I Got the Sweetest Hangover

By Jacquette Timmons

“I got the sweetest hangover, I don’t wanna get over.” That’s the hook from Diana Ross’ sultry disco hit of the 1970s. And she is right: A love hangover can be “sweet, sweet, sweet.”

However, if you’ve ever had an alcohol related hangover, you know it is anything but sweet. You wake up the next day, with a headache, perhaps feeling slightly nauseous and a bit parched and groggy. For those of you who don’t consumer alcohol, you may be surprised to learn that one doesn’t have to be a heavy drinker to experience a hangover.

Alcohol related hangovers are much like financial hangovers – by the time you realize you have one, it is long after there’s anything you can do to prevent it.

Similarly, by the time you read this post, there’s a strong chance you’ve exceeded your holiday spending budget and/or racked up more credit card debt than you planned. Therefore, it’s probably too late to share last minute tips and techniques that will be useful for managing your holiday budget. So instead, I’ll share five (5) choices you can make after the fact --- choices that will help you recover from a hangover you do want to get over!

1. Move from guilt to action

It’s easy to get mired in what you “shoulda, woulda, coulda” done differently but it is much more productive to acknowledge you exceeded your financial limits and commit to getting back on track immediately in the New Year. This is not the time to ‘close your eyes’ by not opening your banking and credit card statements.

2. Go on a spending fast

Hopefully, the holidays brought you all you needed and desired. Because depending upon the degree of your financial hangover, you may need to forego new, non-essential purchases for one to three months. And this applies whether you are using cash, debit or credit!!


3. Increase your credit card payment – even if just $5 or $10

It may not seem like a lot but even just paying an extra $5 or $10 dollars above your minimum payment can help your effort to reduce your credit card debt. On this front, however, be realistic about how quickly you’ll be able to pay off your credit card in full.

4. Shift your focus

When (notice I didn’t say “if”) doing steps 1-3 above become challenging, shift your focus to your goals for 2012. Redirecting your attention to what you really want will help you endure the temporary discomfort the above steps are likely to bring forth.

5. Prepare for next year…now

Much like making sure to eat a hearty meal, drinking plenty of water or increasing the span of time between drinks can lessen the probability of a hangover, being better financially prepared can help you avoid a financial hangover at the end of next year’s holiday season. Therefore, review your statements to count the cost of this year’s holiday and related (travel, hosting) expenses; see by how much you went over budget; use this information as a benchmark for creating your 2012 holiday budget today!
Two aspirins and a little extra sleep won’t help you too much with a financial hangover. But the five recommended choices above are an excellent antidote!

Happy Love Hangover…Happy Holidays!

N.B. If you want help creating a fresh (financial) start to 2012, check this out!



Smart Shopping + Smart Spending = Happy Holidays!

By Jacquette Timmons

Some of us start saving for the holiday shopping season a full-year in advance. While others of us are looking at the calendar with utter astonishment wondering, “OMG, how many more paychecks will I get before the holidays arrive?” Ironically, both approaches require the same thing.

Whether the economy is doing well or in a slump, budgets tend to get a bad rap. But the holidays seem to bring about an even deeper visceral response to the word and practice of budgeting – as if having and following one either means you don’t have enough money and/or that you are being cheap and frugal.

Quite the contrary!

Having a holiday shopping budget equals smart spending, smart shopping and happiness all around. Here’s why: A budget helps you manage the expectations of others, as well as your own!

Now, here’s how: Back into your budget by determining for how many people you want to buy gifts; how many gifts per person; what type of gift; and the price point per gift. Do an initial version that is unedited. If you have the resources to do your first draft stress-free (read: no new debt)…awesome! If not, revise your budget until you reach the dollar amount that you can realistically afford using cash and/or a credit card you can pay in full. Note: it is perfectly OK if you have to adjust your budget several times before reaching the sweet spot.

Remember, the goal is to give meaningful gifts to your loved ones, the cost of which won’t leave you feeling remorseful on January 2 -- after the holiday euphoria has worn off! Also, keep in mind that the joy of giving and stress cannot co-exist. So, plan your holiday shopping (where, when, what debit/credit card you plan to use) to minimize your stress with the shopping process – especially if your holiday plans also include traveling!

Holiday shopping shouldn’t break your bank, and it won’t if you are proactive. And it doesn’t matter if you started planning twelve months ago or are just getting started today. A budget consists of equal parts smart shopping and smart spending…the perfect mixture for a happy holiday!

Food. Diet. Money. Budget.

By Jacquette Timmons
 

Food and money have a lot in common. For starters, a healthy relationship with either requires a common sense approach – something that is often easier said than done. And, your relationship with food and money forecast to the world a great deal about your behavior, choices and mindset, and dare I be bold enough to say, your degree of self-love and self-esteem.

