Category Archives: Money Management

Cheap and Free Tax Preparation Options

Totally surprised! I qualify for the third option on here and I think most of my friends do, too! So many free tax preparation options...

This year, taxes are due on April 18, 2017. That seems like it’s far away, but it definitely sneaks up on you quicker than you’d think!

Beside avoiding procrastination, filing your taxes earlier helps you reduce the odds that you’ll be a victim of tax identity theft. That’s because the IRS only accepts one return for each social security number, so if an identity thief files a fake return before you get to your real one, you’ll have more than a headache on your hands.

If you’re looking to file and don’t want to do it yourself, but also don’t want to drop a ton of cash, check out these four cheap and/or free tax preparation options.

VITA

VITA is a free tax preparation service for low- and middle-income Americans. Trained volunteers help you get your information straight in person, and then run it by the supervising volunteer, who has even more training. Once you’ve made it through all of your interviews, which can take about one to three hours depending, they e-File your return for you, and you’re good to go!

You do have to make less than $54,000 to qualify for this program for the 2016 tax year. Those income limits change based on your geographic location, and specific life circumstances. You’ll have to run all of your family’s specifics by the organization that runs VITA in your area before being granted an appointment.

Free File

Free File is another IRS-sponsored way to get free tax preparation. They’ve partnered up with some tax preparation software companies to allow households with income under $64,000 to use that software for free. In many states, you can even file your state return for free using this method. Just be sure to check out this wizard tool that will show you which software is best for your specific situation.

Transparent Software Options

If you don’t meet those income requirements, you can still file your taxes affordably with guidance from tax software. There are really expensive options that come with a big price tag and hidden fees, and then there are affordable, transparent options like FreeTaxUSA.

The Federal returns you file with them are always free. Even if you’re self-employed or own a small business. Even if you’re a homeowner. State returns are $12.95, and, if you want, you can pay an extra $6.99 to file amended returns, get audit assistance or access their live chat with front-of-the-line privileges. Right now you can get 10% off your entire order using promo code FREETAXUSA10.

Big Box Tax Preparation

This is my least favorite option. The biggest reason is that in my experience, I haven’t found it to be affordable at all.

One year, I took my taxes into a big box store. I had multiple state returns because of frequent moves. Income tax for one state was supposed to be waived because of military status and state law, but this guy refused to listen to me, and wanted me to pay additional taxes erroneously. And then pay him $300+ just for doing a bad job.

I walked out the door. These people aren’t CPAs. They’re seasonal workers who receive some seasonal training. I called up my state to make sure I wasn’t totally screwing up, and they confirmed that the big box store guy was wrong.

In my opinion, the best way to use big box tax preparation is as a free consult if you’re preparing your taxes yourself. Otherwise, especially if you’re a contractor and have lot of schedules and forms to attach to your 1040, they can be a big money suck.

Cheap and Free Tax Preparation Exists

If you’ve been putting off filing your taxes because of cost, worry no more. There are ways to get your return filed for free or moderate costs, without taking the risk of DIYing it.

 

 

 

*This post contains affiliate links.*

Affordable Small Business Accounting Software

Did you know that as of 2016 there were 11.3 million women-owned businesses in the United States?

True story. Since 2007, the economy at large has only seen an increase of 9% for the establishment of new businesses. But women-owned businesses? Forty-five percent growth.

Not all of this growth is for positive reasons. One reason people leave the W-2 grind and head out on their own is unequal pay and marginalization in the workplace. It stands to reason that women would start working for themselves or taking charge and employing others.

This is especially true for black women, who are the fastest growing group of entrepreneurs in our country. When you consider the added barriers that racism imposes, it’s not surprising that so many women are taking control of their own destiny.

While the reasons behind these trends may be messed up, there’s no reason to feel any kind of pity. Businesses run by women have seen a 37% increase in revenue since 2007–ten percentage points higher than the economy at large.

Women aren’t just quietly leaving, establishing new businesses in lieu of being someone else’s employee.

They’re rocking it once they head off on their own.

