Readers Question: A Debt Collector Is Threating me if I Don't Pay | What Should I Do?

Some debt collectors use horrific tactics to collect on bad debts. I have heard money guru Dave Ramsey on his radio broadcast relate the stories he has heard over the years of the over the edge tactics debt collectors use. 

Dave Ramsey told of a woman who was being harassed by a debt collector. Somehow the debt collector got out of her that her dog had died. Using this information, threatened her that if she didn't pay he would go and dig the dog up and hang it from a tree. This unnerved the woman so much she paid the debt. She was in such a state that she made several trips to the burial site of the dog to see if he had been dug up. 

This kind of harassment is extreme, yet everyday federal law is being violated by these debt collectors and it goes unpunished. The following list is the from the Fair Debt Collection Practices Act(FDCPA). This is the law that specifys how what practices debt collectors can not do. If they are doing these things you can report them to the FTC and sue them.

What practices are off limits for debt collectors?

Harassment. 

• Debt collectors may not harass, oppress, or abuse you or any third parties they contact. For example, they may not:
• use threats of violence or harm; 
• publish a list of names of people who refuse to pay their debts (but they can give this information to the credit reporting companies); 
• use obscene or profane language; or 
• repeatedly use the phone to annoy someone. 

False statements. 

• Debt collectors may not lie when they are trying to collect a debt. For example, they may not:
• falsely claim that they are attorneys or government representatives; 
• falsely claim that you have committed a crime; 
• falsely represent that they operate or work for a credit reporting company; 
• misrepresent the amount you owe; 
• indicate that papers they send you are legal forms if they aren’t; or 
• indicate that papers they send to you aren’t legal forms if they are. 

Debt collectors also are prohibited from saying that:

• you will be arrested if you don’t pay your debt; 
• they’ll seize, garnish, attach, or sell your property or wages unless they are permitted by law to take the action and intend to do so; or 
• legal action will be taken against you, if doing so would be illegal or if they don’t intend to take the action. 

Debt collectors may not:

• give false credit information about you to anyone, including a credit reporting company; 
• send you anything that looks like an official document from a court or government agency if it isn’t; or 
• use a false company name. 

Unfair practices. 

• Debt collectors may not engage in unfair practices when they try to collect a debt. For example, they may not:
• try to collect any interest, fee, or other charge on top of the amount you owe unless the contract that created your debt – or your state law – allows the charge; 
• deposit a post-dated check early; 
• take or threaten to take your property unless it can be done legally; or 
• contact you by postcard. 

Do I have any recourse if I think a debt collector has violated the law?

You have the right to sue a collector in a state or federal court within one year from the date the law was violated. If you win, the judge can require the collector to pay you for any damages you can prove you suffered because of the illegal collection practices, like lost wages and medical bills. The judge can require the debt collector to pay you up to $1,000, even if you can’t prove that you suffered actual damages. You also can be reimbursed for your attorney’s fees and court costs. A group of people also may sue a debt collector as part of a class action lawsuit and recover money for damages up to $500,000, or one percent of the collector’s net worth, whichever amount is lower. Even if a debt collector violates the FDCPA in trying to collect a debt, the debt does not go away if you owe it.


Related articles

• What To Do When the Debt Collector Calls (abcnews.go.com)
• Four Mistakes Not To Make When Talking With A Debt Collector (creditscore.net)
• What to Do If a Debt Collector Calls Looking for Family or Friends (walletpop.com)
• Can you sue an out of state collection agency (wiki.answers.com)
• Debt Collectors Using Facebook To Embarrass Those Who Owe (idle.slashdot.org)

10 Great Tips When Looking for a Home to Buy

Shopping for a home can be an exhilarating or dreadful thing to do, depending on your personality. The applying for financing, the realtor's, the multiple homes to view, it's a lot of work. It's such a big decision that if done incorrectly, will have results that you must live with for a long time. I have compiled a helpful list of ten tips to get you started.

1. Never be the one who makes the first offer on a home. If the home is in your price range let someone else bid on it first. You may lose the bidding. But you will see what others think the house is worth.

2. On paper comparable houses look the same. Don't be in a hurry, because with a lengthy inspection you may find it has better views, parking or amenities. Take your time.

3.Realtors have a list of inspectors whose job it is to notice the worst details of the home. Skip the inspectors and get a seasoned building contractor who has seen it all. They will tell you where the dead bodies are buried. They have seen what damages can occur in a home and what it takes to repair them.

4. Never ever make an offer on a house that is broken or needs repairs. The seller may have the work done but will it be done correctly? There's a world of trouble that comes from shoddy work that may take months to show up.

