There are many options to get your taxes prepared this year. Here is a link to free tax preparation in South Hampton Roads and Earned Income Tax Credit information.
Some things are not UNEXPECTED expenses
Christmas comes every December. Kids go back to school in September. The car needs new tires. These items are not unexpected. However, the family budget is often surprised by these predictable expenses.
These irregular items can really wreck efforts of money management. Planning for predictable expenses need to be incorporated in a good spending and savings plan.
Saving a portion of the tax refund can be one way to prepare for irregular expenses. The money saved will reduce financial stress. Imagine how it would feel to have money saved for Christmas, and no holiday bills arriving in January!
A Club Account at a local credit union or bank is a great way to save for upcoming events. Christmas clubs and vacation clubs allow money to be saved for a specific period of time, called the term of the club. The term can range from a few weeks to a year or more. This is a great place to save money before an upcoming expense instead of using debt. Funds can be deposited manually or transferred from a checking account automatically.
Another great idea is the revolving savings account. This is money set aside every month in a savings account specifically for these expenses that do not come every month. The money in this account may be for several items. Below is an example of a revolving savings account.
Expenses Total amount needed Monthly amount to save
Christmas $300 $300/12 months = $25
Car repairs $240 $240/12 months= $20
Car insurance $600 $600/6 months = $100
Total savings deposited in account $145 per month
This $145 deposited in the savings account every month will allow for withdraws for the whole amount of the expense (Christmas, Car repair, ect.) when the money is needed.
It is not a good idea to charge these expenses on a credit card without a plan to pay them off. Caution must be used when using debt to provide basic living expenses. A credit card is convenient, almost too convenient. If a credit card it used to pay for items that reoccur without quick repayment, debt will build quickly.
A better option may be the debit card which drafts money from the checking account for each purchase. Debit cards only allow money actually in the account to be spent. This forces spending choices. ‘Will we purchase groceries for 4 days or eat out tonight?’
A debit card can have a major credit card logo and may offer the same buyer protection. It is important to ‘opt out’ of options that allow overspending the money in the account. Overdraft protection is often expensive because of the fees charged. Use the convenience of the debit card but do not purchase items that are not budgeted in the spending plan.
Planning for predictable expenses is a smart plan. Think about the expenses that are budget busters for your finances and use one of the savings option discussed to plan for the expenses.
Savings helps you expect and plan for predictable expenses!
January 2011 Newsletter: Fresh Financial Start!
The Virginia Saves January Newsletter is available! Check it out!
http://myemail.constantcontact.com/Fresh-Financial-Start-.html?soid=1103122022232&aid=2WLy0Oq400o
You can receive the monthly newletter filled with tips and information by enrolling as a Virginia Saver.
www.virginiasaves.org/enroll/
http://myemail.constantcontact.com/Fresh-Financial-Start-.html?soid=1103122022232&aid=2WLy0Oq400o
You can receive the monthly newletter filled with tips and information by enrolling as a Virginia Saver.
www.virginiasaves.org/enroll/
Dreaming about the Tax Refund. . .
According to the Bankrate.com, this year 30 percent of Americans intend to pay down debt with their tax refund, 28 percent say they will save or invest it, and 26 percent plan to use the refund for necessities such as food or utility bills.
How should the tax refund be spent this year? The BEST idea is have a plan, then stick to it.
Virginia Saves recommends splitting the tax refund into three parts:
ü 30% Emergency savings- Prepares for the next emergency.
ü 30% Pay down debt- Improves financial outlook.
ü 40% Discretionary spending- Allows spending on needs or wants.
An Emergency fund is the first step to financial security. Even a modest savings of $300 will prevent relying on using debt for an unexpected expense. Emergency savings breaks the cycle of crisis living and living payday to payday. Saving 30% of the tax refund in a savings account prepares for the next unexpected emergency.
Reducing Debt will reduce the minimum monthly payment due on credit cards and other debts. The reduced monthly payment leaves more money in the budget for other needs. Paying down debt with 30% of the tax refund improves the financial outlook for the year.
The remaining portion of the refund is allotted for discretionary spending. Purchase needs before wants and look for sales to stretch the dollars. Spending 40% of the tax refund on desired items is the reward for money smart choices.
Taxes can be prepared for free for families with incomes below $49,000. South Hampton Roads EITC Coalition is offering free income tax preparation. This includes roving site service and a site may be close to you. The South Hampton Roads Earned Income Tax Credit coalition has the free tax preparation sites listed at http://www.shreitc.com/en/free-income-tax-preparation-sites. AARP are also offering free tax preparation for low income families and seniors at many local libraries. http://tidewatertaxaide.org
Many families qualify for the Earned Income Credit (EIC) and only have to file to receive a refund. Even if no taxes were paid, you may still be eligible to receive a tax refund with the EIC. Click here for more information.
Spend your tax refund wisely. You will be glad you did!
Fresh Financial Start for the New Year!
It is a New Year and time for a Fresh Financial Start! 2011 can be the year the finances get into shape, but it will not happen automatically. If the desire is to be in a better financial standing in at the end of the year, then some of the spending habits will need to be different during the year. Small changes over a period of time equal some impressive results.
Small ¢hanges x 12 months = Impressive Re$ults
It is all about the choices being made on a daily basis. For example, the extreme vow not to visit Starbucks in 2011 probably will not be successful. Simply cutting the fancy coffee mornings in half, ordering the regular coffee, or making coffee at home will save some dollars that really add up!
Where can extra money for savings be found? Look at how money is spent now and where small changes can be made.
· Save change in jar
· Bring a bag lunch several days a week
· Buy a reusable water bottle and refill at home
· Plan meals to prevent fast food runs at 6 PM when the kiddos are hungry
Little by little, collect money not spent during the week. Plan how to use the money saved or it will be accidently spent. A savings account is a good place to save money for unexpected emergencies. The emergency savings help Virginia Savers improve their current and future financial situations.
The ¢hange saved today will change the future for the better!
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