Money Management

22 comments

money management
No matter how old we are, sound money management always come in handy.  It’s about keeping an eye on our budget and making sure that we keep more, get more and ultimately enjoy more.  It’s not always how much resources we have but our efficiently we use what’s available.

Mindset

Practical Advice

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{ 22 comments… read them below or add one }

cornell March 8, 2009 at 2:55 am

my wife was laid off from her job should I increase my w4 allowances from 2 to 4 to cover some expenses that could hurt us financially?

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MoneyNing March 8, 2009 at 7:59 pm

cornell: It really depends. You should lower the amount that your employer is withholding from each paycheck until you absolutely get no refunds nor need to pay taxes when you file them. If going from 2 to 4 does that, then do it. Otherwise, don’t. It really depends on your unique situation since too many factors play into this.

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deegee May 5, 2009 at 6:26 am

Cornell, MoneyNing’s advice is in general good. However, a good place to go to see if you should change your W-4 allowances is the IRS website, http://www.irs.gov. There, you can locate the instructions for both the W-4 form and the important Estimated Taxes (1040-ES) form. The latter is like a would-be mini-tax form for the current year (2009).

As MoneyNing wrote, you should ideally target a small amount of tax owed or due (i.e. refund) for the tax year when you files your tax return next April. If you get too large of a refund, then you were paying too much during the year and lending the government money interest-free (and not using the money yourself for things such as paying down debt or meeting other expenses). If you owe too much, you may end up paying tax penalties for underwithholding. If you owe in April (without penalties), then you were effectively borrowing money from the government interest-free.

I always targeted owing some, but not a lot of money in April. This balanced both objectives.

Some other points for you to consider:

(1) You may have some sources of income which had zero withholding. Unemployment insurance benefits do not usually have any taxes withheld, but are taxable as income. Same for unearned income such as dividends and capital gains.

(2) If you now have to pay your own health insurance premiums (i.e. your H.I. coverage was from her plan), those are at least partially tax deductible. Be sure to factor that into your 2009 Estimated Taxes.

(3) It is possible to have a different number of withholding exemptions for state tax purposes than for federal purposes. You should check your state’s tax website to find the form you can file with your employer to adjust your state exemptions without changing your federal exemptions. Otherwise, whatever you file on your W-4 will apply to both.

(4) If you itemize your deductions on your federal return, you should try to pay most of your state income taxes as possible by the end of the year so you can deduct them on the following April’s federal return. Otherwise, you will have to wait another 9-12 months before you can deduct them. Your state’s tax website will have information about how to determine and file Estimated Taxes. [And you will avoid penalties for underpaying state income taxes.]

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Bankruptcy Ben June 9, 2010 at 9:31 pm

If you’ve got any debt remember to contact your lenders asap, you’ll generally able to get 3months of suspended payments and interest that might help you out until your wife gets back to work.

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Scotty Neal October 7, 2009 at 9:05 am

With the dollar on a steady decline relative to several foreign currencies, predicted for continued decline, possibly severe, what’s your suggestion for protection of savings used for fixed income earnings…..and for future fixed income.

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MoneyNing October 7, 2009 at 11:25 am

Most people will suggest commodities and you can certainly buy ETFs like GLD (for gold) or USO (for oil). These are becoming good investments as the dollar decline and USO is especially good since it gets consumed, unlike gold.

Another approach you may take is to buy foreign currencies, or even foreign currency but beware that foreign currencies have principal risk. Another alternative is CDs like the MarketSafe CD from EverBank that offers CD type protection and some upside if the dollar keeps declining. This way, if the dollar goes up against the BRIC currencies, you won’t lost any money but if the dollar declines relatively to those countries, you get some upside.

But no matter which specific option you choose, commodities and currencies seem to be the best bet against dollar declines.

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Mary Hall October 21, 2009 at 9:40 pm

Really nice compilation of articles. Good job :) I especially like the one on paycheck perception — it never does seem enough for a lot of people, does it?

