Saturday, January 29, 2011

Should I Use Software To Do My Own Taxes Or Get Help From A Pro?

Most people use a computer to prepare their yearly income tax returns now.  The laws just get more and more complicated -- it's VERY difficult to do it any other way now.  The IRS has even stopped mailing the forms booklet now, if you do still want to figure your taxes out by hand, you'll probably have to use a computer anyway so you can go to  and download and print the blank forms you'll need.  (A few libraries and post offices still have a handful of the forms, and what is left is drying up quickly.)

So your choice has pretty much come down to -- are you going to get the software and do it yourself, or are you going to see a tax professional and have the help of their software? 

Friday, January 28, 2011

Buy or Rent Your Home? Details to Help You Decide

A few of you might remember the 1950s TV quiz show, The $64,000 Question.  In today's dollars, that's closer to the $464,000 question -- and you might be surprised that it's not just for a few select contestants on a television show, but for you and pretty much everyone you know.  So what is this vital question?

The median rent on a home in the United States today is $842 per month.  If inflation averages 3% per year, you will pay well over $1.1 million to rent that home over your lifetime! That's based on renting your first home at age 25 and living 50 more years.  If you live (and rent) longer than that, ... you do the math! 

Or you could buy the home.  If you could pay cash for it, its median price today is $168,800.  But you also have to pay property tax, insurance, repairs and maintenance ... not to mention mortgage interest and possibly private mortgage insurance if you don't happen to have that much cash handy to make the purchase. 

Should I rent my home or buy it?  That is one of the biggest life decisions you will ever make. It's especially hard to make that decision today.

Thursday, January 27, 2011

A Hidden Gem-The Savers Credit Could Be Worth $1,000 To You

Yahoo! Finance has a highlight out on an article "Save $1,000 on Your Tax Bill" by Consumerism Commentary, provided by US News and World Report on Wednesday, January 26, 2011:

I recommend this article as it does a great job of telling you about the value of this credit, which is designed to give low income taxpayers a powerful incentive to save.  (Low income meaning this credit is gone at an income of $27,750 for singles and $55,500 for married couples filing jointly, and begins to be phased out at lower income levels than those).

But this article points out that you should take a second, serious look at the savers credit.  I'd like to add an exclamation point to a couple of items they discuss.

Saturday, January 22, 2011

Top 10 Ways To Go Broke Trying To Build Wealth

10  Buy on impulse what feels good at the time and don't keep records of what you spent your money for.  After all, life is short, you might as well enjoy it!

My response:  You definitely should enjoy life, but are you settling for something good or simply momentarily pleasurable and giving up the better and best of life.  If you don't keep records, you likely will have a nagging feeling that "life is flying by and what do I have to show for it?"  But consider this.  If you do a quick $40 ATM withdrawal twice a week, that's over $4,000 in a year, and over $200,000 in a lifetime that you have no idea where it went.  If that's you, and you can't seem to get your $20,000 in total credit card balances to go down, paying on time 11 months a year but late "only once", then you're paying 29.99% interest -- $6,000 every year just for interest.  No wonder the balance doesn't go down, when it takes $500 every month just to tread water.  Over a lifetime, if you keep that $20,000 balance, you'll pay over $300,000 in interest on those cards.  Hard to build wealth when you do that.  Keep records.  Look at them.  Be surprised with how much you spend on things that are already consumed.  Decide which of those things you'd rather do without ... would you rather make yourself wealthy, or the bank?

Thursday, January 20, 2011

How To Get Wealth When You’re Broke And Over 50

Wealth is not everything.  Wealth with selfishness is loneliness. Wealth does happen to be the easiest path to personal freedom … the freedom to have the time and the means to live life the way you choose to do so.  And the best path to wealth, the one any determined person can do, is to become a passionately smiling tortoise:  Have a mentor and a plan, consistently follow your plan step by step, be alert to adapt to changing conditions as your plan unfolds, and keep smiling – enjoy the journey!  It really is that simple … and that complex.

If the Best Path to Wealth is Slow Cooking … Aren’t I Already Too Late?
You’ve probably seen and heard the facts and figures about accumulating wealth over a lifetime. Here’s a couple of examples:  If you save $2,000 from money earned in a summer job at age 16, then do it again at age 17, 18, and 19 … and then never add another dime, but let it slow cook at average long-term stock market returns until age 65, you’ll have over one million dollars!  If you’re too late for that one, you could save $100 per month every month without fail from your paycheck beginning at age 27, again let it slow cook at average long-term stock market returns, and retire at age 67 with over one million dollars. (These examples are both based on average returns of about 11.5% per year).
Here’s a Plan That Will Work in Just 9 Years

Saturday, January 15, 2011

The Mystery of Where Passion Drives You!

Passion is a powerful force.  We mostly think of it in terms of romance, art, and causes we are deeply interested in.

I would go farther.  Much farther!  I believe it is a requirement for success in anything we do.  Even our jobs.  Even our businesses.

I believe this enough that

Friday, January 14, 2011

The 4 Dimensional Success Story

Rob and Rudy were the best of friends.  Every afternoon the school bus would drop them off a couple blocks from their homes and they would start walking the rest of the way, talking about what they could do with all of their hours of freedom now that they were released from the chain link fence that enclosed the entire campus and the bumpy bus ride was complete.  The sun shone brightly, the wind was calm, life was good.

Soon enough, they arrived at Rob's house, where they quickly snarfed a snack of crackers and peanut butter, turned up some mood music, and went to work on their project.

Thursday, January 13, 2011

KISS and Doug's Top 4 Tax & Money Tips of All-Time!

Over the 30 years I have been a certified public accountant, I have been asked to speak to a wide variety of small groups on my top tax and money tips.  And of course, once you get me started I can easily get as wound up as a top, going, going, going!  But in the spirit of KISS (I prefer the keep it simple, sweetheart version)  I like to focus on the four recommendations I have consistently found to be most effective:

1.  Own your home.   

There are countless benefits to establishing roots, stability, and having a home you can call your own that go beyond the simple rules of finance.  But those simple money rules are so, so powerful!
2.  Become your own bank.

Think how much power banks have had over you in your life.  Ponder what could happen if you could have even a little of that power focused on YOU!  Is it really possible .... ?