5. The important thing when you select a house, is to be able to see what can be changed and what can't. For instance, you can change the rugs, repaint the walls, remodel bathrooms and kitchens. You can't change the road system, the neighborhood, the climate, or the schools.

6. Have a walk thru before closing. Turn on all the faucets. Check under the sinks. Turn on all appliances. The hot water heater,A/C, furnace, sump-pumps, sprinklers, etc. Do a thorough walk thru.

7. You need to look at your house closely and not get caught up in stupid things like granite counter tops or paint color. Look at doors and trim to see if they are cheap or solid, fixtures, kitchen drawers, closet space. Does the basement seem musty? Really take your time to look at the house you are buying.

8. Make sure that you really want to be a homeowner, especially of a house. There are hours of raking, painting, and other maintenance issues, plus no super to call when things break (and they will break). Owning a house takes more time, energy, and money than you expect.

9. Ask your homeowner friends for a list of expenses, so you know what you are getting into. Consider both ongoing expenses and big things out of nowhere like the roof needing replacing. Expect one big thing a year. Consider utilities, insurance, property tax, any assessments such as for sewers.

10. Spend some time in the neighborhood in the daytime and at night during the week and on weekends. Perhaps there is an incredibly noisy bar around the corner or a neighbor who plays his stereo at 2 am. Or neon signs that blink into the windows all night.

Spending some extra time, it will give you the confidence you are making the right decision.

Use these tips to access the compatibility of the home to your life style. Don't have house fever. People get caught up in the process. Remember take your time.

Related articles

• Important Tips for First Time Home Buyers (doorfly.com)
• Buying a Second Home - Tax Tips for Homeowners (turbotax.intuit.com)
• 40 Essential First Time Home Buyer Blogs (doorfly.com)
• Seven Monthly Bills Most People Have, and Seven Ways to Reduce Each Bill (thesimpledollar.com)

How Do I Motivate My Son to Save Money?

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In life I believe most people are not born savers. So take this into account when your trying to help someone change direction. I was a spender for most of my life and did not change direction until I was forced to, out of necessity. Even then it didn't happen overnight, there was a lot of false starts along the way.

Kids are especially tough to motivate. They are usually so immature it's hard to find a way to reach them. They are inundated by a constant barrage of TV ads, showing them nice shiny things to buy. They actually expect their parents to buy them these things. So back to the question; How do I motivate my son to save?

There isn't a one size, fits all answer to the question. Like me you will have to find something your child feels strongly about. Kids always want you to buy them something. This is your opportunity to use the situation to teach a lesson. Showing them that life is about prioritizing todays wants and integrating them into long term goals. 

One technique I have used to teach my kids is to relate a story about my youth. I told them the story about when I was young and went to my parents to buy me a bicycle. I described how they couldn't afford it and told me to save up for it. I had a small job at my Dad's work, sweeping up. I worked many months at that job. Over time I made enough to buy that bicycle. I told them that the way to get things was to work for them. I told them that they must learn WORK=MONEY. My Dad taught me that lesson and I will be sure to teach that to my children.

You must show your kids how present choices affect their future options. Talking to your kids about the things they need and want. Letting them come up with ways to reach their goals. Kids know they have to save for things but they chose not to because they are in the "I want it now" mode. Getting them to stop acting like this, only comes with time.

I am lucky to have 3 out of 5 children that have learned saving is the way to operate. But the other 2 don't quite get the idea and are taking a little longer to catch on. I firmly believe that if your children don't learn to work and make their own way they just could be living with you the rest of your life.

Related articles

• Daddy's Guide To Teaching Your Kids About Money & Finance (moneyning.com)
• Teaching Your Kids About Saving (mint.com)
• Teaching Children to Help Neighbors, With or Without Reward (nytimes.com)

Debt Collectors Are Calling me Everyday - What are my Rights?

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The Federal Trade Commission (FTC), the nation’s consumer protection agency, enforces the Fair Debt Collection Practices Act (FDCPA), which prohibits debt collectors from using abusive, unfair, or deceptive practices to collect from you.

Under the FDCPA, a debt collector is someone who regularly collects debts owed to others. This includes collection agencies, lawyers who collect debts on a regular basis, and companies that buy delinquent debts and then try to collect them.


If you’re behind in paying your bills, or a creditor’s records mistakenly make it appear that you are, a debt collector may be contacting you.

Here are some questions and answers about your rights under the Act.

What types of debts are covered?

The Act covers personal, family, and household debts, including money you owe on a personal credit card account, an auto loan, a medical bill, and your mortgage. The FDCPA doesn’t cover debts you incurred to run a business.

Can a debt collector contact me any time or any place?

