Debit versus Credit

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  • I Need To Rollover My Old 401k

    I’m often lazy when it comes to managing my money. I’ve talked about automating a million times before and that’s because I automate everything I can. The more I automate the less chance I have of screwing something up. Unfortunately sometimes you’ve got to do something that just can’t be automated. Switching banks for example, or rolling over a 401k. The latter is what I need to take care of at the moment. It’s been three months since I quit my last job and I have yet to rollover my 401k.

    Thermometer at the top

    Many of the regular readers here know that I recently quit my old job and took on a new job with a startup.I don’t have a 401k at my new job (yet) and I haven’t set up an IRA yet either (and I call myself a financial nerd — I’m going to be burned at the stake when other PF Bloggers read this!) since I quit my old job. I also have yet to rollover my old 401k. The procrastinate-o-meter is boiling over the top here.

    I think part of what has me procrastinating is I’m not sure where I want to roll my 401k over to yet. For convenience I’ve been leaning toward USAA (since that’s where a huge amount of my financial accounts are already), but I’m also considering Vanguard and maybe even T Rowe Price. Who do you all have your IRA/401k Rollovers with? Any recommendations? J Money would undoubtedly say USAA ( sometimes I think he’s on their payroll 😛 ). What say you?

    I’ve been known to use this blog in the past to check myself (before I wreck myself). I’ll be doing that with this. I owe all of you an update in a weeks time. If I haven’t at least begun the rollover process on my 401k then I’ll either share a dirty secret with all of you… or eat my hat. I’ll let you decide if it comes to that.

     

    November 8, 2011
  • Saturday November 5th is Bank Transfer Day

    Just yesterday I was blogging about saying no to bank fees and today I ran across this little bit of news:

    This Saturday (November 5th) is Bank Transfer Day.

    This was the first I’d heard about it (although I’m sure plenty of people have, considering there are already 76k people signed up on the Facebook event page). I wanted to pass it on to all of you as well. I talked about quitting your bank yesterday and what better time to do it than on Bank Transfer Day? The timing couldn’t have been better on this one.

    So do yourself a favor and if you use a big bank switch it up. Go local or online, but don’t go national.

    Here’s a few resources for you: (and don’t forget to check out the Facebook page for bank transfer day as well for more tips/resources)

    • Find a credit union
    • Find a community bank

    My personal favorites for online banks (if you prefer to go that route instead of going local) are USAA (if you’re eligible), ING Direct, Ally Bank and PerkStreet Financial.

    So will you be participating? Let me know in the comments!

    November 4, 2011
  • Say No To Outrageous Bank Fees

    No doubt you’ve heard something of the monthly fee Bank of America was planning to charge their checking customers for the use of their debit cards. They were going to charge a $5 a month fee if you didn’t meet certain criteria (a huge percentage of their checking account holders would have likely been subject to this fee). Bank of America has now pulled a Netflix and reneged on their plan to charge this fee.

    Everything’s good then right? No need to change banks if you use Bank of America (or Chase, or Wells Fargo or any other large bank) right?

    Wrong.

    Now is the perfect time to change, and the good news is you’ve got plenty of options! Many of you know that I have been reading Ramit Sethi’s I Will Teach You To Be Rich for years now and for as long as I can remember he’s always talked some serious trash about big banks.

    When I saw Ramit at the financial blogger conference this year he, MD and myself had a discussion about the debit card usage fee that Bank of America had just announced and Ramit said something very similar to this:

    I’ve been telling my readers for years to stop doing business with the big banks because they’re going to eventually get screwed over.

    Spot on Ramit.

    I’ve been saying no to bank fees for years. I haven’t banked with one of the ‘big banks’ for probably close to a decade now and I’ve never once missed doing business with them.

