To List the House or Not List the House, That is the Question

We were sooooooooo close.

We were so close to listing the house.

We’d decided against a realtor and for a listing service, which would give us a realtor-quality listing that would stay up until we sold the house.

We’d started packing and put items in storage to make the rooms feel bigger.

We’d taken the photos of clean and de-cluttered rooms.

We’d snuck onto realtor.com looking at houses in Georgia.

We’ve even come up with a list of Twenty Things to Do Before We Buy a House.

We were one day away from listing the house when the floor – a.k.a. the economy, fell out from under us.

Banks aren’t lending money. Credit card companies are reducing credit limits, affecting credit scores for even those with excellent credit histories.

Car dealerships are closing because no one is spending money to buy cars, and banks won’t give car loans to those few who do.

Now we’re unsure what to do. If we find someone willing to buy our house they probably won’t be able to get a loan, at least until banks start lending money again.

And if we do sell the house Husband has to find a job in Georgia before we buy a new place. After all, no lender is going to give us a mortgage with no income. And in this economy advertising agencies are laying people off, not doing much in the way of hiring…

On the other hand, no one’s going to even want to buy our house if they don’t know it’s for sale. I’m also thinking that sitting on the market for awhile will not have the same stigma it has had in the past. Almost all houses are languishing, aren’t they?

So, what’s the smart decision? Do we list the house and take those risks? Do we put it on the market even though no one is buying and we’re uncertain about the future of everything?

Or do we wait, for our home value to decrease more, staying in a place we don’t want to be, and wait for things to get better while we sit here uncertain about the future of everything?

Stay tuned.

The IRS Increases Business, Moving and Medical Expense Mileage Rates

I may faint.

The IRS actually saw a need to provide some tax relief and it didn’t take an act of Congress to implement it.

Starting July 1st, the IRS is increasing the the allowable business deductible for business vehicles from 50.5 to 58.5 cents per mile.  The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.

The IRS is also going to raise the rate for calculating computing deductible medical or moving expenses from 19 cents to 27 cents a mile, also starting July 1st. The rate for charity services, requiring an act of law to change it, remains at 14 cents per mile.  Hey, nobody’s perfect.

Mileage Rate Changes

Purpose

Rates 1/1 through 6/30/08

Rates 7/1 through 12/31/08

Business

50.5

58.5

Medical/Moving

19

27

Charitable

14

14

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

For more information read the IRS press realease.

As always, please remember that I am not an expert on finance, or an accountant. I’m just an accountant’s daughter. So, please, please, please contact your accountant for expert advice.

Why I Don’t Let My Mortgage Company Pay My Insurance and Taxes

I was an insurance agent for many years before I retired to stay home with my son. One of the biggest headaches our office had was dealing with mortgage companies and the havoc they wreaked on our insureds. Most people have their mortgage companies escrow for taxes and insurance, so they money for renewals comes from them. Some mortgage companies were very good payers, and we rejoiced. Many other mortgage companies were so bad at paying their bills we employed someone whose sole job was to make sure the payments got made, and to act as a liaison between our insureds and the mortgage company when it was not.

What is an escrow account?

If your property is destroyed by a fire, the lender will have lost his collateral. Also if your taxes are left unpaid, your state can foreclose on your property in order to obtain payment and the lender could lose his collateral. Because the lender very much does not want to lose its collateral they want to make sure your insurance premium and property taxes are always paid.

When people buy a home and take out a mortgage they usually pay their first year’s insurance premiums up front, either directly to the insurance company or at closing. If you escrow for taxes and/or insurance the mortgage company also collects 2-3 months worth of additional premiums (and/or property taxes) at closing to start your escrow account.

The money in the account will be used to pay your taxes and insurance premiums when they become due. The amount in this account is based on the estimated amount necessary to pay these obligations each year. They make the assumption (often erroneous, but they have no way of knowing in advance) that your insurance and taxes will be the same next year. If the premiums go up at renewal they pay the higher amount and send you a bill for the additional amount disbursed on your behalf, and your mortgage payments will go up to reflect the higher amount. You receive no interest on this money.