No. A debt collector may not contact you at inconvenient times or places, such as before 8 in the morning or after 9 at night, unless you agree to it. And collectors may not contact you at work if they’re told (orally or in writing) that you’re not allowed to get calls there.

How can I stop a debt collector from contacting me?

If a collector contacts you about a debt, you may want to talk to them at least once to see if you can resolve the matter – even if you don’t think you owe the debt, can’t repay it immediately, or think that the collector is contacting you by mistake. If you decide after contacting the debt collector that you don’t want the collector to contact you again, tell the collector – in writing – to stop contacting you. Here’s how to do that:

Make a copy of your letter. Send the original by certified mail, and pay for a “return receipt” so you’ll be able to document what the collector received. Once the collector receives your letter, they may not contact you again, with two exceptions: a collector can contact you to tell you there will be no further contact or to let you know that they or the creditor intend to take a specific action, like filing a lawsuit. Sending such a letter to a debt collector you owe money to does not get rid of the debt, but it should stop the contact. The creditor or the debt collector still can sue you to collect the debt.

Can a debt collector contact anyone else about my debt?

If an attorney is representing you about the debt, the debt collector must contact the attorney, rather than you. If you don’t have an attorney, a collector may contact other people – but only to find out your address, your home phone number, and where you work. Collectors usually are prohibited from contacting third parties more than once. Other than to obtain this location information about you, a debt collector generally is not permitted to discuss your debt with anyone other than you, your spouse, or your attorney.

What does the debt collector have to tell me about the debt?

Every collector must send you a written “validation notice” telling you how much money you owe within five days after they first contact you. This notice also must include the name of the creditor to whom you owe the money, and how to proceed if you don’t think you owe the money.

Can a debt collector keep contacting me if I don’t think I owe any money?

If you send the debt collector a letter stating that you don’t owe any or all of the money, or asking for verification of the debt, that collector must stop contacting you. You have to send that letter within 30 days after you receive the validation notice. But a collector can begin contacting you again if it sends you written verification of the debt, like a copy of a bill for the amount you owe.

Debt collectors are relentless in hounding you for their money. They will call day and night, ignoring the law in pursuit of a settlement. They will harass you and belittle you into paying them. They will use psychological pressure to make you pay them before you pay your electric bill. They are good at their job. You have legal rights under the law, it's your duty to know these rights because they afford a protection that you are due.

Federal Trade Commission Website - http://www.ftc.gov

Related articles

• Understanding The Statute Of Limitations On Debt (creditscore.net)
• How to Win the Debt Collection Game with Dignity (trueslant.com)
• Don't Stand for Harassment from Creditors (creditrepair.org)
• Four Mistakes Not To Make When Talking With A Debt Collector (creditscore.net)

The Early Warning Signs of Debt

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Debt seems to catch people by surprise, there are a few warning signs of future credit problems that you should be aware of. If you know what to look for, you can still turn things around before it's to late.

Who's the most likely to fall into debt? Even though we are all susceptible to credit problems there are several groups that are more likely to have credit problems, according to Credit Counseling Groups. They are:

• Young people
• Households with children
• Low-income households
• Retired people

What are the warning signs of debt? The earliest warning signs of a credit problem include not having much money in your bank account but seeing high figures on your credit statements. As you shuffle money and credit around to try and make ends meet, you may see these additional warning signs as indicators of debt. They are:

• Regularly paying bills after their due dates
• Using cash advances on credit cards to pay off other credit cards (you may also be using cash advances for basic purchases, like rent or groceries)
• Asking family and friends for money
• Looking for a second job to make ends meet

If you see these signs get ahead of the problem. Most likely you don't have a budget. This will allow you to see how much money is coming in, and where your money is going. Also, once you create a plan to get out of debt, your budget will be a trusted map to show you the way.

If neither a pencil and paper nor an Excel spreadsheet appeals to you, check out Mint.com online home budget calculator. Simply put in your income and expenses and the calculator will give you a report of what’s costing you the most, how much you’re short each month, and what your debt ratio is.

Next try to get ahead of your debt. If you are having trouble paying back lenders, it’s wise to contact them. Let them know you’re having trouble and see what arrangements can be made to pay them back. Most creditors would rather get less of your money than not get any at all.

Keep in mind that free credit counseling services are available for everyone. If your only sign of debt so far is a super-high credit card bill and a mediocre bank account, it may be a good idea to get help with a new financial strategy before things really get out of hand.

Once you have your new financial strategy and budget in place, be extremely disciplined when it comes to spending. Your biggest purchases in the months that follow will be paying back debt, so now is not the time to increase your debt load any further. If you’ve racked up a lot of retail debt on things like entertainment, clothes and restaurants, you’ll need to look for more frugal options.

