Finance 101

[waynehartwig]

Ok.. Seems there are some financial studs lurking... So post here your tips and tricks to saving/making the all mighty dollar. Don't post anything that is illegal. Don't post anything that you 'heard people doing'. Only post things that you, yourself, do...Legally.

 

[waynehartwig]

The biggest mistake are those that get back several thousand every year on their taxes!!!

WHY do you give the IRS an interest free loan????!!!???!!???

The best is to end up paying a few hundred dollars every year, believe it or not. I know some really like that 'free' money every year, and even look forward to it, but it's not free! It costs you!!!! Think about.... Take that money and put it into even a savings account and earn $'s on your own with it.

Now there are some of you that get lots of tax credits and say that you can't avoid it - yes you can!!! Change your withholdings! Claim 30 throughout the year if you have to!!

Oh, and then after you get that thousands back, what do you do with it? Blow it on 4x4 parts, hookers and beer?? Invest it!!! Make a house payment with the whole thing - an extra payment (principal only payment), not to be confused with the normal interest payment...

I end up owing several hundred each year. I'm also a prick about it, and I don't pay my owings until near the tax deadline - let MY money work longer for ME!

 

[waynehartwig]

A good tip....

Make 1 extra house payment a year and pay your mortgage off a lot faster.

Go even 1 step further, and most mortgage companies will not allow you to do this.... Some will allow you, but charge you thousands to enroll in their 'club'. I know personally that Bank of America doesn't care, because I had a home loan through them about 4 years ago and did this. You can actually get months ahead on your loan in a very short time! Get this, once you get ahead on your loan, they don't care if you make a payment next month....

Make a small payment every week, instead of a lump sum every month. For example, say your mortgage is $1,000 a month or $12,000 a year. Split the $12k into 52 payments of $235. Doing so will pay your 30 year loan off in closer to 15!

Reason? Simple really.....

Interest is calculated daily on the daily balance you owe your mortgage company. On a $100k loan, 7% interest is a lot of money. When you pay that balance down each week, there is less of a balance each week to be charged interest on. Next time you recieve your tax paperwork from your mortgage company, look at it and see how much you paid them last year on interest alone! A majority of your monthly payment is interest only... If you pay weekly, then you will end up paying less interest every year and pay it off that much quicker.

This really works on anything that charges interest. Car loan, credit cards, etc. Just keep in mind a 20% credit card at $1,000 isn't that much interest paid each year. 7% on a 30 year $100k loan is a lot more.

 

[SAMI]

intersting... i just learned alot...

-Jason

 

[waynehartwig]

Another REALLY big no-no...

NEVER take a second out on your home (or refinance) to pay bills!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! I don't care if you have $50k in credit card debt - do not do it! Don't even do it to pay off your car. The only reason would be because you can't afford the payment and instead of getting into credit trouble, your paying it off. Don't spend the money on hot tubs or pools, either.

Reason?

Say you take out $50k as a second on your loan... You're going to be paying 8% on that loan for a LONG time. Then all you have to show for it is your debt is gone. But in reality the problem is still there, because most likely you will have kept the accounts open and begin charging more stuff on them. Sure, you intend on paying them off every month, but you don't....

And don't get me started on these interest only or reverse am loans... Just don't!

The best investment you can have is real estate, rather it's commercial, residential or even rental. Don't muck it up by doing these scam loans....

ARM's are also a bad idea - even if you plan on refinancing in 3 years before the rate goes up. Each time you refinance, you have to pay fees. The $2-3k in fees you pay you will never get back in the savings. The ONLY time you do ARM's is if you don't plan on keeping the house longer than the ARM period. In that case, make sure you dont have a buy out clause (pre payment penalty).

EDIT: FYI A second to pay off bills is not tax deductable... Don't be fooled...

 

[waynehartwig]

How many of you use Turbo Tax? STOP! You tightwads!! Break down and hire a CPA, it WILL be the best ~$300 a year you spend - trust me!!!!!!! CPA's don't just do your taxes.... Some are men about town. Meaning they have large networks with other professionals - attorneys, brokers, etc. If you treat them well, they will offer you fantastic (sound) advice. CPA's are smart with their money, because they know the no-no's. They know good deals when they come around. They embellish on them....

Granted, if you work at McDonalds, and live at home with mommy, then Turbo Tax is a great way to get your $100 back fast. But if you are married, own a home (or condo), have children, etc. Do not use anything but a CPA. And DO NOT file short form!!! Always file long!! (if you are doing it yourself)

If you don't know of a good CPA, ask your DR next time you see them or even start calling high profile attorneys and ask whom they use. They will be more than happy to tell you - heck, I bet they give you their card!

 

[SAMI]

are you copying and pasting this from somewhere else?

-Jason

 

[waynehartwig]

Here's a cool one...

Do you enjoy recreation? Want to do it for practically free?

Buy yourself a $100k class A motorhome. Yeah right, I can't afford that - you say!

I say you can (most likely)

Most places will have specials where you can get one for .9% for 20 or 30 years (obviously depending on your credit - 780 and higher will get you great deals here!). Now that the payment is down around $500 a month.... Mkes it fairly easy, eh? With the higher scores, they will also knock more $'s off the total cost.