Is escrowing required?

If you have a Conventional Loan and you do not have PMI (Private Mortgage Insurance), you have the option to close your escrow account and make your own tax and insurance payments. If you have a VA or FHA loan, the maintenance of an escrow account was a condition for the funding of your government-insured loan. In this case, the escrow account cannot be waived or altered.

I have an escrow account.  What should I look out for?

The biggest mistake you can make when your mortgage company escrows for insurance and taxes is to think it’s not your problem to make sure it gets paid. It most definitely is. If you are not on top of things you can wind up paying more than you need to, or losing your coverage altogether, and then paying more than you need to.

Unfortunately it’s really not in your control, which is very frustrating. Here are some things you can do, though, to avoid cancellation due to non-payment:

1.Who is your current mortgage company? Has your loan been sold? Have you re-financed? It is your responsibility to let your insurance agent know if your mortgage company changes and request that your policies be updated. Don’t assume that they will contact your insurer to let them know. They don’t. And if the insurer doesn’t know, guess where your renewal bill will be sent? Yup. Can you spell d-e-l-a-y?

2. Make sure the correct mortgagee is added to all of your policies. Here in Florida many homeowners have three policies on their home; a regular homeowners policy (that covers fire, theft, etc.), a flood insurance policy (covers rising water), and a windstorm policy (covers hurricane, tornado and other windstorms). It’s very easy for agents to overlook one or more of your policies, so keep on top of it.

3. Call your mortgage company two weeks after you get your policy renewal notice. By that time they should also have received their copy along with the bill, and they will have had time to input it in their system. If the mortgage company has not yet received the bill get a fax number for the correct department so that you and/or your insurance company can fax them a copy of the notice.

4. Call your insurance company one week before the bill is due. If the insurance company has not yet received payment call your mortgage company to ensure payment has been mailed. If not, insist they “overnight” payment directly to your insurance agent (if your agent has the ability to accept renewal payments) or directly to the insurance company. Keep in mind that “overnight” often means 72 hours with many companies, which is why you should insist.

5. If payment is still not showing as received by your insurance company by the day before the due date, overnight them a check yourself (or if you have a local agent you can just bring a payment over). Yes, this sucks. Yes, it’s difficult to come up with the money. With some insurance companies you will have a grace period and not really have to do this. Here in Florida, however, many people are insured for regular Homeowners insurance through the state’s insurance program, Citizens Property Insurance Company. They have no grace period. No even a single day. Not even if it isn’t your fault. If your payment is late your policy lapses – meaning you lose coverage – and may have to have your policy re-written. A huge pain in the tushy you want to avoid. And your rate may be higher. Once your mortgage company pays one of you will get refunded (usually the money is refunded to the party whose check is received last). If the refund gets sent to the mortgage company you have to get them first to make sure it’s applied to your escrow account, and then that they mail you a check. A huge, huge pain in the tushy. BUT, better than losing coverage and suffering a loss, then having to sue the mortgage company.

Ugh.  How do I avoid an escrow account, or get rid of the one I have?

I have a conventional loan, and I put 20% down so I wasn’t required to have PMI. My experiences with the myriad ways in which mortgage companies screw up was a major factor in my decision NOT to have my mortgage company escrow for insurance and taxes. I wanted to be responsible for getting my payments made on time, and I wanted to be able to earn interest on my money as I saved it. It’s like getting a discount.

If you have a conventional loan and have had or can have PMI waived (you’ll need at least 20% equity), talk to your mortgage company about letting you close your escrow and self-pay. Talk to a supervisor. This may be harder now due to the current mortgage crisis, but nothing ventured, nothing gained.

If you’re shopping for home financing, are eligible for a conventional loan and can put down 20% or more, make one of the questions you ask, “Must I escrow for insurance and taxes?” Some companies charge a point (a percentage of the loan amount) or offer a higher rate. I’d steer clear of those.

