Category Archives: Personal Finance

Why Some Who Cut Expenses to the Bone Still Can’t Make Ends Meet

The other day I was fueling up my car at the local gas station. While I was waiting for the tank to fill, I thought it would be a good idea to get rid of the remains of a ridiculously large bug that was splattered on the windshield.

Unfortunately, the only squeegee I could find was at another pump island that was occupied by a big ol’ cowboy who was filling up his pick-up truck. (Yes, there are still a few cowboys in my neck of the woods.) So I walked over to him.

“Do you mind if I use the squeegee?” I said. (I almost ended the question with “partner,” but I figured that would be overdoing it.)

The rancher squinted and then, for a couple of uncomfortable seconds he just stared at me with his steely eyes. Uh oh, I thought. It suddenly crossed my mind that if this guy was in a bad mood and looking for a fight, it wouldn’t be long before that dang bug wasn’t the only thing plastered on my car windshield.

Thankfully, and much to my relief, the wrangler broke into a wry smile. “It’s a free country,” he said.

Well … He’s right about that. It is a free country.

Of course, that freedom extends to how we manage our personal finances too — which is why it almost always surprises me whenever I hear people making excuses for why they can’t make ends meet.

I don’t care how much money you’re earning; unless you’ve been struck by a catastrophic medical condition, are stuck in an extended period of unemployment, or blindsided by another unforeseeable event such as a gold-digging spouse who skips town with your life savings, there’s no reason why you shouldn’t be able to balance the bills every month.

Let’s face it, folks. The reason most people get into financial trouble is because they make lousy choices, and one of the biggest choices we all make that affects our standard of living is where we choose to live.

A few years ago, I explained why people who can’t survive on an income of $40,000 per year have nobody to blame but themselves — and one of the biggest reasons is because, well, it’s a free country.

Think about it; most of us have the freedom to live wherever we want — especially in the early stages of our adult life. And yet, there are countless numbers of people who insist on living in high-cost-of-living areas even though they lack the means to afford it. Why?

Data from the United States Census Bureau reveals just how much disparity exists in the standard of living for the 325 largest metropolitan areas in America. The index measures relative price levels for consumer goods and services such as groceries, housing, utilities, transportation, and healthcare.

Here are the American metropolitan areas with the ten lowest and highest costs of living:

The nationwide average equals 100 and each score represents a percentage of the national average, so areas with lower scores are more affordable than those with higher scores.

As you can see, all things being equal, it’s approximately 2.6 times more expensive to live in Manhattan, New York, than Harlingen, Texas. That’s a significant differential — and it’s especially important to keep in mind if you’re, say, a twentysomething or somebody who is still trying to figure out where to put down your roots.

Yes, for many people, living in San Francisco (affordability index: 164.0), Lake Tahoe (146.4), Honolulu (165.7) or the Big Apple is a romantic notion — but it’s not the smartest idea if your household income can’t cover the bills. It’s just not.

When it comes to keeping your financial head above water, remember: where you live matters. It really does, folks.

The good news is, it’s a free country. So choose wisely.

Photo Credit: Phillip Taylor PT

 

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2017 Tax Deadline, Start, and Extension Dates (for 2016 Calendar Year)

This post has been updated for 2017 (the 2016 tax year).

It’s January and other than frigid cold temperatures and seasonal mood disorder, you know what that means – tax season has arrived. This post will help get you in the mood and covers the 2017 tax deadline, filing start date, and extension deadlines for the previous calendar year’s taxes. Mark your calendars!

Also – stay tuned – in the coming weeks, I’ll be offering up some free tax software to readers!

When is the 2017 Tax Filing Deadline (for the 2016 Tax Year)?

tax-deadlineThis year’s IRS tax deadline is Tuesday, April 18, 2017. The normal IRS tax date of April 15 falls on a Saturday this year, so there is a weekend extension to the following Monday, April 17. However, Emancipation Day – a legal holiday in the District of Columbia – will be observed on that Monday, so the nation’s filing deadline is pushed to Tuesday, April 18, 2017 instead.

Tax Filing Postmark & E-File Deadline

The April 18 tax deadline does not refer to when the IRS receives your tax return. Instead, it refers to the date that the tax return is postmarked. So if you mail out your tax return on April 18 by U.S. mail and the IRS receives your tax return after that date, your return won’t be considered late. The same rule applies for e-filing your taxes. If you e-file your taxes, you must do so by April 18th as well.

When is the Tax Deadline if I’m Out of the Country?

Your tax filing deadline AND payment deadline, if you are out of country, is Thursday, June 15, 2017. If you are out of country, you have an additional two months to file your taxes (from the typical April 15 date). Those eligible include:

  • Those who live outside the United States and Puerto Rico and main place of work is outside the United States and Puerto Rico, or
  • Those in military or naval service outside the United States and Puerto Rico (there is additional lenience for those in a combat zone, contingent operation, or who have been hospitalized).

If you qualify as being out of the country, you will still be eligible for the extension even if you are physically present in the United States. You must attach a statement to your return explaining which of the two situations qualify you for the extension.

Tax Extension Filing Deadline

If, for one reason or another, you are unable to file your tax return by the April 18 tax deadline, you can file for an IRS tax extension. Note that the extension must be postmarked by the April 18 deadline also.

Also, a key disclaimer – an extension of time to file is not an extension of time to pay. Any taxes due are still due on the normal filing deadline date.