So it shouldn’t come as a surprise that diet is to food what budget is to money: Hard to do!

Especially during this waist and wallet bulging season – aka the holidays – when temptations abound.

The challenge with diets and budgets is that, by their nature, they are restrictive. You are saying “no” to a choice you would really rather say “yes” to.

Holiday season or not, people often fail at diets and budgets because neither is sustainable over the long-haul if you don’t approach them with the right intent, focus, and goal.

Here are a few tips to help you turn “diet” and “budget” – the terms and the practice - into your friends:

• Define “right.” People often approach diets and budgets as if one-size-fits-all. To truly achieve success, make sure you are tailoring the diets and budgets you are following to your particular set of circumstances.

• Define your success, yourself. If the first tip - “right” - is about process, then this tip is about outcome. Diets and budgets require discipline and dedication. Others can challenge you to stretch yourself, but you do the actually work and only you know what boundaries you can extend in a sustainable way. And don’t forget about acknowledging your milestones with treats! Rewards are good for your soul.

• You can substitute “diet” and “budget” with more friendly terms, e.g., food plan or spending plan, but the end result is still the end result: You are giving yourself a framework to help you decide to what you’ll say “yes” or “no.” The key is to determine if you are making a lifestyle choice or quick-fix one. When you approach a diet or budget as a quick-fix solution to reach a goal or to correct an unhealthy behavior, it is reactive; but when you approach the same as if you are making a lifestyle choice, you are thinking long-term and operating proactively. Proactive is always a healthier way to go!

• Lead with a system. As with food, so with money. Common sense wisdom rules: eat less than the energy you expend; spend less than the money you earn. Nothing new, but oh, so hard to follow at times. Having a system for doing what you know is the right thing to do will help you rebound faster when you fall off the proverbial wagon.

• Give yourself permission to (sometimes) cheat. There are moments when you actually do yourself a favor by just giving into the temptation. But only if you commit to doing it occasionally and for a limited time. As an example, the Thanksgiving holiday is later this week. Unless you are on a strict, physician-prescribed diet that says no sugar, allow yourself to have a slice of pie (or two)! Be sure to return to your diet after the holiday, though. Same for your budget. If you go a few dollars over your budget for gifts this season, avoid beating yourself up. Instead, identify ways to reduce your spending in the weeks ahead on other items.

• Where’s the joy? Before you begin any diet or budget, one of the first questions you’d benefit from asking yourself is: Why am I doing this? Your “why” factor is powerful…it is your source of joy. Don’t forget to look for and remember your joy factor! Otherwise, you will concentrate more on what you are being deprived of and you’ll become frustrated and you’ll abandon your game-plan at the precise moment when you have the most to lose – literally and figuratively.

Food is never just about food in the same way as money is never just about money. Wrapped up in our choices about both are our conscious and unconscious thoughts, perceptions and expectations. Diets and budgets frequently get a bad rap and aren’t sustainable not because of what they are, but due to how we approach and utilize them. Contrary to conventional wisdom, they actually can be sustainable over the long-haul if we get our intent, focus and goal right.

So, work on getting it right and while you are at it…have a Happy (and healthy) Thanksgiving!

 

 

 

 

 

 

 

 

 

Tax Moves to Make Now to Lessen the Pain Come April 2012

By Carla Fried

Between now and the end of the year you can make some tactical money moves that will save you some serious money next Spring. Consider these year-end moves that can trigger a smaller tax bill come next April 15th:

 

• Sell a losing investment. Time for some classic lemonade making. If you have an investment-stock, fund, ETF etc-that has lost value amid the markets big swings this year, you might be able to reduce your tax bill by selling it for a loss. Sell an investment at a loss and it can it can be used to offset any gains. An investment held less than on year is considered a short-term loss; holdings of more than one year are considered long-term. Short-term losses can be used to offset short-term gains, long-term losses are applied to offset long-term gains. (Remember, short-term gains are taxed as ordinary income. Long-term gains are taxed at a maximum rate of 15%.) If you don’t have any gains to offset losses, you can use $3,000 a year in losses to offset ordinary income tax. If your loss is more than $3,000, don’t worry. You can keep claiming the loss as a way to reduce your taxable income in subsequent years until you’ve accounted for the entire loss. It’s just that you have to do it in $3,000 annual increments.

• Note: If you want to sell an investment at a loss to claim the tax break and then repurchase it, be careful. You need to wait 30 calendar days to buy the exact same investment. This is what is known as the wash-sale rule. But you could buy a similar investment, just not the identical investment. So for example, if you sell Exxon Mobil you could buy Chevron immediately. It’s just that you need to wait 30 calendar days before repurchasing Exxon Mobil.