Of course if you don’t escrow you need to be disciplined about putting money aside to make those tax and insurance payments. Perhaps a little saving by delusion will help…

The preceding information is not advice, it’s just my thoughts and opinions. I’m just a girl on the web, not currently licensed in insurance or anything else in any state. You should absolutely seek the counsel of an insurance agent and/or a mortgage professional licensed in your state before taking any action at all. Coverages and programs discussed may or may not be available in your state.

Twenty Things to Do Before We Buy a House

I’ve spent lots of time thinking about selling our home here and moving to another state. The market is worse here than almost anywhere else in the country (we also boast having the highest foreclosure rate – don’t be jealous!), so it doesn’t look like it’s happening anytime too soon.

Still, it’s good to have a plan, and I have plenty of time to come up with one.

When Husband and I are finally ready to start looking for a house in our new home state there are a few things we will be sure to do, some of which we didn’t do in out first home buying process.

Before We Start Looking

These are things we will do before we actually go see any houses.

1. Familiarize ourselves with the area. We are still debating on whether or not to rent for at least six months first. I know it’s a good idea, but the thought of moving and doing it all again six months or a year later is so unsavory. On the other hand, it would give us time to really know the area, and not have to rely on the recommendations of friends and family whose preferences may not be the same as ours.

2. Know our credit score. We’ll be making sure our credit reports are accurate. We’re not planning on getting pre-approvals, as we don’t want anyone pulling our credit (and thus lowering our credit score) until we’ve chosen a lender. By knowing our score and income, and given our complete lack of debt at that point (our only debt is the mortgage on our house here), we can get a good idea of what interest rate we will realistically qualify for, and what kind of mortgages are available to us.

3. Know how much house we want to buy. We are huge proponents of living below our means, and just because a lender is willing to lend us $300,000 doesn’t mean that’s how much we want to borrow. Our goal is to take the equity (falling every day) we have in our current house and try to keep our mortgage payments about the same as they are now. Our mortgage is currently 12% of Husband’s income, but we know we’ll be taking a pretty big salary cut when we move. We’d like to keep the mortgage at 25% of his income or less. We won’t know our exact numbers until we sell this house and Husband gets a new job.

4. Compile a list of requirements. Our list is broken down into Must Have, Preferred and Wishes. We Must Have at least 3 bedrooms, but a 4th is Preferred. A Den or other Bonus room is one of our Wishes. So is having a laundry room on the second floor. You get the idea.

5. Hire a buyers agent. This is one of the most important things we’ll do this time that we didn’t do last time. There are seller’s agents, buyer’s agents and dual agents (represent both sellers and buyers). When buying a home I’m going to have a buyer’s agent. A buyer’s agent is ethically required to do what’s in our best interest in the real estate transaction. They represent us and only us, and cannot be in collusion with the seller and/or his or her agent. We won’t be afraid to sign a non-exclusive contract, but we’ll be sure to read and understand it first. An experienced buyer’s agent is going to understand the market, know where the bargains are and know how to whittle 1000 possible listings down to the five to ten that most meet our requirements. They won’t try to push their own listings on us; no trying to fit a square peg into a round hole. That will save us tons of time, tons of money, and tons of stress.

6. Do our own research. We’ll look on the internet for information about the neighborhood, schools, crime. Sites like Homefair are chock full of useful information. We’ll also check the property appraisers website to get an idea of property taxes in the area we’re looking. Some areas (like the one in which we live) give homestead exemptions and longevity discounts that can make the current owner’s taxes artificially low, so we’ll want to make sure we’re getting an accurate picture of the taxes we’ll have to pay.

7. Get insurance quotes. They won’t be accurate, but if we can get an agent to give us an idea of the rates for the area we’re considering and the types of policies we’ll need (i.e. is it a special flood hazard area, necessitating flood insurance?) we can use the information as a factor in our decision.