If your only have a small debt to repay count yourself lucky you doing something about it now. Most people wait way to long when the damage is extreme.



Related articles

• Review: Debt Free for Life (thesimpledollar.com)
• Why our lines of credit are running wild (moneyville.ca)
• CCCS advice on dealing with debt (telegraph.co.uk)

The True Value Of Improvements To Your Home

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Since you can't get a dollar-for-dollar return on your home improvement, it's important to weigh the other advantages. In addition to creating a more enjoyable space, these may include:

Future goals

First impressions are everything. According to the National Association of Realtors, more than 77% of new home buyers start their search for a new house online, but they won't go near the property if the exterior doesn't look nice. So if you want or need to sell your current house, investing in "curb appeal" improvements that enhance the exterior condition of your home can be especially worthwhile. These types of updates may also help you move the property faster and secure a better resale price.

I often tell homeowners that although they may not see investing in a property 'facelift' as a high priority in terms of their own needs, when it comes time to sell, this type of improvement can bring in big dividends simply by increasing traffic to the homes. More eyes mean a faster sale and a better price — especially if the interior matches or exceeds the curb appeal of the exterior.

"Green" benefits

Some improvements create a return on investment that isn't seen in the property value but rather energy efficiency. Such improvements may also benefit the environment — especially if you have a home that's nearly three decades old.

According to the Joint Center for Housing Studies at Harvard, existing housing stock built prior to 1983 constitutes over 20% of annual CO2 emissions from fossil fuel combustion. Certain upgrades can help improve the efficiencies of these and other homes. For example, qualified dual- or triple-paned windows can help save as much as 15% to 20% on energy bills. Foam-backed siding can provide an insulation boost and also reduce sound transmission, which may enhance quality of life. And upgraded Energy Star appliances, HVAC systems and electronics can serve as "mini remodels" that pay for themselves by reducing utility costs, thus improving cash flow.

Now is an especially appealing time to complete these types of upgrades because of the tax credits available through the American Recovery and Reinvestment Act (ARRA) of 2009. The Act offers $4.3 billion in tax credits to homeowners who purchase Energy Star qualified appliances, including central air conditioners, furnaces (oil and gas), heat pumps (air source and geothermal), water heaters and more.

Other considerations

You need to weigh all of the pros and cons of a remodeling project — and have a game plan for financing — before you start. Here are some of the main things to consider:
Longer-term costs .... and benefits

Some projects may have additional future costs, while others can actually save you money. For example, if you're building an addition, you will have to pay the structural costs of the initial outlay and you will also need to furnish the new space, and heat and cool it year-round. Make sure to add these costs into your budget.

One thing I encourage people to do is to spend part of their remodeling budget on making the existing structure more energy efficient. First, I recommend an energy audit (usually around $500-600 for an average home), which shows the homeowner which energy-efficiency upgrades they could benefit from. Then they can choose the most beneficial upgrades for their home and implement them over time as budget allows.

Often the upgrades pay for themselves in only two or three years because the home is less expensive to maintain. Plus, the efficiencies gained from the upgrades will continue for the lifetime of the house, benefiting future homeowners, too.

Property taxes

If the project requires a permit, you can expect the tax adjuster to take an interest in your project. This could lead to a value reassessment and, potentially, increased property taxes.

Time frame

Quality of life is important, but you will also want to balance the reality of life events and consider whether you'll have time to enjoy the improvements. You may also have other higher-priority expenses that will need to take precedence. Your financial advisor can help you evaluate your situation so you can determine what's best for you.
Home equity line of credit

One option to consider to help pay for your remodeling costs is a home equity line of credit. This type of loan may be especially attractive right now considering today's lower interest rates. Your financial advisor can help you explore this option.

Do it yourself (DIY)

Are you handy? Or do you have time to learn some new skills? A major trend in home remodeling is for the homeowner to take on a large portion of the labor on a project. With labor costs typically running around 30% per project, doing the work yourself could significantly lower your overall costs. Or if you're not comfortable completing all of the work (e.g., electrical, plumbing), consider hiring out only those parts of the job. Also, you may want to be your own contractor to further reduce your costs and increase your return on investment.

Property conversion

Here's an interesting option to consider today: Instead of making improvements to your house, rent it out to someone else and purchase a new property that already includes everything you want at a dramatic discount. Many builders and homeowners are trapped with properties that are brand new, but aren't selling in today's buyer's market. You can take advantage of this property abundance, as well as lower interest rates, if you have good credit and are able to manage the expense. Once your tenants start paying rent, you can pay the mortgage and may even be able to take in some extra income.
What to ponder before you pound that nail

Ask yourself these questions to help you determine whether a remodeling project makes sense for you:
What makes my house feel like home to me?
What improvements would I need to make to enhance my quality of my life in this home?
Am I willing to invest the time and energy to do the work myself or do I need to hire an expert?
Am I prepared to be inconvenienced while the improvements are made?
How will I cover the costs?

