Free Tax Prep--Really!

You've probably received your W-2's or income statements from your employers by now. If you earned less than $49,000 last year, you could qualify for free tax preparation. There isn't much in life that is free so I suggest you take advantage of this legitimate offer. This free tax preparation is offered by "VITA" sites. VITA stands for Volunteer Income Tax Assistance and is a program offered by the IRS and local organizations.   Volunteers are trained and certified. They know how to prepare basic tax returns and will check to see if you qualify for certain tax credits. Your return can be filed electronically and you can receive your refund quickly. There is no need to pay anywhere from $75 to $150 to a for-profit tax preparer, along with paying to receive your refund "rapidly" often at another cost of $100 or more, depending on your refund amount. Save yourself that money and use a VITA site near you. To find a VITA site near you, call 1-800-906-9887 or go online to the IRS VITA website. In Maryland, check MD CASH Campaign's website to find a location. They are a non-profit organization--whom I work for--full disclosure--whose partners operate VITA sites. Now that you are saving some money on tax preparation, stay tuned for ideas on where to put that savings so it can grow for you!

Spending Plan aka Budget

Most people shudder when the word "budget" is mentioned, evoking thoughts of having to track what you spend, stay within your financial limits and get discouraged when you've spent beyond the "budget". So, instead, most of us in the financial education world are using "Spending Plan" now. We're all going to spend, so let's try to plan our spending. It's the same end result we're aiming for, so use whichever word makes it more pleasant for you. Until we determine what our income is, what our fixed expenses such as housing, utilities, and transportation amount to and prioritize our non-fixed expenses, we are not really in control of our financial health. Being in control means we can meet our financial goals and have choices--where to live, what kind of car to drive, what types of food we can eat and a major factor for me--where I can vacation. Going through a month just spending our income without planning often leads to "too much month for our money". We've all been there and it stinks--way too stressful to keep on that path.

Creating a Spending Plan is easier now than ever--there are many online resources and free tools to use. The Federal Government's website, mymoney.gov has some tools; mint.com is a great resource and bankrate.com has a free downloadable budget (don't wince at the word). Poke around at various sites to see which one works for you.  You could create your own in an Excel Spreadsheet or with software packages such as Quicken. Once you have your Spending Plan in place, be sure to CHECK it--every week at least, to make sure you are on track. It's like buying that treadmill so you'll get in shape and then never using it--if you don't use the Spending Plan to determine what to spend money on, you will not be in control of your finances.

Getting financially healthy is not always a fun thing to do ( I still get annoyed when my Budget/Spending Plan does not allow me to vacation in a place that I want) but in the long run, brings a sense of peace that is invaluable.

Received a Gift Card for the Holidays?

Some people claim that a Gift Card is an impersonal and unthoughtful gift--I'm guessing these are the same people that are done holiday shopping by November 15th and have these impressive handmade name cards to mark everyone's place at the Holiday dinner table. Inspiring perhaps but not realistic for me--Gift Cards are a staple of Holiday giving--and the fact that I can conveniently get them while shopping for groceries brings a smile of relief to my day.  I must not be the only gift card buyer since the National Retail Federation estimated that the total gift card spending for the holidays will be over $24 billion.  Here are some tips if you were lucky enough to receive a Gift Card for the Holidays:

1) Spend it--chances are if you don't use it soon after getting it, you will lose it. By shopping right after the Holidays, you may get some great sales/bargains.
2) Know your rights--Gift Cards used to have expiration fees and other complicated terms that could make them challenging to use, but things have changed.  New Federal Trade Commission rules went into effect in August 2010 that say that a gift card can not expire for at least 5 years from the date it was purchased. You may face inactivity fees though if you don't use the card for a year--another reason to spend it quickly. See all the new rules at the FTC's website.
3) Treat the card as if it were cash--if you lose it, you may be out of luck or you may pay a fee to  replace it.
4) The Gift Card is only good if the store is still in business--again, back to Tip #1.
5) If you received a Gift Card for a restaurant, don't forget to tip you waiter/waitress on the full amount of the check, not the remaining amount once the Gift Card is deducted (can you tell I used to be in the restaurant business?)
6) Spend the full value--why leave $2 on it--you probably won't go back to use those $2.

Charitable Giving-Do Your Homework First!

If you are in a position to help a charity this Holiday season--choose it wisely. There are so many requests for help, some of which have no intention of actually helping the cause you want to support.  Never give your credit card or checking account information out to someone calling you on the phone asking you to support their charity. You have no proof of who is on the other end of that phone and what they are doing with your financial information. Instead, ask them to send you something in writing and check them out first. Check to see if your state requires charities to be registered by going to the National Association of State Charity Officials' website . If it does, check the information on that charity to see how much of its funds go to the actual charitable work and how much goes to "administration". It's actually possible that a charity is properly registered but puts 90% of its money into "administration"--hardly a group I would want to support. Also, check out the charity through the Better Business Bureau's website and Guidestar's website. Make sure your good intentions to help others actually turn into reality.

For more information on giving to charities, check the Federal Trade Commission's information.

One Way to Make the Holidays Enjoyable

An almost unavoidable aspect of the Holidays is shopping. Like many, I look forward to shopping--it's the only time of year I can let my inner shopaholic emerge--going into stores with holiday music playing, the thrill of tracking down a good deal, the irrational joy involved with buying, the ability to spend money and justify it since it's gifts for others--what's not to like? The bills that come in after the Holidays--that's what's not to like.

While we need it year round, during the Holiday season we really need to develop that inner voice of caution that starts with telling us to create a budget of what we can afford to spend on gifts, holiday trimmings, parties, food and items involved in gift giving and entertaining. Call it a Spending Plan since we're clearly going to spend and it may make us more inclined to develop it if we're not as negative about it as we are about "budgets". Be honest when coming up with--if you are going to get your pets gifts but hate to admit what you spend on them, put them on the Spending plan anyway.

Once you've taken the admirable step of creating your Spending Plan, check it at least every week. It's way too easy to start shopping and let our good intentions slip away but if you're looking at your plan every week, you can reign in your impulses before it's too late.

When your shopping is done, and you're on track with your Spending Plan--congratulate yourself and celebrate your success in being financially responsible (in a small, affordable way of course!). The Holidays will be even more enjoyable when you aren't stressed about if you have overspent-AND-January will be a lot happier if you're aren't dreading credit card bills! Check some other Holidays Shopping Tips on FTC's website.