Items to Bring When Looking At Houses

1. A Scorecard. We’ll use our Required/Preferred/Wish lists to make a scorecard for each house to help us keep track of the houses we’ve seen and for comparison purposes later.

2. A digital camera, an extra data card and extra batteries. We’ll take pictures of the neighborhood, the outside, views from the front and back doors, interior features we like, interior features we don’t like.

3. A cell phone charger. We can use this small electrical appliance to test electrical outlets. Oh, yes.

4. A tape measure. Will our furniture fit? How much wall space is there? How big of a refrigerator can I buy for the space? All good things to know.

5. Bottled Water. I don’t want to waste time having to stop for drinks.

6. Hand Sanitizer. I’m allergic to cats. And if a house looks dirty I’ll definitely want to use some. Blech.

Before We Put An Offer In

We hope to narrow it down to three houses, depending on the market and what’s going on with it. In some cases we may do these things after we put in the offer, but only if we have sufficient “outs” built into the contract.

1. Visit the neighborhood at different times of day. A neighborhood that seems quiet at 11am might transform into a noisy, motorcycle club and roving-teen-filled mecca at night. We’ll check out the neighborhood at random times of day -and week – to make sure it fits with our preferences. Another thing we’ll do is look for all of the ways to access the neighborhood so we can see the surrounding areas and any potential problem areas.

2. Talk to our prospective neighbors. We’ll go up and knock on the door. It’s not a time to be shy. These people will be living next to us for many years to come, and if they open the door and clouds of marijuana pour out we may want to reconsider our choice. You may not. Different strokes. We’ll ask about crime, difficult neighbors, renters, worrisome animals (a friend lives next door to a menagerie of very stinky, more-comfortable-on-a-farm-than-in-a-subdivision-type animals). What do they like best about the neighborhood? Worst?

3. Do more of our own research. We’ll check out the property appraiser’s website to get information about taxes and home sale prices. We can find out how many times the house has changed hands and how much was paid, and lots of other useful information that’s all available for free. Knowing how much someone paid for a home can be extremely useful when negotiating price.

4. Check with the city to see if there are any pending land use changes. A good friend bought a large home on a very nice piece of land, only to have a huge chunk taken away under eminent domain for a sewage system. The pending plan would have been useful to know before buying, methinks. The forty acres of woods behind our dream home could wind up being razed to make way for a WalMart. Zone changes happen, but we at least can protect ourselves as much as possible.

5. Check to make sure any renovations have received the proper permits and inspections. I know several people who were fined and/or had to rip out renovations, wiring and plumbing that were done without proper permits and were not up to code. If the homeowner can’t provide proof we’ll contact the city. If not permits were obtained that will affect our offer.

6. Check to see if there is a Homeowners Association. If there are, what are the fees? What services are provided for the fees? We’ll get a copy of the community rules, and decide if we can live with them. Is participation compulsory? My sister’s community has several homeowners refusing to pay their share, and the last treasurer embezzled funds. Oy.

7. Bring in the expert. Before I bought my current house I brought my stepmother (the most critical person I know) and my best friend (the most observant person I know) to get their opinions. It was my first house and I was nervous about taking such a big step. Next time we’ll bring a friend who is a building contractor to see the house, just to get an opinion on the construction and any issues we might have that way.

I hope there’s time to do all of these things. The market and other factors will dictate if we’ll get to each step, but I hope we do. Once the offer is accepted and we have a deal we’ll of course have lots more to do, which will be the subject of another post.

Great News on PMI from The Accountant’s Daughter

A friend of mine over at This Wasn’t In the Plan posted today about how she wants to pay down her mortgage so she can eliminate PMI (Private Mortgage Insurance) payments from her mortgage. A great idea that reminded me I’d heard a very quick blurb on the news about PMI and taxes that I hadn’t heard before, so I’m guessing many others haven’t either.