Do you own a home? If so, then you already understand the tax benifits. Buy a class A and reap the same benifits TWICE! Yes, a class A is considered a second owner occupied home! Meaning all of the maintenance, interest (on a .9% there isn't much), etc. is all tax deductable. Now you know why retired folks have these really nice coaches... It's not that they spent their children's inheritance....

 

[waynehartwig]

are you copying and pasting this from somewhere else?

-Jason

Nope... Just rattling it off as I think about it....

 

[waynehartwig]

Here's a favorite of mine, and I won't go into much detail - good topic of conversation when you hire your CPA!

Say you own a business and your home. Buy the building in your personal name and lease it to your business.

Think about it, and ask around...You'll understand why quick enough. Can you say loopholes?

 

[JeeperG]

Credit is a myth!

I don't borrow money anymore EVER!

Also easiest way to make money is with your income.

I do not live paycheck to paycheck

 

[78mitsu]

Max out your 401K contribution and invest 10-20% of your income, if you play your cards right (well rounded portfolio), you'll have a nice amount saved in 5-6 yrs. I always end up paying taxes because capital gains gets me every time (I pay half now then defer the rest until I withdraw it, those accounting folks are so smart)

 

[waynehartwig]

Max out your 401K contribution and invest 10-20% of your income, if you play your cards right (well rounded portfolio), you'll have a nice amount saved in 5-6 yrs. I always end up paying taxes because capital gains gets me every time (I pay half now then defer the rest until I withdraw it, those accounting folks are so smart)

Oh definately!!! If you don't have a 401k/IRA, all I have to say is... WHY????!!! This is practically free money! Plus, it is your retirment. Don't count on the government to pay your retirement.....

 

[waynehartwig]

For those that are curious where I have learned all of this (and more that I haven't even mentioned), read these books....


"Rich Dad, Poor Dad." Robert Kiyoaski (http://www.richdad.com/)
"Getting Started in Bonds" Sharon Wright
"Investing Bible" Lynn O Shaugnessy
"How to Pay Zero Taxes" NADN
"Investing for Dummies"

Fox News Channel easily has the best business shows.....

 

[JeeperG]

I agree that the Rich Dad Poor Dad is a good book.

I also like most of Dave Ramseys ideas.

 

[waynehartwig]

I also like most of Dave Ramseys ideas.

Not so much... He's completely against credit cards, but yet advocates using debit cards to purchase items from internet companies. THIS IS A HUGE NO NO and another tip!!!!!!!!!!!

NEVER pay with your debit card while making an internet purchase, heck, don't do it with any purchase if you can avoid it.

Reason?

Say mr internet guy adds a zero by mistake to your $100 order and doesn't catch it. You do! Because now you are over drawn, because you only had $900 in your account (it was payday). Now you have no money, and your bounce check charges are coming in full force. You call your bank, and they can't help you because you paid with a DEBIT CARD! You will now have to call the merchant, get them to agree that they overcharged you, and refund the $900 that they took in excess. Of course, now it's been a month and $900 barely covers the bounced check charges.

Now use teh same scenario when paying with your credit card. One phone call to the credit card company and your money is returned to the card and THEY go after mr internet guy. Also, all the while your only $900 to your name is still in YOUR bank - no bounced check charges either! And much better state of mind....Don't you think???

I use my credit cards for just about everything I do, and everywhere I go. Literally. I pay for gas, fast food, groceries, etc. with a credit card (not debit card with the credit logo). Even business expenses. I also have auto bill pay set up to send x amount to my one favorite card each month. This date is also a week-10 days BEFORE my due date.

 

[waynehartwig]

While on the subject of credit....

Always check your credit report at least once a year. I don't care if you have a 800+ score, always.

Reason being you never know what is going to be on there. There are always mistakes made, and these mistakes if caught sooner than later are a lot easier to clear up - and less damaging to you!

 

[JeeperG]

Yeah its possible I guess, can't say I ever had that problem.

I pay cash or debit for everything. Unless for some reason I need to pay with a cashiers check or money order for some odd reason.

Also my understanding is Visa Debit is covered no different then a regular Visa Credit Card? Zero Liability?

Another thing people do that hurts them is 90 days same as cash, how many people you know that actually pay in full after 90 days, almost none.

Hell I am just happy I learned the hard way, I am almost debt free, (don't think you do not need medical) which should be payed off this year. I don't live paycheck to paycheck, I have an emergency fund, all that makes it a hell of a lot easier then worrying what bills you have to pay.

Granted maybe yourself and a few others are good at using credit cards and paying stuff off quick, Sad thing is MOST americans suck at it, Its a bad habit. Even people that make say 6 figures are in debt like crazy, it doesn't make sense to me.

I am by NO means and expert here just I have learned a few things the last say 12 years that changed my way of thinking completely.

Word.

 

[JeeperG]

Always check your credit report at least once a year. I don't care if you have a 800+ score, always.

If I recall there is a website or a place that lets you check it for FREE once a year? Can't remember what it is.

 

[JeeperG]

Here we go.. Annual Credit Report

How often can I request a free credit report through this website?
You are entitled to receive one free credit report every 12 months from each of the nationwide consumer credit reporting companies – Equifax, Experian and TransUnion. This free credit report can be requested through this website, by phone or by mail.

Also a kind of off topic thing. My brother and 2 other guys created a computer program out at IRS in Ogden that helped save 20 million a year.
I thought it was pretty cool