If you have a clear vision, then it may be time to take on that remodeling project. That means it's time to meet with a minimum of three remodeling contractors to obtain cost and time estimates. And it also means it's time to talk with your advisor about your financing options and how a remodeling project fits into your long-term goals.

In the end, a home improvement may increase your home value for when it's time to sell. But one of the most valuable benefits of this type of investment today may simply be to make your home more enjoyable for you and your family.
"There's a direct relationship between how your house makes you feel and your perceived quality of life. When a home is beautiful as well as functional, you are far more likely to feel at home in your life. In our world today, that's a value that can't be quantified.

Related articles

• DIY Home Energy Assessment (lifegoggles.com)
• Real Estate Weekly: The best bang for your remodeling buck (marketwatch.com)
• 8 reasons to invest in your home (money.cnn.com)
• Builders' Show: Remodeling activity poised for a comeback in 2011 (blogs.consumerreports.org)

Follow the IRS on YouTube and Twitter

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I will never accuse the I.R.S. of being behind the times every again. They have been constantly updating their computers and data processing for years. There are new ways to file your taxes like never before. You can do them on computer, online and now on your phone.

Image via CrunchBaseThe I.R.S. has kept up with social media too. You can follow there videos and tweets here.

YouTube

The IRS has short and informative YouTube videos on tax related topics in English, American Sign Language (ASL) and a variety of foreign languages:

IRS Videos – http://www.youtube.com/irsvideos

ASL Videos – http://www.youtube.com/IRSvideosASL

Multilingual Videos – http://www.youtube.com/IRSvideosMultilingua

Twitter

IRS tweets include various tax-related announcements, news for tax professionals and hiring initiatives:

@IRSnews – http://twitter.com/irsnews

IRS news and helpful information for the public, the press and practitioners

@IRStaxpros – http://twitter.com/irstaxpros

IRS news and guidance for tax professionals

@IRSenEspanol – http://twitter.com/irsenespanol

Información, Comunicados de Prensa y Noticias en Español del IRS

News and information in Spanish from IRS

@RecruitmentIRS – http://twitter.com/recruitmentirs

IRS Human Capital Office

@YourVoiceatIRS – http://twitter.com/yourvoiceatirs

Taxpayer Advocate Service

Audio Files for Podcasts

The IRS creates audio files for use as podcasts. Each short audio recording provides information on one tax related topic. The audio files and their transcripts can be found in the Multimedia Center on IRS.gov. These files are also available as podcasts on iTunes.

Widgets

Widgets are tools that can be placed on websites, blogs or social media networks to direct others to IRS.gov for information. The IRS has developed a variety of widgets that feature the latest tax initiatives and programs. These widgets can be found on Marketing Express, the marketing site that allows IRS partners and tax preparers to customize their IRS communications products.

Super Bowl Weekend Roundup

If you are lucky enough to go to the Super Bowl you must be pretty well off. A nice info graphic at Mint.com pretty well sums it up. The median price of 4 tickets to attend is $26,294 according to Stubhub.com. Add to that your airfare, room and food. The ticket price range goes from $2,827 for a seat to $307,500 for Hall of Fame Suites.


 So what kind of person can attend this shindig? The average income is $222,318. The median age is 37 . It splits up to 26% Female and 74% male. Most attendees are executives or professionals. Pretty nice.


In between plays here are a few of the best post on some of my favorite blogs that you can read:


When Can You Lie About Money to Your Spouse? @ Consumerism Commentary

What Should You do if You Get an IRS Audit Letter in the Mail? @ Free Money Finance

Your Take: Divorce Insurance? @ bargaineering

Lifecycle Funds are a Terrible Investment Idea @ Five Cent Nickel

Surviving on Minimum Wage? : An Example Budget @ Free By 50

Can you afford NOT to be in a couple? @ DINKS Finance


Check your mortgage company rules before trying to pay off your loan @ Clever Dude

20SomethingFinance 2010 Tax Guide @ 20 Something Finance

Converting a Principal Residence into a Rental Property – The Solution! @ Million Dollar Journey

How to Cope With Buyers Remorse @ barbarafriedbergpersonalfinance

How Moe Broke Out of His Rut @ personalfinancebythebook


Here are some carnivals I participated in:
FESTIVAL OF FRUGALITY-265-Get Stuff on the Cheap & Help the Earth
Totally Money Blog Carnival #3!
Baby Boomer's Blog Carnival Seventy-sixth Edition

Have a good time watching the game. I know I will.