For those who don’t have it – or who have it and don’t understand it – PMI is extra insurance that lenders require from most home buyers who take out mortgage loans that are more than 80 percent of their new home’s value. It protects lenders against losing their shirts if a borrower defaults on a loan. The PMI company line is that they enable borrowers with less cash to have greater access to homeownership. With this type of insurance, it is possible for you to buy a home with as little as a 3 percent to 5 percent – even 0% down payment.

While this means that people can buy a home sooner without waiting years to accumulate a large down payment, these low/no-money-down loans are part of the reason for the sub-prime mortgage crisis, as many people bought homes they just could not afford (and adjustable mortgages that were no good for them).

But I digress.

These loans are riskier for the lenders because people are more likely to default on a loan in which they have very little money invested. PMI doesn’t protect you – it supposedly protects the bank if you default. In foreclosures the bank must sell the house and then get reimbursed for the difference, if any, between the sale price and the loan balance by the PMI insurer. The PMI insurer can then come after you for what they had to pay the bank – which doesn’t seem fair at all, does it?

(I don’t have any idea if these PMI insurers are/have been paying off the lenders during this mortgage crisis or not, but it would be interesting to find out… )

The bottom line is that buyers with less than a 20 percent down payment are normally required to pay PMI. In recent years savvy mortgage brokers and buyers have turned to piggyback loans in an attempt to avoid the PMI requirement. Blended mortgages allow borrowers without a 20 percent down payment to take out a home equity line or a traditional second mortgage simultaneous with their first mortgage to provide the necessary down payment, avoiding PMI. It’s even more of a moneysaver because the interest on second mortgages and home equity lines is almost always tax deductible.

That cost the PMI industry to lose a lot of business. So they’ve pushed to make PMI premiums tax deductible, and it seems they’ve been successful.

Yes, PMI is now tax-deductible. So, while it sucks that you have to pay it, at least your tax bill this year could be smaller.

Let the festivities ensue!

As always, please remember that I am not an expert on finance, or an accountant. I’m just an accountant’s daughter. So, please, please, please contact your accountant for expert advice.

The Forgotten Foreclosure Victims: Pets

I’ve talked before about how the sub-prime mortgage crisis, and how it’s resultant foreclosures affect all of us in my article Foreclosure Affects New Buyers, Old Buyers and You.

It occurred to me today that there are other victims that many haven’t yet thought about.

When people are forced to foreclose on their homes they can pretty much forget about getting another mortgage. That will force most of these people, these families, into the rental market. This is, of course, going to be terrific for the rental market, which suffered along as everyone with decent credit (and, obviously, many who didn’t) rushed to borrow 110% of their home’s value with zero money down on a 3-year Adjustable Rate Mortgage, and left many complexes with higher vacancy rates than ever before. Their time has come…

But. Most rental properties don’t allow pets. Whether they’re a large conglomerate of apartment complexes or a single unit condominium owner the reasons are mostly the same: fear of damage, fear of being sued, not enough space, etc. You can find properties that will accept pets, but they usually only allow the the lives-in-a-fishbowl or poops-in-a-box variety. Finding one that will accept dogs is not nearly as easy. Along with three-or-more bedroom units they’re likely the first to be snapped up. That leaves dogs, quite literally, out in the cold.

So what is a homeowner on the brink of financial collapse, about to be homeless, homeless, to do when faced with the prospect of choosing between no home for their family or having a home but leaving their pet behind?

Now in addition to the emotional turmoil of leaving their homes, their neighborhoods and their financial security behind, people are choosing to leave their pets behind, too. I certainly would not want to be the mother who, in the face of her own heartbreak, has to tell her children that their beloved mutt – the one that they fell asleep cuddled up with as babies, the one that accepted the pokes and tail pulls when they were toddlers, the one that waits by the door every day for them to come home from school – has to be given away because they just can’t bring them to their new home. I’d never get over it.

And the poor pets. They don’t understand. All they know is they’re not with the ones who love them. They have fear and uncertainty, and they miss their families. If they’re lucky they find a new home with new people to love. If not…I just don’t want to think about it.