• Accelerate Mortgage and Property Tax Payments. If you’re looking for ways to generate more tax deductions, consider paying some of your 2012 housing bills before Jan. 1. For example, if you make your January 2012 mortgage payment in December 2011 you can claim the interest portion as part of your 2011 mortgage interest deduction. Same goes with any property tax you prepay. (Of course, this only works if you choose to itemize your deductions, rather than claiming the standard deduction.)

• Get Tactical with Medical Expenses. If you’ve shelled out more than usual for medical expenses this year, do a quick calculation to see if your total out of pocket costs might be near 7.5% of your adjusted gross income for the year. Any medical costs above the 7.5% threshold can be claimed as a deduction. So if you’re close you might consider pushing any elective procedures you anticipate having in 2012 into this calendar year.

• Think Charitably. Charitable donations you make by year end can be claimed as itemized deductions. That’s a win-win; helping causes you believe in and getting a tax break as well. If the value of any donation is $250 or more, make sure you file away a copy of the receipt/recognition of your donation.

 

 

 

When Can Your Side Job Become THE Job?

By Jacquette Timmons

If you have a side-business, it is probably your intention that someday it will no longer be a “side” gig. I suspect your dream is that one day you’ll be able to dedicate 100% of your time and resources to it and let go of your “day job.”

But how do you know when you are really ready to make that transition? What do you use to gauge if now is the right time to say good-bye to your “9-5” and let go of the (relatively) guaranteed bi-weekly check you have currently?

When I started my business in 1995, I didn’t start it as a side gig; although, there were times when I wish I had! The reasons for my occasional woe is me in the form of, “If I could do this over, I would…” represent the three factors you need to consider when deciding the best time to leave your primary job.

These factors are relevant regardless of your business (product, service, combo) and in almost equal measure determine your business’ success or failure: financial resources, support system and time.

Financial Resources

It’s common wisdom to save 6-12 months of living expenses for an unexpected, rainy day. To this number, I would add 6-12 months of business expenses. This approach assumes you aren’t commingling personal/business resources by depositing business receipts into your personal account. If you are, now is an ideal time to create a separate identity – legally and financially – for your business.

I’d also presume that some of your account receivables will be outstanding for sixty- to ninety days, regardless of your payment terms. This strategy will help you manage cash-flow if you have to “float” your business expenses using personal resources (cash or credit card). (I once waited six months for a check from a client!)

Remember, when you are working THE job, cash-flow takes on an importance it may not have had when you were also working the day-gig. Cash-flow can truly become more important than making a profit sometimes!

Support System

You’ll need a support system in two ways: emotional and infrastructure. Because you’ve been “doing” your side-job for awhile, you probably have most if not all the things you need, i.e., smartphone, laptop, printer/scanner, files/filing system. But as you imagine working from home full time or renting office space, how might your infrastructure needs change? Once you identify any gaps between what is and what will be, what is the cost of closing the gaps? (Be sure to add this number to your financial needs/resources above.)

I cannot emphasize enough the importance of a really good emotional support system…of a certain kind. If you currently spend most of your time with family and friends who work a traditional 9-5 job, make a commitment to surround thee (and quickly) with other entrepreneurs. Seriously. No matter how well intentioned your 9-5 crowd is, there are elements of running your own business that they will never understand (unless they at one time were also an entrepreneur). You’ll save yourself a lot of frustration by being in the company of, supported by, encouraged by, and challenged by fellow entrepreneurs who “get it.

Time

When you leave your day-gig to focus full-time on THE job, you get more time and lose it, simultaneously. Here’s why: i) When you are juggling both jobs, you are probably much more disciplined and protective about your calendar. As a result, you are probably extremely focused and productive. ii) However, when you are able to dedicate 100% of your time to THE job you at first feel like you have a ton of “free” time. For some, this time freedom renders them paralyzed with indecision about what to do and when and often comes with guilt about how you are using said time.

So before you leave your 9-5, get clear about how your choices with regards to time will change and begin to adjust your habits and patterns accordingly. In this way, the transition from “I only have two hours to get this done,” to “I have all day to finish this,” won’t feel so drastic.

Now, let me tell you a sobering reality about all that I’ve just shared: When it comes to financial resources, support system and time, you’ll actually probably under-estimate what and how much you really need because it always takes more than you forecasted!!! I’ve yet to meet an entrepreneur to say otherwise and I can attest to this personally.

However, don’t let this dissuade you. Instead, allow it to help you temper your expectations and to prepare as best you can. And, good luck!