    Like I mentioned earlier you’ve got so many options now that there are very few good excuses left on why you should bank with one of the big banks. Seriously. Three categories and likely 30+ options within said categories:

    • Credit unions
    • Community Banks
    • Online Banks

    For those of you who still bank with the Bank of Americas or the Chase banks, try this test for me. Ask a friend or a family member if they use a credit union, community bank or an online bank and if they do ask them what they like about their bank. Ok, now whatever their answer was… can you honestly say that about your big bank? I doubt if you can, honestly. Ask four more people after you get your first answer. How does your bank match up now?

    I’d be willing to bet it doesn’t.

    Do yourself a favor and quit your bank. Switch to a credit union, a local (community) bank or an online bank. Once you switch you won’t regret it. It’s time to vote with our wallets and just say no to outrageous bank fees.

    November 3, 2011
  • Occupy Wall Street or Phoenix or Chicago or…

    Unless you’ve been living under a rock somewhere you’ve surely heard about the protests going on all around the United States and even other parts of the world. It started as Occupy Wall Street and has grown into protests going on in basically every major city in the U.S. Here in my hometown of Phoenix Arizona the protestors have been hanging out downtown protesting everything from politicians to corporate greed. In fact, I was reading an article when I saw this little snippet from an interview, which gave me a bit of a chuckle.

    What Phoenix’s occupiers are mad about varies, depending on whom you ask.
    According to Darren Lansing, who was interviewed while shirtless and blowing bubbles, his gripe’s with politicians.
    “[We’ve got to] get the money out of the hands of the politicians and back to the public,” he tells New Times.
    When asked how he plans to do it, Lansing says, “We’re doing it right now, man.”
    Apparently, blowing bubbles is the key to redistributing wealth. Who knew?

    No offense meant to any of the protestors, but there has got to be a better way to protest. The act of protesting alone will not likely solve anything. His bubble blowing form of protest certainly isn’t getting the money “out of the hands of the politicians.”

    I’m lucky. I’ve got a job and so does my wife. We make pretty decent money between both of our jobs and we are wise with our money. We’ve saved an emergency fund, starting saving for retirement and have even started to set aside money for a new car, house upgrades and vacations. We’re frugal on the things we don’t care much about but are happy to spend our money on things that we enjoy.

    We aren’t out of a job like a lot of the protestors. I get that.

    I wish there were more jobs to go around for everyone who wants one. There just aren’t right now. A lot of things that have happened are out of a lot of peoples control — home values dropping in half, high unemployment, high rents. Life’s tough for a lot of people. Like I said, I get that. What I don’t get is why so many people today feel like they don’t have the ability to take their destiny into their own hands.

    Instead of ‘Occupying Wall Street’ all day, every day, why don’t more people start a small business, or get training for a new job? Yes, jobs are scarce, but they aren’t nonexistent — not to those with skills.

    One really awesome suggestion I found:

    If you really want to do something radical, help start a new community bank. The number of banks has shrunk over the past few years.

    Create more funding institutions to help decentralize financial power. If you don’t have the expertise, see who you could bring together in your community to create a new lender.

    Banks are a huge part of this protest. People are mad about excessive fees, bailouts and just about everything else. If you want to take power out of the banks hands, then start a community bank (or credit union). I can’t think of a better way to take power out of the hands of the bankers and the politicians.

    November 1, 2011
  • Starting a Family on a Budget

    This is a guest post by Holly Miller, who writes for Coupon Croc.

    If you do not keep tabs on your spending habits, they can easily get out of control. When starting a family on a limited income, budgeting is especially important. Families with limited resources face additional pressure when it comes to keeping spending in check. Raising a family comes with many expenses, from food and clothing to school and sports. Creating a budget allows you to plan your monthly expenditures in advance, and to more easily make choices for necessary adjustments. Budgeting allows your family to be financially prepared for minor setbacks and helps when starting a plan for savings. (more…)

    October 25, 2011
  • Tax Return Errors, Take Two.

    If you follow me on twitter you might’ve noticed my tweet on the 19th of October about the mistakes I made on my tax return and the current status of said tax return. Just in case you didn’t catch the tweet, here’s a screenshot of the tweet:

    Picture of a tweet I made about tax return errorsI thought I’d expound just a little bit more about what’s really going on and touch on a couple lessons I’ve learned throughout this whole process.