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Akhilesh March 15, 2010 at 7:08 am

hey nice info..really liked it..money management is always handy no matter how old we are it is convenient for us only.

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dandan45 June 11, 2010 at 5:27 am

Thoughtful advice. As a boomer, I seem to be hitting retirement at just the right time — when the market drops and no real value in fixed income. I do agree with commodities and certain CDs as investment tools. There is value and protection in certain types of real estate also. Keep sharing your insight.

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Fabian Toth July 19, 2010 at 10:34 pm

Scotty Neal

You should seriously consider taking charge of your own investments. read “Trend Following” by Michael Covel, it will be a real eye opener for you and how you approach investments

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Scotty Neal September 8, 2010 at 7:49 am

How do I go about buying foreign bonds or CDs? My target countries are:
Canada, Australia, China.

I’d like enough detail to carry out a complete transaction – buy and sell (redeem).

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Randy September 16, 2010 at 5:21 am

I agree with Mary. Nice articles, and I enjoy this website.
We should all keep in mind that our health is our most important financial commodity. With our health we have the ability, if we choose, to produce income.

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mallin patio furniture October 7, 2010 at 11:48 pm

i guess i should be learning to live within my means before it’s too late

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Lucy March 29, 2011 at 7:13 pm

I just picked up a 2nd job that is per diem and ended up owing the government more after I filed my taxes. Someone mentioned that I should increase my 401K in my 1st job so that I would be taxed less. Is this true? Any comments…short or long is welcomed =)

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MoneyNing March 29, 2011 at 9:14 pm

This is partly true, as contributing to a 401k means that you don’t have to pay for taxes on that contributed amount until you withdraw from the retirement account. But keep in mind that a 401k is meant for retirement savings. Each dollar you put in today means more money in the future, but less money to spend now.

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rente-doorlopendkrediet June 25, 2011 at 7:21 am

Here are a couple of money related quotes:

It is better to have a hen tomorrow, than an egg today.
When you combine ignorance and borrowed money, the consequences can be disastrous.

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Larry Acker July 28, 2012 at 7:23 pm

When prepaying a mortgage, or auto loan, you should write 2 checks, 1 for the actual payment, and 1 for the overpayment. And on the overpayment, is it also required to write “For Principle Only” on the check, along with the account number.

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LK September 11, 2012 at 7:48 pm

I have been a stay home for the past 15 years, only now that my children are going to school Fultime I feel comfortable enough to consider having mu own business from home. But I have no clue how to come up with any business ideas. Do you have any idea? I have a few ideas on inventions , again , do you have any ideas how to start making my ideas become a reality.

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Dora October 1, 2012 at 5:31 am

My husband is about to recived his mother state , is about 200,000 , where is the best place to invest this money? thank you.

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MoneyStreetSmart January 23, 2013 at 9:13 am

Dora- this is a situation that you and your husband need to evaluate closely in terms of your current financial position. Do you have any debt that could be paid off? Credit Cards, Mortgage, Car Payments, etc.? Do you have some money set aside incase of job loss of health emergencies? If you have your basics covered you can now explore investment options for the future. Take a look a your short vs. long term financial goals and set up a plan that is right for you. Research CD’s, Bonds, or maybe property investment. The options really are endless about where to invest the money- the questions to ask yourself are what risk am I willing to take? And when might I need/want access to these funds? Hope this helps. Would love to hear what you decided to do!

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Jonathan November 30, 2012 at 1:40 pm

Less is more. Thanks for guiding us to some really helpful resources, personally I really enjoyed reading; “5 Surefire Ways to Think That Your Paycheck is Never Enough” I also love the picture at the top of your post :)

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Bobby February 18, 2014 at 9:42 am

One of the toughest lessons I’ve learned is spending less than you earn. This is such a simple piece of advice, yet you’d be surprised how many struggle with this idea.

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