Today’s post goes out to all the ladies out there. Full of ambition. Capable. And driven.

Who also want a little bit of help keeping their finances straight along the journey.

Taking Care of Your Money as a Small Business Owner

When you’re a small business owner, you have to take care of everything yourself–or hire someone to take care of it for you. When it comes to business finances, the person you’ll be hiring or contracting with is an accountant.

Here’s the thing, though: you can’t just hand your accountant a shoe box of receipts at the end of the year along with your bank account number.

You have to stay organized so they can do their job effectively. Not only will it help you stay on good terms with your CPA, but staying organized will help you measure the health of your business on days that don’t rhyme with “April 18th.”

A great way to do this is through accounting software. Typically, the best programs are going to be pseudo pricey. But recently, I got turned on to one that’s pretty darn comprehensive at an affordable price. Because you shouldn’t go broke trying to take care of your money.

Affordable Small Business Accounting Software from Xero

Let’s start with the basics: Xero is an online accounting software program that services companies with up to one hundred employees. If you don’t employ that many people, or only employ yourself, you don’t have to pay the same price as the larger small businesses. Prices are tiered:

Starter Plan

Best for solopreneurs with minimal invoicing needs.

Comes with:

  • Ability to send five invoices/quotes per month.
  • Capability to enter five bills to remind yourself when to pay and to make sure you have an accurate perception of your cash flow.
  • Ability to reconcile 20 bank transactions.

Cost per month: $9

Standard Plan

Best for companies with >6 employees, or solopreneurs with higher monthly invoice volumes.

Comes with:

  • Unlimited invoicing and quotes.
  • Unlimited bill tracking.
  • Unlimited bank transaction reconciliation.
  • Payroll for up to 5 people.

Cost per month: $30

Premium Plan

Best for companies with 6-100 employees on payroll.

Comes with:

  • Unlimited invoicing and quotes.
  • Unlimited bill tracking.
  • Unlimited bank transaction reconciliation.
  • Payroll for up to 10, 20 or 100 people.
  • Multi-currency capabilities.

Cost per month:  $70 for 10 employees, $90 for 20, and $180 for 100.

Free Trial

No matter which plan best suits your needs, you can get a 30-day free trial here–no credit card required.

Evergreen Nonprofit Pricing

Run a nonprofit? Then you can get 25% off the prices you see above at the end of your free trial.

Xero’s Functionality

Affordable payroll software for small business owners.

Xero is super simple to use. The larger your business is, the longer it will take to set up, but that’s only because you have more information. No hair pulling. Everything is streamlined. Even the most complex accounting maneuvers are navigable with Xero’s guidance. Your CPA will be impressed when she looks things over.

The biggest bump in the road is the payroll availability. This is no problem if the only person you employ is yourself, but if you do have employees, you should know that currently Xero only offers full payroll capabilities, including electronic services, for the following states:

  • California
  • Florida
  • Illinois
  • New Jersey
  • New York
  • Pennsylvania
  • Texas
  • Utah
  • Virginia

It does offer payroll for these states, as well–you just won’t be able to execute every last thing for your employees electronically:

  • Alabama
  • Alaska
  • Arizona
  • Arkansas
  • Colorado
  • Georgia
  • Hawaii
  • Indiana
  • Kentucky
  • Louisiana
  • Maryland
  • Michigan
  • Minnesota
  • Mississippi
  • Nebraska
  • Nevada
  • New Hampshire
  • North Carolina
  • North Dakota
  • Ohio
  • Oklahoma
  • South Carolina
  • South Dakota
  • Tennessee
  • Washington
  • Wisconsin
  • Wyoming

They keep adding states all the time, so if you don’t see yours, be sure to scroll down on this page to check Xero’s most recent list.

Simplicity and Affordability

While Xero is simple and affordable, it’s also comprehensive. After that initial setup, upkeep is a breeze. That gives you more time to get back to running the world.

Shoot...this is pretty much half the price of the small business accounting software I'm paying for now...

