Category Archives: Personal Finance

Money Monday: Tax Breaks for Parents

Now that it’s tax season, it’s time to consider what tax breaks you as a parent might be able to claim.

1. Childcare tax break

One way to save is to set up a Dependent Care Flexible Spending Account, or DCFSA, during Open Enrollment. You might be able to save up to 30% in taxes on the money you put toward it.

2. Child care credit

If you did’t sign up for a DCFSA, check out the Child and Dependent Care Credit when filing your taxes.

3. College savings plans deductions

“Many states offer full or partial tax deductions for parents saving for college in state-sponsored 529 plans.” (“Taxes made easy: 5 breaks for childcare and education.” Jeanie Ahn. Yahoo Finance.)

4. College tax credits

There are two college tax credits that you might be able to gain: the American Opportunity Tax Credit and The Lifetime Learning Credit.

Read more on these tax credits and deductions here: “Taxes made easy: 5 breaks for childcare and education”.

Money Monday: Top Budgeting Tips

If you haven’t been successful at sticking to your budget yet, perhaps you just need a refresher on how to best make your budget work.

piggy bank saving

photo from 401kcalculator.org

  1. Set and stick to your budget — number one on making the budget work!
  2. If you’re constantly overspending, try sticking to an all-cash budget. Handing over crisp bills instead of your credit card hurts far more!
  3. Make your financial priorities top…priority! After each paycheck, set aside how much you know you’ll need for that month, on: rent or mortgage payment, utility bills, grocery budget, and any other monthly expenses.
  4. Check in financially every day or week. It’s difficult to keep spending in check if you don’t keep on how you’re doing — which may make you uncomfortably and unnecessarily stretch those dollars too much at the end of the month.

These ideas (and many more!) are from The Muse’s article here: “50 Personal Finance Tips That Will Change the Way You Think About Money.”

Money Monday: Financial Fitness of the Generations

Members of the different generations view their financial situations in various ways.

The different generations — Millenials, Gen Xers, Boomers and Matures — view their financial situations in different ways: financially comfortable, have just enough to get by, or financially struggling.

Financial Fitness of the generations

This infograhic is from the CALIFORNIA ASSOCIATION OF REALTORS.

Projects with the Best Returns in 2017

Resale ROI

House projects have varying degrees of return; here are the top five projects with the greatest ROI, and the top five with the least ROI:

This infographic is from the CALIFORNIA ASSOCIATION OF REALTORS.

Money Monday: Questions to Ask Before You Retire

Sometimes it’s difficult to plan financially for the future when you also need to worry about here and now.

However, if you don’t think ahead, you most likely will be in for a rude awakening come retirement age. Now is not too early to be thinking and planning for retirement; and to help you, here are three questions from Time.com to think about:

  1. Will you be able to replace enough money to retire while maintaining your standard of living?
  2. What are you investing in? There are general investment recommendations here.
  3. What will retirement look like?

Read all of Time.com’s article on Yahoo here: “Ready to Retire? Better Ask Yourself These 3 Questions First.”

Money Monday: California Housing Affordability

Higher wages and seasonal price declines affect California housing affordability.

housing market forecast

• “Thirty-one percent of California households could afford to purchase the $511,360 median-priced home in the fourth quarter, unchanged from third-quarter 2016 and up from 30 percent in fourth-quarter 2015.” (“4th Qtr 2016 Housing Affordability”. CAR.org. 9 Feb 2017)

• “A minimum annual income of $100,800 was needed to make monthly payments of $2,520, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 3.91 percent interest rate.”

Read all about 2016’s housing marketing in the fourth quarter, in the CALIFORNIA ASSOCIATION OF REALTORS’ article here: “4th Qtr 2016 Housing Affordability“.

 

Money Monday: Tax Deductions for Homeowners

With the tax deadline coming up, now is the time to refresh yourself and learn about tax breaks you could be getting if you are a homeowner.

Some of the following tax deductions are only applicable to new homeowners, but there are a few that any owner can file for:

  1. Mortgage interest
  2. Mortgage insurance premiums
  3. Energy related tax credits
  4. Capital gains exclusion
  5. Property inheritance
  6. Property taxes
  7. Home office costs
  8. Moving expenses

If you would like details on these potential tax breaks you could be getting, read Yahoo’s article here.

Money Monday: Investing in real estate

As with all investments real estate investment has it own risks and the decision to invest should be carefully considered.

As a landlord there are certain costs that you will need to cover, potential vacancy problems that may strain your ability to pay your mortgages, and liability issues. It is important that you speak with an expert before putting yourself in a situation where you can potential over-extend yourself.

With that in mind, I have included some of the basic property types and benefits associated with real estate investment.

Single-family residence. First time real estate investors are usually advised to buy a single family detached home and rent it out as it’s market value appreciates. The reason for the popularity is that they are relatively easy. They are easy to buy, easy to finance, and they hold appeal to buyers and renters. Also, if you find that the real estate investment game was not the right choice for you they are relatively easy to turn over. Mortgage brokers know this-so these properties are also usually easier to finance and refinance.

Vacation property and second homes. Investment options in this category are myriad, from outright purchase to fractional-interest contracts and timeshares. Even if the property isn’t income producing, it can appreciate into a worthy investment, and mortgage interest is fully deductible. If you do rent the property when it’s not in use, realized income and tax obligations depend on what percentage of the year it’s kept for “personal use”-a tightly defined term you should discuss with a real estate attorney.

Apartment properties. Apartment properties require a long-term commitment, as well as a substantial investment of borrowed and equity capital, but due to the availability of professional managers they often don’t demand a lot of personal time. If you are the do-it yourself type then you might find yourself spending your weekends painting, advertising vacancies, and repairing faucets – though the higher return might be worth it for you. They can have mortgage loans of up to 100% of value, while other investment types may require all cash. Loans can be amortized or paid with the income generated by rents.

Condominiums. Condominium investments provide a bit of extra risk. Their market value appreciates more slowly than for detached single-family residences, and rental rates usually aren’t high enough to cover mortgage, property tax, and maintenance fees.

Vacant land. Vacant land is probably the least liquid and therefore usually the weakest choice for a profitable shorter-term investment. While undeveloped land is easy to maintain, it nearly always takes longer to appreciate and longer to sell.

Commercial property. To reduce personal liability and offset the greater expense of these properties, some investors form or join a limited liability company. Because of the extremely high risks involved with this type of agreement, consulting a real estate attorney is essential before taking this step. You probably shouldn’t consider this arrangement if you aren’t personally familiar with the other partners and their business expertise.