How to Make Your Bonus (and Raise) Pay off Big Time

By Carla Fried

Let’s face it, snagging a bonus or solid raise isn’t exactly easy these days. That makes it all the more important to make the most of any extra pay that comes your way. Don’t worry, I’m not about to suggest you save every penny. We’ll get to that sort of unimpeachable advice in a sec. But I’d put in a pitch for making sure you spend a portion on something that makes you smile. Maybe that’s paying off your credit card. But maybe it’s a long weekend getaway. Both have value. In our overworked and overstressed world where it’s hard not to worry, spending a little on checking out can be the secret to avoiding burn out. And that’s what enables you to excel at work…and earn the next bonus or raise. You decide how much feels right. Maybe you siphon off 75% or so of any windfall for solid financial planning, and give yourself the room to splurge with the other 25%.

Okay, now onto the best financial moves for any extra income:

• Pay off high rate credit card debt. ‘Nuff said. You know the drill here.

• Contribute more to your 401(k). The minute you hear the word “raise” contact HR or your plan administrator pronto and increase your contribution rate. If you do this before the first raise ever hits your paycheck you’re not going to “miss” having that money to spend. This is especially profitable if you have yet to max out on your company’s maximum matching contribution. By increasing your deferral rate you’ll be eligible for a higher match. You just got a bonus on your bonus!

• Fund a Roth IRA. Individuals with income below $107,000 and couples filing a joint tax return with modified adjusted gross income below $169,000 can contribute $5,000 per person this year into a Roth IRA. If you’re at least 50, the max is $6,000. If your MAGI is between $107,000-$110,000 ($169,000-$179,000 for couples) you can make a reduced direct contribution into a Roth IRA for 2011. If your income is above that upper limit, you can still finagle your way into a Roth by first contributing to a Traditional IRA and then converting that into a Roth. The big advantage of a Roth IRA is the prospect of having 100% tax free income in retirement. Remember, all withdrawals from a Traditional IRA will be taxed as ordinary income. In effect, with a Roth you pay your tax today, rather than in retirement. Unless you anticipate being in a low tax bracket come retirement, the Roth can be a better deal. Moreover, if you already have money in Traditional IRAs, adding a Roth IRA to your retirement mix gives you some tax diversification: you have both types of accounts that in retirement you can tap strategically based on your needs.

• Pay Down Your Mortgage. This is for the 50+ crowd. If you intend to live in your current home through retirement, using some extra cash flow today to get the mortgage paid off before you stop working can be both financially smart and psychologically calming. Or if you’re been hankering to refinance at today’s seriously low rates, but worry you won’t qualify for a loan given today’s higher equity requirements (typically 20%) consider a cash-in refinance. That’s when you bring some cash to the refinance so you can buy your way into having at least 20% equity. With bank savings rates at 1% or less, using extra cash to reduce your mortgage costs can be a smart move. Just make sure that when you refinance you don’t extend your original loan term. So for example, if you’re 10 years into a 30-year loan, take out a new 20-year mortgage. That way you don’t end up paying more interest over the total length of your payback of the two loans.

Going cash-free: what does the future of payments look like?

By Josh Smith

“Cash is king!” may still ring true on Wall Street, but pretty soon technology will be telling us all that, “the buck stops here.”

Like it or not, the future of payments isn’t on printed bills and noisy coins, but rather on the other device you already carry in your pocket or purse -- your cell phone.

Other countries have been using their mobile phones to make small payments for years, but the U.S. is just now entering the game in a meaningful way.

So, what does a cash free future look like?

At the center of our future payments is our smartphone. This device will allow us to make payments in new ways and in new locations.

Making Payments

Google Wallet now lets owners of a specific phone make payments at the same tap to pay stations that have been accepting credit cards.

This technology is powered by NFC, a small chip that allows your phone to securely communicate to a terminal when it is nearby. You will still need to enter a PIN on your device to make this possible, but no more grabbing for your real wallet.

As you can see in this Google Wallet video, there are a number of other ways that you will benefit from a wallet that is part of your phone, such as coupons and loyalty programs that don’t require you to remember any cards or clippings.

Soon, your smartphone will come with this same technology. These payments tie into your credit and debit cards, as well as prepaid cards that you can load up for controlled spending or to give your kid an allowance on his phone.

We may also see stickers that attach to the back of your current phone to enable NFC transactions.

Another way you may be making payments is on someone else’s smartphone or tablet. The Square card reader is a small credit card reader that plugs into the headphone jack of Android phones, the iPad and the iPhone.

As you can see in this video, the square card reader will let you make a payment with the same credit card you have been using, but because it attaches to smartphones, you will be able to use your card in new locations. Think, at a festival or small business that didn’t typically accept credit cards. I know I can’t wait for my dry cleaner to get one of these.

Anyone can get a Square card reader, and start accepting payments, which means even you can start charging your friend’s when they ask you to pick up the tab because they don’t have any cash. Just keep in mind the 2.75% transaction fee.

There are a number of new payment ideas out there, but these are the closest to coming to your pocket and becoming a reality. As we move forward, I anticipate even more integration with our phones for payments, discounts and loyalty.