Online Budgeting Tool That Keeps Your Data Private Try Doughhound.com

Some people are a little worried when using sites like Mint.com because they have to share their personal account numbers and passwords.

Now there is a new site called Doughhound.com that wants to serve these people. The idea behind Doughhound.com is to help consumers monitor their spending without having them enter there account numbers or passwords.

Doughhound.com was created by Daniel and Jillian Tobias. They used to track their budget on a spreadsheet since they could not find an online budgeting site that didn't require them to provide private information.

The way Doughhound.com works is you manually enter your expenses and tag each one with the corresponding category or categories. Which you create yourself. This means users can decide to look only at one area of their spending, and they don’t have to deal with correcting categorizing errors that can crop up on sites that do it automatically

Users can also set up budgets on the site to keep track of how much they are spending in a certain category over a certain time period and create customized charts and views. Each time they visit the site and enter their data, users can see how well they are meeting their budgeting goals.

If you don't want to manually enter the data yourself then Doughhound.com is not for you. A site like Mint.com will suit you better.

So why not just use a spreadsheet? The advantage of Doughhound.com over a spreadsheet or similar software is that you don’t have to deal with complicated spreadsheet formulas, you can more easily share the information online with others and you can provide information via e-mail. Doughhound, which went live recently, will accept advertising and so far has about 100 users.

Related articles

• Five Best Personal Money Management Sites [Hive Five] (lifehacker.com)
• How to Create (and Stick to) a Realistic Budget with Mint [Budgeting] (lifehacker.com)
• Five Reasons You Should Budget (turbotax.intuit.com)
• No Time To Budget? Track Your Expenses In 15 Minutes (mymoneyblog.com)

Are You Putting Your Life On Hold To Save For Retirement?

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In her new book, “Generation Earn: The Young Professional’s Guide to Spending, Investing, and Giving Back” (Ten Speed Press), the author Kimberly Palmer recommends that young adults try to save at least a quarter of their annual income.

This is a tall order for young or old to accomplish. But for the author and her husband they actually saved one-third of their joint income. Ms. Palmer, who is now 30 and writes the Alpha Consumer blog and column for U.S. News & World Report, said she recommended the one-fourth figure rather than one-third in her book because “it’s more realistic for people” in the current economy.

So how did they do this? They lived in a one bedroom apartment and basically never upgraded their college lifestyle. The daily meals consisted of inexpensive non-meat meals costing $120 weekly. They never upgraded to new cell phone models and never got cable.
Let's fast forward to the present. Today they have a mortgage, a child, daycare costs and are only saving 15% of their income. There goal is to get back to the 25% level of savings, but that's going to have to wait a while,

What are the reasons for this radical shift, the answer is babies. A family takes a lot of your income. And not just for a little while. For this family the next 25 years will be a time for sacrificing savings for a family . If more children come along then the money needed, will be multiplied.

I know many couples who have chosen to not have children. They enjoy more freedom and can retire sooner if they were good savers.

I received a comment on another post called "Do I Rent or Own When the Kids Are Gone?". It was from a couple who were in their mid 50's who had retired. They answered my question by telling me they live in a apartment and feel they can move to any city they want if they so desire. They do own a vacation home in the country where they go enjoy outdoor recreation activities. These people are set with a sustainable life style that can be enjoyed for the next forty years.

Did they put their life on hold to prepare for this day? Or did they live their lives along the way. The young author sacrificed before the child arrived and is sacrificing, in a different way, after the child came.

The extremes on either side of savings must make you move to the center and convince you to live your life along the journey

Related articles

• How to Prioritize Retirement Savings (money.usnews.com)
• Recession Lessons from Gen Y (money.usnews.com)
• Do your investments fit your retirement plans? (theglobeandmail.com)

Who's in your Corner When the I.R.S. is at your Door?

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What strikes terror in the hearts of the individual like a letter from the I.R.S. I know because I received a couple in my day. You feel like Luke Skywalker facing Darth Vader in battle for the first time. Maybe not that bad but close.

If you have never dealt with the I.R.S. count yourself lucky, it's an experience you can do without.  In my case I claimed a deduction I shouldn't have and got busted. They offered me a payment plan. I took it and it was over. 

I was lucky with my minor scrape with the I.R.S. but some people have been audited and charged fines and late fees. They have had to hire lawyers and meet multiple times with an auditor. Many months of correspondence fighting the problem is exhausting.