How to File a Tax Extension

In order to file a tax extension, you will need to fill out IRS form 4868. Note that filing the extension does not get you off of the hook, you still need to pay any estimated taxes by the April 18 deadline. If you don’t you will owe interest and possibly a penalty on your taxes owed.

The tax extension will allow simply to push back the deadline for sending in your 1040, 1040A, 1040EZ, 1040NR, or 1040NR-EZ six months (4 months if you are out of the country). If you’re in country, the extended tax filing deadline is Monday, October 16, 2016 (since the 15th falls on a Sunday).

When Can I Start Filing Taxes?

You can start filing your taxes Monday, January 23, 2017. You can start working on your taxes sooner – however, software companies will hold your returns and cannot submit them to the IRS electronically via e-filing until Jan. 23, 2017. Paper tax returns will begin processing at the same time. Your return will not be processed prior to, and you won’t receive your refund until after your return is processed.

I would strongly caution to not file a return sooner than January 23, because software companies will often update their software to take in to account any IRS changes.

When will I Get My Refund?

As a standard, the IRS anticipates issuing more than nine out of 10 refunds in less than 21 days.

However, beginning in 2017, a new law requires the IRS to hold refunds on tax returns claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit until mid-February. Under the change required by Congress in the Protecting Americans from Tax Hikes (PATH) Act, the IRS must hold the entire refund — even the portion not associated with the EITC and ACTC — until at least Feb. 15. This change helps ensure that taxpayers get the refund they are owed by giving the IRS more time to help detect and prevent fraud.

After filing, you can always check your tax refund status to see where your refund is at.

Where Should you File your Taxes?

Check out my list of the best and best & cheapest ways to Efile for more suggestions. Also, keep an eye out for an upcoming H&R Block promotion next week, where I will give away free tax prep software to readers!

Also, when it comes time to pay your taxes, I would recommend that you pay taxes online, as it is quicker, safer, and more reliable.

Want more tips? Check out my guide on the basics of how to do your taxes.

Tax Deadline, Extension, & Start Discussion

  • When will you start preparing your taxes?
  • Will you be filing a tax deadline extension this year?
  • How are you preparing and filing your taxes this year?

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Saving Money Is Easy When You Know This Simple Trick

If you search Google for “how to save money,” you’ll get 396 million results. See for yourself; I’ll wait.

With that many results, how is it possible that people still have trouble saving? I’m sure that one of your New Year’s resolutions was to save more money too.

Let me use a little analogy: One of my favorite movies is The Matrix. It speaks of a world in which there are two realities: one that’s the life we ​​live every day, and another hidden behind this first layer. The first world is a dream; the second is The Matrix.

That has always fascinated me: Have you ever had a dream that you were very sure was real?

The instructor, Morpheus (played by Laurence Fishburne), is trying to teach the protagonist, Neo (played by Keanu Reeves), to fight under special rules of the game. In order to get Neo to learn, Morpheus screams, “Come on, stop trying to hit me and hit me!

That statement reflects exactly what people have to do to start saving — and it’s the only trick that matters: Stop trying to save and save!

What do I mean by that?

Thinking about saving money is a waste of time. To be successful, you have to actually do it. Seriously! As soon as you finish reading this!

Go online or to your local bank and setup a CD.

Invest In a mutual fund.

Go to your bank and open up a separate savings account. Then gamify it and download a saving app.

Stop procrastinating and do it already! Then be consistent.

Don’t just do it for a few weeks. Force yourself to save with an automatic paycheck transfer of at least 10% on the first day of every month.

Seriously. Stop thinking about saving and just get to it!

That’s it.

Now you’re saving money. Congratulations!

And what happens after that?

In The Matrix, after Morpheus implores Neo to stop fiddling around, Neo begins to perceive the reality of the Matrix and realizes that it’s not so much technique as it is human will. That’s the source. That’s the true force; the real trick.

Human will is what turns your ideas into reality.

In the real world, if you set aside 10% of your income towards saving, on Day One your mind will immediately begin looking for ways to live on less money. This means that first month will probably be a bit, er … messed up.

However, by the end of the second month, you’ll have grown accustomed to living with 10% less income, and you’ll have found a way to reduce your expenses accordingly. Best of all, you’ll have been saving for two months.

And if you can’t reduce your expenses? The truth is, 95% of people who make that claim are simply making excuses because they’re unwilling to adjust their lifestyle. But if you’re among the other 5% who truly can’t set aside any money for saving at the moment, then keep your head down and keep grinding. You’ll eventually reach a point where you can finally save a little for the future. I know because I was there once.

For the rest of you, let’s get to it. Here’s an article highlighting some actual, practical tips on how to save money — but until you change your way of thinking, none of that matters.

So, what are you waiting for?

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About the Author: George Diaz writes for the personal finance sites Sobre Dinero and My Financial Wisdom. He can be reached at george@myfinancialwisdom.com.

Photo Credit: Saucy Salad

 

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6 Ways to Ruin Your Retirement

Despite the plethora of websites, books, magazines, advisors and other financial information and services available for retirees, there will always be a contingent of people who fail to make their retirement savings last for the rest of their lives. There are many ways to avoid this, some of which are more proactive while others are reactive in nature. But none of them are particularly difficult; all that any of them really require is discipline and common sense. Here are a few ways you might be endangering your retirement.