I just couldn’t do it. I honestly think we’d move wherever we needed to before we’d let our dear dog go. She’s one of us…

I also don’t want to think about the others. The people who don’t take care of their dogs, at the very least making sure they are taken to a shelter. I read a story today about someone who just left their dog behind. Alone in the house they abandoned. No food or water.

How could they do that? How could they? I think that person deserves whatever they get and more. People (and I use that term loosely) that would do that should be shot. They should lose all of their teeth. They should develop open sores all over their bodies so that they are as ugly on the outside as they are on the inside. Then they should die a slow, agonizing death that takes many years, so they they get a taste of what waits for them in the afterlife.

And there’s nothing we can do about it, either.

If you are thinking about adding a pet to your life, please make sure you’re prepared to take care of it for the long haul. And please don’t spend thousands on a puppy mill puppy – go to the Humane Society and save a life.

Please.

Called on the Carpet: January 30th Financial Goals Checkup

Uh oh. It’s January 30th and I am waaaaaaaaay behind schedule for the year.

PaidTwice over at I’ve Paid For This Twice Already wrote a post checking in on her 2008 financial goals, then asked me and two others how we were doing with ours. I’d entered a really great carnival with my post It’s About the Money, Honey where I outlined my financial goals for 2008. PaidTwice wants to know how I’m doing.

The answer is not great. I got waylaid for much of December with my son getting very sick, and then I had to deal with my own version of InfectionsRUs. Then vacation, and, and…

All of which is really irrelevant, because the real reason I’m behind is that I’ve got a serious case of the “I just don’t wanna!”s. I’ve always just had a loose budget in my head, and since we have no debt and considerable savings on a single, modest income, I’ve been doing okay so far.

But I could do better. Much better.

So, here it is. The good, the bad, and the ugly.

1. Draw up an actual budget by January 5, 2008. I’ve finally done one. Late. Very late. Okay, today. After I saw PaidTwice’s post. I’m sure it will need tweaking, but at least it’s done. Honestly, I’m abhorring the whole process, and the thought of entering my receipts has me, on January 30th, looking for just about any distraction. Still, I will persevere. Tomorrow. Hey, American Idol is on! Grade: C-

2. Install the Peachtree Accounting program (bought for $120 and then got a $140 rebate, thank you very much) by January 5, 2008. Um, yeah. Not done. It’s sitting here right by my computer. I’ve decided to wait on this and just start small, with simple software, so as not to overwhelm me even more than I already am. My new target date for this is July 1, 2008, but I may put it off longer, depending on how things go. Grade: Incomplete

3. Review all of our IRAs and other retirement and savings accounts by March 31, 2008. Well, finally one I’m not late on. As I get my tax info together I’ll get this stuff together, and make an appointment with…someone…to go over all this stuff. Grade: Incomplete

4. Pay ourselves first. Find at least $100 per month to put into our non-401k savings, and $20 per month to put into our son’s savings account per month. I have enough left in checking this month to do both things. Yahoo! Grade: A- (saving a full A for saving more than the goal amount)

5. Learn about the stock market. Read at least one book per quarter, and at least one online article per week. I haven’t read a book yet (suggestions, anyone?), but I have been reading lots of financial articles, and even a few on the market. Blech. Grade: B

6. Enter the stock market by the end of the year. Not a thing done yet. Grade: Incomplete

So, that’s one A-, a B, a C- and three incompletes.

Not a stellar start, but a start it is.

Sometimes one needs to get called on the carpet to get back on track. So, thanks PaidTwice. I take back all the things I said to my computer screen when I read your post. 😉

The Accountant’s Daughter’s 2007 Year End Tax Tips

The end of the year is one of the most important times in our financial year. Besides putting our money and time budgets to the test with all of the holiday gifts and parties and travel, tax planning should also be a money and time priority.