What happens if your not getting anywhere with the I.R.S., it feels like they are so powerful and intimidating. There is help, someone to stand up to them and be in your corner. Where do you find them? Well, there at the I.R.S. Believe it or not the I.R.S. has something called the Taxpayer Advocate Service. It's an in house advocacy group that will stand up for you, all you have to do is ask.

Their mission statement is:

Taxpayer Advocate Service (TAS) Mission: As an independent organization within the IRS, we help taxpayers resolve problems with the IRS and recommend changes that will prevent the problems.

Here are seven things every taxpayer should know about TAS:

1. TAS is your voice at the IRS.

2. The service is free, confidential, and tailored to meet your needs.

3. You may be eligible for TAS help if you have tried to resolve your tax problem through normal IRS channels and have gotten nowhere, or you believe an IRS procedure just isn't working as it should. 

4. TAS helps taxpayers whose problems are causing financial difficulty or significant cost, including the cost of professional representation. This includes businesses as well as individuals.

5. TAS employees know the IRS and how to navigate it. They will listen to your problem, help you understand what needs to be done to resolve it, and stay with you every step of the way until your problem is resolved.

6. TAS has at least one local taxpayer advocate in every state, the District of Columbia, and Puerto Rico. You can call your local advocate, whose number is in your phone book, in Publication 1546, Taxpayer Advocate Service -- Your Voice at the IRS, and on the website at Contact Your Advocate. You can also call the toll-free case intake line at 1-877-777-4778.

7. You can learn about your rights and responsibilities as a taxpayer by visiting the online tax toolkit at www.taxpayeradvocate.irs.gov . 

This advocacy at a government institution is a breathe of fresh air. It's hard enough to deal with a bureaucracy normally, a helping hand and a kind face is what's needed in government. A little customer satisfaction goes a long way. 

Related Posts:

The I.R.S. has an App to Track Yor Refund

File Your Tax Return For Free - Here's Where to do it

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Are Extended Warranties Worth the Money?

If your like me have you noticed the deluge of ads for big screen TV's. You know it's Super Bowl time again when you get that yearly itch to get that new LCD or plasma TV. Why don't they have the Super Bowl around Christmas so I have a good excuse to give my wife a new set. You know it would be for her.

Marching down to Best Buy to get a new set is bad enough, but when you finally check out the clerk asks you if you would like to buy an extended warranty. You freeze, like a deer in the headlights. There is nothing like having to think in a split second to spend the extra money on something you haven't thought through while the burly guy behind you is waiting to make his purchase and the clerk is staring at you.

The debate over extended warranties is never quite over. We are offered these warranties for everything now a days. I bought a $50 voice recorder and was offered a extended warranty of 2 years for $10. Would it make sense to purchase it or pass it by? I don't know I'll have to do the math and get back to you.

I can see maybe getting a warranted on things $500 and up. On items that you know are expensive to repair. Not things that are necessarily throw away items like a voice recorder.

So what do consumer agencies say about extended warranties?

• Most products don't break during the warranty period. If they malfunction right away, they're covered by a store return policy or manufacturer warranty.
• The cost of the warranty is almost as much as the cost of a repair. So, buying a warranty is like paying for most of a repair, whether you need one or not.
• You can self-insure by setting aside the same money in a repair fund. If the item doesn't break, you get to keep the money.
• As a general rule, you shouldn't buy insurance for little things, only for financial disasters. If a repair cost won't wreck your finances, you probably don't need the coverage.
• Some higher-tier credit cards will extend the manufacturer warranty for free if you purchase the item with the card.
• The benefit of a warranty is mitigated if you have to pay a deductible.
• A warranty might call for replacement with a refurbished unit, not a new one.
• The extended warranty usually starts when you buy a product, largely duplicating the manufacturer warranty for some length of time.
• You know warranties are a bad deal for consumers because electronics retailers make a huge share of their profits from them.

On the other had the warranty industry has their arguments:

• Warranties extend your protection, providing peace of mind for typically 10 to 20 percent of the cost of the item. If a warranty costs more than that, make sure there's a good reason.
• Extended warranties usually offer service and protection a manufacturer warranty does not. That includes in-home repair or replacement, generally quicker turnaround for repairs, around-the-clock and weekend technical support, coverage for damage caused by power surges and the ability to transfer the warranty.
• If you regret buying a warranty, you can cancel, typically within 30 days, for a full refund, not a prorated one.
• Repair prices are often more expensive than warranty costs. An LCD television costing $550 would typically have a service-plan cost of $55 to $110, while the cost of repairing a main system board, for example, might cost $375.
• A self-insure repair fund is a good idea, but, as a practical matter, consumers won't set aside money for repairs.
• Some extended warranties cover accidents. As electronics become smaller and more portable, there will be more dropped laptops and cell phones in the toilet. Manufacturers typically don't cover accidental damage.