 

 

*I have been compensated for the writing of this post which contains affiliate links. Regardless, all opinions are honest and my own.*

Personal Finance Insights from Self-Employed Women

Some insights I wouldn't have thought of, and some great questions posed. Personal finance from self-employed women.

Yesterday I had the privilege of organizing an event in honor of Women’s Money Week at Whetstone Workgroup. Since the patrons at Whetstone are self-employed, we set up a discussion with financial counselor Katharine Perry on saving for retirement when you’re self-employed (and female.)

I learned a ton, including the fact that the state of Pennsylvania just rolled out a 529 for special needs individuals. More on that another day, but essentially, the money can be used for needs beyond education at any time.

I also learned a lot about what self-employed women are worried about when it comes to personal finance, and also got some insights from those who have done this freelancing gig for a lot longer than I have. I wanted to share some of that with you here today.

Why Women’s Rate of Savings is So Low

Three out of every five women over the age of 65 cannot pay for her basic needs. We live longer than men, but when we set our retirement goals we aim 50% lower. (See these and other alarming stats here.)

It was interesting to hear some of the reasons why this happens. In our group here in Pittsburgh, there were a couple of points that were brought up:

  1. Women, in general, tend to take care of everyone else before they take care of themselves. This thought process goes beyond day-to-day care taking and extends to finances. When you make your own well-being the last priority, your retirement savings is going to suffer—or be nonexistent.
  2. We undervalue ourselves. When we don’t charge enough for our services, it becomes more difficult to set larger dollar amounts aside for tomorrow.

Retirement Savings When You are Self-Employed

Automation is an awesome way to make sure you’re saving enough for retirement. But that becomes a little bit difficult when you have a variable income.

There are several ways to tackle this issue. One is to treat your retirement savings like a bill—just as important as your rent or cell phone bill. If you automate those bills, you should be able to automate your retirement contributions for the month if you’ve made paying yourself first a priority.

Another way you could approach it is by contributing a certain percentage of each paycheck. This method can’t be used in conjunction with automation when your pay is variable, but if you get disciplined about it the habit could become just as routine.

The Worst Can Happen

When you’re self-employed, you have to worry about what happens when you can’t work because that’s the moment money stops coming in. There are no such things as sick days when you work for yourself.

There are also major concerns around disability and finding a good policy that won’t cost you an arm and a leg. These policies are arguably just as if not more important than life insurance during your working years.

Another big concern was long-term care and its accompanying insurance. This wasn’t just a concern for ourselves. People are living longer. If your parents don’t have this type of coverage, you, their child, will in all likelihood end up footing part if not all of the bill.

These situations can cause temporary financial strife or even eat into the money you’ve been saving for your own golden years. It can really mess with your head, too, because the financial hell doesn’t end until your loved one does, and that’s not something you want to see happen–money be damned.

What if I’m starting late?

This was a major concern. It’s all well and good to tell twenty-five year olds that compound interest is their friend. Time is on their side, and moderate savings today could lead to major returns in the future.

But what if you’re just getting started at 60? Or even 50?

We landed here:

It’s best to sit down with a trusted financial advisor in these situations. Every individual’s situation is so unique, and when you don’t have time on your side, blanket advice is rarely going to apply.

Diversify your income.

Remember when that money mentor told me you don’t want to keep all of your eggs in one basket?

There was a lot of agreement with that sentiment yesterday. Whether you’re diversifying your income streams within your freelancing business or diversifying your skills in multiple fields, having something to fall back on when one stream of revenue falls through can be a lifesaver.

The Unemployment Rule

This is totally unrelated to self-employment, but I did learn a new financial rule of thumb during the event. Apparently, for every $10,000 you make in salary, you will be out of work for one month should you become unemployed.

Maybe that’s why CEO’s get such generous severance packages while entry-level workers often get—unemployment?

</sarcasm>

How do we spread this message to others?

At the end of our event, I was thrilled to hear that everyone was energized to take this message to the women in their lives.

There was just one question.

“How do we get them to engage?”

My answer?

Actively combat Cyber Balkanism.