Being the daughter of an accountant, there’s a few things I’ve learned over the years. The first is to always hire a tax professional to get correct advice, and to minimize your tax liability. Now that my husband and I have a small business we’ve discovered the minefield that is deductible small business expenses , and we’ve gotten invaluable advice on how to use those deductions correctly (for example, we decided not to deduct our home office), minimizing the risk of an audit. Even if you do them yourself, I’d at least get the return reviewed before submitting it to the IRS. Often communities will offer free or low-cost tax preparation assistance, so check in your area.

Still, even as laymen, there are things we should know about, even if only to ask our accountant. Here are a few things I’ve been doing or considering as the calendar and tax year comes to a close. I hope they are of help to you.

The bottom line when it comes to taxes is that you want to delay paying taxes on your income as long as possible, and pay expenses as soon as possible. By deferring income you in effect get the use of that money for an additional year before having to pay income tax – a year when you could make that money work for you. And by paying expenses NOW you get to deduct that which is deductible now, reducing your tax liability.

Delaying Income

1. Defer your compensation – If possible, defer your last paycheck or any bonuses due you until after the first of the year. When it comes to income, it’s always better to put off until tomorrow what is due you today. Try to get your job-related expenses reimbursed before the end of the year instead of your regular paycheck, if possible. That way you can still get some cash, and it’s not taxed as income.

2. Make additional allocations to your 401k or IRA – Deductions to some retirement accounts are made with pre-tax dollars, reducing your taxable income. You can contribute up to $15,500 per individual to a 401k (plus an extra $5000 if you’re over 50) or up to $400o per individual to an IRA ($4500 if you’re 50 or over), so max these out of you can. Even if you can’t max it out, even an extra $100 helps you now and in the future. A nice bonus – IRA contributions for 2007 don’t need to be made until April 15, 2008. There are also ROTH IRAs to consider. Though not tax deductible they may be better for you in the long run. There are also SEPs and Keoughs which have various rules, so check with your accountant to see what would be best for you.

3. If you have a small business, wait until January to bill your clients – a few weeks delay on you having that money is the same as deferring salary for others.

Expenses to Pay Now

1. Pay your property taxes early – If you do not escrow for your taxes and are responsible for paying them yourself (along with homeowners insurance something I highly recommend – why should you pay them a year in advance through your mortgage payments?), you may get a discount by paying them early. I save about $200 by paying them in November instead of waiting until March. That’s a pretty good savings.

2. Make your January mortgage payment a few days early – This way you can take advantage of the additional mortgage interest in this tax year instead of next. Note: It must reach them by December 31st to qualify.

3. Consider selling losing stocks – You can use the loss to offset some of the capital gains from your better-performing investments. Note: There are some tax changes coming next year which may make this not the right choice for you – check with your accountant.

4. Make charitable contributions – Generosity is tax-deductible. Make your contributions now, but please keep in mind that they’ve really tightened the requirements for appraising the value of non-cash donations. Money is easy, but you’ll need an appraisal by an expert for any contribution over $5000 (so if you’d planned on donating to charity the car that died 5 years ago that’s been sitting up on blocks in your back yard, you’re probably going to be out of luck).

5. Now is a better time for pricey medical procedures – Well, really never is a good time for this, but if you have any procedures you need done in the near future try getting them done before the end of the year if the costs will exceed 7.5% of your adjusted gross income. Another tax deduction awaits. Then again, who wants to do this around the holidays?

6. If you have a small business pay any deductible subscriptions, dues, invoices now – Again, better to take the deduction this year and reduce the tax due in April.

7. Make that big purchase – in my state we get to deduct sales tax, but that deduction may end this year. So if you live in one of the states without a state income tax (Alaska, Florida, Nevada, South Dakota, Texas, Washington or Wyoming) now is a great time to buy a car, a $6000 Apple computer, or a huge screen plasma HDTV television (hello, Super Bowl!).