    The two big problems

    I received a private scholarship during the 2009 winter/spring semester for $2,000 which for one reason or another I did not claim on my tax return. Truthfully at the time I probably figured it’s a scholarship, why would I need to claim it as income? Turns out I was very wrong. More on that in a second. The other big problem on the tax return was the way I claimed my wife’s education credit. Her employer paid for the vast majority of her education expenses up front (they provided an education credit card). In actuality she had very few expenses for school that she paid out of pocket, but I obviously made a mistake somewhere because I tried to claim about $3,000 of the $8,500 her tuition rang up to that year.

    Oops.

    It was definitely my fault in both cases. So after weeks of back and forth with the tax guy (as I mentioned in my previous post on this situation I paid for audit defense insurance when I filed my taxes this year) we’ve come to the conclusion that I’m definitely going to owe around $1,000 dollars to the IRS. Not quite as bad as the original $1,200 – $1,300 estimate, but still a pretty big chunk of money. All of the errors the IRS claimed were definitely errors on my part, but the tax guy was able to find a credit I didn’t claim, so that’ll reduce the overall amount I owe. Thanks Chuck!

    Here’s the deal with the scholarship

    According to my tax guy (and I’m no expert so I’m taking his word on this one) a scholarship is non-taxable when you use it to pay qualified expenses. In this case the only qualified expense was paying tuition and other applicable fees to my alma mater, Arizona State University. It wouldn’t normally be hard to prove that I paid for my tuition with this scholarship, but the issue is that I also took out a student loan and ASU applied them directly toward my tuition – automatically – so I never even got a bill for my tuition. Because they did that they form they sent me for taxes for the year showed a big fat “0” for education expenses. No ‘qualified’ education expenses, no non-taxable scholarship. Great.

    So that’s the situation. It’s all a bit complicated, what with two major mistakes having been made, but it’s nearly resolved at this point and frankly I’ll be glad when it’s all over with.

    Here’s what I’ve learned from this whole ordeal (college students pay especially close attention):

    If you are able to qualify for a scholarship that’s fantastic, but make sure you structure your financial aid properly. Your school should do this for you automatically if it’s a scholarship through the school, but if it’s a private scholarship you’re expecting you need to plan ahead. Let your school know you’ll want a tuition bill instead of having your student loan (or grants) applied directly toward your tuition. Hopefully the financial aid department won’t have an issue with this. You NEED to pay for your tuition with the private scholarship first. If you still owe tuition after your scholarship is exhausted then use your grant money next (if you qualify for any) and then your student loan proceeds (in that order) to pay for the remainder.

    If you are able to do this it should save you a headache further down the line.

    Finally I’ve decided that with all of the changes to the tax law every single year I’m just not qualified to do my own taxes or use any sort of personal tax software (nor do I want to put in the time to study all the changes that might affect my family every single year). I’ll be using an accountant next year. Can anyone recommend a good one? 🙂

    October 21, 2011
  • Don’t Be Too Frugal. You Only Live Once.

    I’m a big fan of the Foo Fighters. I have been since I discovered them in high school, with their album The Colour and the Shape. They were in town for a concert the other night and I really wanted to go, but I waited until almost the last minute to buy tickets and they were a decent amount more than I expected to pay.

    I didn’t want to do it. After all, what kind of self-respecting personal finance blogger blows upwards of $140 for a couple of concert tickets? Isn’t being frugal extremely important?

    Right?

    Not so much.

    It took a comment from my lovely wife to put things in perspective. And I quote:

    You’re never going to look back on your life and say “I wish I wouldn’t have spent that money” but you might look back on your life and say “I really wish I’d gone to that concert.”

    Isn’t she brilliant? I think sometimes we get so wrapped up in frugality or saving money (or even earning more money) that we forget to live. Money isn’t life and I think we all need to be reminded that life is precious and we ought to take advantage of every single day.

    The moral? Don’t be too frugal. You only live once (presumably).

    October 19, 2011
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