Cyber Balkanism is the phenomenon of all of us staying in our own little corner of the internet. We don’t actually spread ideas, because we’re talking to the people who are already listening.

Go where other people are. If you enjoy reading mommy blogs, go there and engage. Into fashion? Same deal. NES games? Seriously, there’s a corner of the internet for everything.

When you engage with people, they have a way of engaging back.

That’s true online, but it’s true in real life, too. There is still such a taboo around money discussions, and I personally feel this silence is especially detrimental to women. We, who want to close the gender wage gap, are uncomfortable discussing ways to increase income. We, who want to combat sexism in finance, but may be uncomfortable bringing up the subject of higher-level finances with friends.

Go where other people are. Get outside your bubble. Meaningfully engage, and then don’t be afraid to bring up money.

Also, share this post. Post haste.

New Year’s Resolutions: Clean Up Your Credit Report

New Year's Resolutions: Clean Up Your Credit Report

It’s a new year, and once again we haven’t hit our goal for a down payment for a house. Medical bills and health insurance premiums have totally messed us up in the past twelve months, but that’s a story for another day.

It is, however, a new year, and with the turning of the calendar many people set resolutions and goals–a good many of those goals are financial.

With all of these New Year’s Resolutions, I wanted to point out another huge thing people should be doing as they save and prepare to buy a home. Of course, you need the capital for a down payment. You need it for closing costs, and to prove to the bank that you have enough of an emergency fund to not go broke if something needs to be repaired in your new abode.

But before you can even think about getting that mortgage, you need to know what’s on your credit report. Lenders will be looking not just at your credit score, but also at the line items on your report in order to determine how worthy you are of receiving their loan.

Anecdotes: Credit Report Errors Happen in Real Life

A few years ago I wrote about getting your annual free credit report. (You should not contact the credit bureaus; you should follow the directions in this post.) One of my readers followed through, and found out that her bank had her mortgage on there twice. It made it look like she had twice as much debt as she actually did. She took steps to remove it.

Michelle found out when she was an adult that someone had bought a house in her name when she was only thirteen years old. She had a heck of a time proving that she did not, in fact, make such a huge purchase before she was even legally an adult.

A few years ago, I myself found out that I had negative information on my credit report. It was a shock, as it was an issue I had already worked out with the billing institution. (It wasn’t even a loan.) I wrote a Goodwill Letter, explaining the circumstances, and requesting that it be removed as we had already resolved the balance. They obliged, but I am the only person I know of that has ever had success with this method.

How to Clean Up Your Credit Report

While we all were in different situations, each of us started by getting our free credit report. This is an important step that everyone should take, especially if you’re thinking about making a major purchase in the near future that will require taking out a line of credit.

After you get that report, finding errors can be a devastating blow. You now have to dispute the error with both the credit reporting bureau (Equifax, Experian, or TransUnion,) or, if it appears on all of their reports, you will have to dispute it with all three. You must write them a hard-copy letter, send it to them, along with copies of documents that support your position, and then wait 30 days for a response.

It may not come back in your favor. If it does not, you must request that your original letter remain attached to your account.

Next, you go to the information provider, who is the person or company that filed the inaccurate report. You must again write a formal letter of dispute, send it with copies of documents that support your position, and wait for the response. They may or may not agree with you, but at the very least they have to let the credit reporting company know about your dispute.

It’s a time-consuming process. It’s doable, but can be frustrating. Even if you don’t want to do it, cleaning up your credit report is something that needs to happen if you want to get a halfway decent rate on your next loan or mortgage, or sometimes even have a lender extend credit to you at all.

If the whole process seems overwhelming, there are companies out there that can help. You give them your information, and they take care of the entire process for you. They have professionals who deal with credit bureaus and information providers regularly, so they know how to effectively communicate and use the rules to advocate for you efficiently.

Finding the right company to trust with your information is critical. One company that I trust is CreditReport.com. When I sat down with them to talk about their work, I already knew they had an A+ accreditation with the Better Business Bureau, but that meeting showed me the passion they have for helping people fix their credit, and through that, their lives.

