of about 80,000 students were both a point lower: 69%.

The problem has been a long time coming. A biennial survey by Jumpstart Coalition for Personal Financial Literacy, conducted from 1997 to 2008 (when many Millennials were in high school) showed high school seniors doing even worse. In 1997, the average score on a 31-question financial literacy exam given as part of the survey was 57.3%. In 2008, the average score was at its lowest ever, 48.3%.

Though young people in America have for decades struggled with financial literacy, state curricula haven’t shifted much to address the gaps. Fewer than half of states make high school students take an economics class, and just 13 require a personal finance class, according to a 2011 survey by the Council for Economic Education. In those 13 states, though, the payoff is clear: Students who had taken such courses were more likely to go on to save money and pay off a credit card bill in full each month, and less likely to be compulsive buyers, max out credit cards and make late payments.

The biennial survey also shows that just 16 states require testing in economics, three fewer than in 2009. This regression is noted in the survey summary, which points out that over the past two years, the trend toward teaching on these subjects has slowed, and is “in some cases moving backwards.”

To ensure that rising generations have the tools to be financially successful, financial literacy experts and advocates interviewed by USA TODAY say that education must start in the early years.

Whether they’re learning about managing money, or not, at home or in school, the lack of financial savvy among Millennials could have a trickle-down effect with detrimental consequences for society, experts say.

Young adults with too much credit card debt can be precluded from certain jobs, and poor financial decisions can force some to drop out of school, says Ted Beck, CEO of the National Endowment for Financial Education. And if the next generation is unable to “continually acquire skills,” he says, the United States is left with an uncompetitive and unattractive workforce that by necessity will lean more on social programs.

Beck says today’s young adults are “a test-case generation of what’s to come. They’ll be responsible for their financial lives to a much higher degree than previous generations. We have to figure out how to improve their knowledge base so they don’t dig a hole.”

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When settling a debt with with a creditor or debt collector, do not make any payments until you’ve received the agreement in writing.  If you want any negative credit reporting removed from your credit reports, that has to be in writing as well.  I spoke with a woman today who sent in a check with a settlement offer to her creditor asking for the information to be removed from her credit report.  She’s upset that the creditor won’t remove it even though they cashed her check.  I had to explain to her that the creditor never agreed to her settlement offer and they were free to cash the check she sent them.  If she wanted to hold the creditor liable for removing the information from her credit reports, she needed to get the creditor to agree to that in writing.

Also, a verbal agreement is useless.  Creditors and collectors will tell you anything over the phone to get your money.  Later on, they will claim that the agreement was different.  IF IT’S NOT IN WRITING, IT DIDN’T HAPPEN.

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Credit cards are gaining in popularity again.  In late 2008, debit card usage grew at a faster rate than credit cards but that trend has reversed according to card processor First Data.  Since April, consumers have been using credit cards more and more.  Usage is returning to pre-recession levels.  Banks have been increasing solicitations and boosting incentives in an effort to get you to use credit over debit.  Eight out of ten credit card offers last year were for cards with rewards points, miles, or cash rebates.

This is not good news.  I was hoping that the recession would help us recognize that we needed to change our charging habits permanently.  If you are starting to use your credit cards again, think twice before you do.  Do you really want to charge up a ton of debt again?

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One of the biggest mistakes tax payers make when they are audited is providing a copy of other years’ tax returns.  By doing so, it greatly expands your audit risk.  It gives the auditor many things to look at that he or she would otherwise not see, like patterns of income and deductions.

Why do people bring previous tax returns with them to the audit?  Because the audit notice asks them to.  But IRS rules state that you are only required to provide information relating to the specific tax year being audited.  You are not required to provide any information for other tax years unless it specifically relates to the tax year being audited like carryover items.

If an auditor asks you for a previous year’s tax return, just state that you don’t believe that it relates to the year being audited or the issues being examined.  Most times, that will end the request.

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