The bottom line is, the statistics and math say that buying an extended warranty is a bad move if you want to save money. Warranty companies are in business to make money and if they were paying off on the warranty contracts they would be out of business. They know the chances of your item needing repair is nil, thus they make money. Use that same data in your decision to purchase an extended warranty. 

There is one other thing that warranties provide that is not in the fine print. That is warranties give piece of mind. The value of that is hard to quantify.



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Is the Facebook Bubble Coming?

Image via Wikipedia
Recently Goldman Sachs valued Facebook at an incredible $50 billion dollars. That's incredible for a company that produces revenue of between 1 and 2 billion dollars. With Goldman Sachs getting in the middle of this, I am sure it will end badly.

The Goldman Sachs deal consist of an investment of $1.5 billion dollars, roughly 3% of Facebook's accessed value. The shares are to be traded on the secondary market and are not for the general public.

To put Facebook's supposed valuation in context, consider this: $50 billion is roughly equal to the size of the economy of the Dominican Republic. The Gap has a market cap of $13 billion. McDonald's market cap is only $83 billion. So based on the current deal, Facebook is worth nearly 4 times as much as the Gap, and nearly two-thirds as much as McDonald's.

Inflating the value of a company by Goldman Sachs is only more of the same techniques of puffing up values for their own devices. They may be doing this because eventually Facebook will go public and having a foot in the door will only put them first in line to making 100's of millions of dollars in the eventual IPO.

Social Networking is a bubble like email was a bubble. It's a core technology that changes the way we communicate. But investors get carried away and drive valuations way up till the day comes where it's as common as email and the legs are kicked out from underneath it, and the the stock plummets. It's like the dawn of AOL, a high flier, that got it's wings clipped when one day it was only one of many email and data portals.

Other dot.com companies are in the news with high valuations. Google recently offered to pay $6 billion for coupon social networking company Groupon, which is less than 2 years old and has well over a dozen competitors doing the same thing. Though the offer was turned down, Groupon believes they are worth much more.


Look at a cloud computing company Salesforce.com. It rents out, via the internet, software that helps sales people track leads and customers to enhance productivity. At the beginning of 2010 it was at $62 a share. It ended 2010 at $150 a share. Hungry investors are looking to munch on some tasty dot com's and not using normal valuation techniques before investing. With a P/E of 96, investors are becoming speculators, an action that will cause another Dot.com bust.

It's time to be careful out there and not get caught up in another dot.com bubble. Over valuation and hyping of these popular companies will get us in a feeding frenzy. The ones that do the hyping will profit in the hundreds of millions, but the small investors will be the ones that get hurt the most. Didn't someone say.

"Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement: and when experience is not retained, as among savages, infancy is perpetual. Those who cannot remember the past are condemned to repeat it."

The full quote from The Life of Reason (1905-1906) by George Santayana

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The I.R.S. has an App to Track Yor Refund

The I.R.S. is trying to make itself more helpful by giving us an app for our phones. The most disliked department in our government is keeping up with modern times. This new app will not help you to avoid taxes, but it will at least keep track of your refund.

The IRS2Go app, introduced on Monday, lets filers check on the status of their refund from their phone and get daily tax tips. The free app is available for the iPhone and phones on the Android system.

I think it's great the stogy old I.R.S. is taking advantage of modern technology to be a little helpful to us. The app is pretty slick with a nice interface. I checked out the iPhone version and it's pretty easy to use. It has 4 buttons consisting of a Get your refund status, Get tax updates, Follow online, and Contact us.

To check the status of their refund through the app, users enter their Social Security number, which is encrypted for security. They then select the filing status they used along with the amount they expect to receive in their refund.

People who file online can check the status of their refund 72 hours after they receive an e-mail from the I.R.S. confirming that it has received their tax return. Those who file paper returns must wait up to four weeks.

Additionally, users of the app can sign up to receive tax tips it promises will be in “plain English,” about topics like child tax credits and education credits. They can also sign up to follow the I.R.S. Twitter feed.

Isn't that special, the I.R.S. is on twitter. I hope they go on Facebook because I can't wait to add them to my friend list.

At the present time there is not an app to file your return by the I.R.S. Though Intuit does have such an app, but only if your using the 1040EZ form.

I can't wait to see what they come up with next. Maybe a tax audit app.

More helpful links for tax help:

File Your Tax Return For Free - Here's Where to do it

The New Tax Law: Gifts For All

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• Official IRS App for iOS and Android (slashgear.com)