They charge $99.95/month, with many of their clients having their issues resolved within a two-month time frame. More complicated problems or tougher disputes can take longer, however.

Ultimately, it depends on how much of your own time you want to invest. You can go the DIY route if you feel confident you can do a lot of research on your own, and have to patience to deal with both the credit bureaus and the information provider, even if they fight you. If passing that time and frustration to someone else is worth $99.95/month to you, looking into a reputable credit repair company may be a better option.

One thing is for sure: you need to clean up your credit report. Monitor it. When you find errors, take steps to fix them. That way when you go to apply for a mortgage you can focus more on things like down payments, closing costs, and emergency funds.

 

 

 

*This post includes affiliate links. When you use these links, I receive compensation to continue running this blog. You do not pay anything additional for the service when you use these links. Thank you for your support!*

How to Negotiate With Credit Card Companies

I needed this so bad! Now I can lower my interest rates down to zero when I negotiate with my credit card company.

Credit card debt is evil. While the cards themselves can offer great rewards if used responsibly, it is so easy to quickly get tied up in more debt than you ever thought reasonable or possible.

Making matters worse is the hard-to-understand interest rates that you are paying on top of your original debt.  The good news is that these same companies that do their best to confuse you also want your business.

And they have competition.

You can use this competition to lower how much you end up paying in interest and how long it takes you to do so. Here’s how to negotiate with credit card companies.

Find out what you’re paying in interest.

You can try finding this on your statement, but I would just call my credit card issuer to get this information. Legally, the credit card company is obligated to give you accurate information, including fully answering your questions about your interest rates and how they are applied.

There are two rate numbers you need to know: the prime rate and your rate over prime.  Add these two numbers together to get the total interest you’re paying on your debt.

Shop around.

The best place to start shopping is your mailbox. If you haven’t already thrown it away, go through that junk mail and see what kind of preapproved offers you have.  Many times you’ll come across offers that give you 0% interest for a promotional period if you have good credit.

This is a great bargaining chip, but make sure you know what the interest will jump to after your promotional period is over and what consequences there will be if you miss/make a late payment.  This isn’t something you’ll need to get into during negotiations, just something you should know for yourself ahead of time in case you do make the switch.

You can also do research online.  You needn’t apply for new credit cards.  Just check out sites that specialize in consumer finance and see what average rates are right now.  Then see if you can find any introductory offers.

Negotiate with the credit card company.

Review all of your research. Make sure you feel comfortable with it so you’re confident while talking to your credit card issuer. Call up customer service and insist on talking to a supervisor. Write down the supervisor’s name/ID number as making them accountable and more likely to be accommodating.

Then let them know what’s going on. You have received offers from other banks/companies, and, unless they can match the offers you’ve been given, you plan on taking your balance to a new lender.

These people want you to keep your debt with them. That’s how they make their money. But if for some reason this person says they can’t help you, ask to talk to their supervisor, again writing down names and ID numbers.

Remember to be polite through the entire process. Anger won’t get you anywhere.

Keep going through the ranks or keep calling back until you get what you need. Lowering your interest rate is important:  the interest is what’s keeping you in debt. So if at first you don’t succeed, try, try again.

If you really just can’t get anyone to help you, switch to that new lender. Take that 0% interest rate. Make all your payments on time. And if things start to get out of hand again, call them and try to negotiate.

Negotiate your interest rate–not your debt.

Some people will attempt to reduce how much they owe in total by offering a lump sum payment. For example, if you owed $10,000, the issuer might agree to take $8,000 all at once and “forgive” the other $2,000.

This is called settling your debt, and it is not a good idea for your long-term credit. It will show up on your credit report as a settlement, which will be a huge red flag for future lenders.

When you call in to negotiate, only negotiate on interest rates and then hustle to pay off that debt. Negotiating on your total debt, or settling, could have negative implications on your financial future.

 

This post is a part of Women’s Money Week. If you want to join us, you can do so here. Please tag this post with #WMWeek17 when sharing on social media.

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