8. For any deductible purchases you make this month, use your credit card – this way you get the item/benefit this year, get the tax benefit this year, but don’t actually have to pay for it until next year. When you can use that income you deferred. Hey, every penny counts, people!

Which brings us to an excellent point. Every year brings changes to tax laws. This may be the last year for several deductions (like the $250 supply deduction for teachers and the college tuition deduction). Please take advantage of them now. Also, the new tax year will bring new rules, so in some cases you’re better off trying to have some things fall under the 2008 tax year. Again, your tax advisor can help you wade through the muck.

As always, please remember that I am not an expert on finance, or an accountant. This is nowhere near a complete list. I’m just an accountant’s daughter. So, please, please, please contact your accountant for expert advice.

It’s About the Money, Honey

It’s the first day of December, and a good time to start thinking about our finances, and our goals for next year. I was inspired to do so by the folks over at Cash Money Life , who have set up a Carnival to encourage people to share their Financial Resolutions for 2008. Horefully we can learn something in the sharing.

We’re in pretty good shape financially. Even though we’ve been a single income household for the past three years we have no debt, besides our mortgage. We have credit cards, but we pay them off every month. We have a nice amount in savings. It’s not easy to live on one moderate income without accruing debt, but we feel blessed and grateful that we’ve been able to do it.

Still, we should be saving more money than we are, and we want to change that in 2008.

Here’s the plan.

1. Draw up an actual budget by January 5, 2008. This is something I have always resisted. I have a vague budget in my head, but nothing drawn up on paper. I’m not promising to use it for the whole year, but I do promise to try living by a budget for six months and see how it fits.

2. Install the Peachtree Accounting program (bought for $120 and then got a $140 rebate, thank you very much) by January 5, 2008. And start using it for budgeting and to keep track of receipts and expenses and such. My taxes will be soooo much easier to do next year!

3. Review all of our IRAs and other retirement and savings accounts by March 31, 2008. Consolidate and eliminate as needed to reduce fees and maximize profitability. Our biggest issue with this is not knowing who to trust with our money. Everyone seems to have an agenda. We may have to bite the bullet and just consult a financial planner – the kind that charges you an hourly rate but isn’t tied to any company, so hopefully they’ve no agenda of their own). Again, though – who to trust?

4. Pay ourselves first. Find at least $100 per month to put into our non-401k savings, and $20 per month to put into our son’s savings account per month. We haven’t been putting much into savings since I stopped working – we’ve just been maintaining the status quo. Note: These numbers may be adjusted once the budget is set.

5. Learn about the stock market. Read at least one book per quarter, and at least one online article per week.

6. Enter the stock market by the end of the year. Do the research, set a budget and jump in. Again – who to trust?

We also hope to sell our house and move out of state in 2008. I’m going to cry if that doesn’t happen. Cry a lot.

By reaching these goals our financial picture will be much more focused than it is the way it stands now. That’s a good thing.

See how I’m doing on my goals! Check out Called on the Carpet: January 30th Financial Goals Checkup!

The Taxman Cometh and the Husband Tries to Taketh Away

I paid my property taxes today. $1840.

Those big checks are so hard to write. Compared to what many have to pay, it’s pretty reasonable – and $100 less than last year. Yay us!

BUT. Since we so much want to be out of here , every mortgage payment, every tax payment, every insurance payment seems more like rent – money down the toilet. I understand that it’s not, and that we continue to reduce our principal with every payment we make, but with falling property values it just feels … not nearly as fun as paying mortgage, taxes and insurance on a new house.

Then, tonight, my husband came home after a bike ride and asked me how long I’d owned the house before we married. I bought it the year before. He then informed me, with a Cheshire Cat grin on his face, that he’d now put more money into it than I had (I’d stopped working shortly after our son was born). So now it was his house.

Not so fast, bub. I put 20% cash down. He hasn’t put more money into it yet, and won’t for quite awhile. Heh.

Besides, it’s in my name alone. Though my state is a community property state, it won’t matter if I bop him on the head.

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