Simple Debt-Free Finance

A Simple Approach to Getting Out of Debt & Into Wealth

A Simple Way to Avoid the 10 Most Common Tax Mistakes.

Posted on | March 8, 2010 | No Comments

Investopedia has their list of The 10 Most Common Tax-Filing Mistakes available on Yahoo! Finance. According to them, the top 10 list looks like this:

  1. Wrong Filing Status
  2. Wrong Address
  3. Incorrect or Missing Social Security Numbers
  4. Unsigned Return
  5. Math Errors
  6. Tax Computation Errors
  7. Incorrect Identification Numbers
  8. Incorrect Financial Institution Information
  9. Undocumented Deductions
  10. Wrongly Claiming — or Forgetting to Claim — Credits And Rebates

Let’s stop and think about these for a moment. Most of these are simple data entry errors, and most are probably the same from one year to the next. Your mailing address doesn’t change that often, and your Social Security Number certainly doesn’t (unless you have extremely bad luck with identity theft).

I use Turbo Tax to do my taxes, but all tax software offers the same simply data entry and import features. I haven’t had to enter information like this in years - since I started using Turbo Tax. I entered it the first year, double (and triple) checked before I submitted my tax return and haven’t looked back since.

The same goes for computation errors and deductions. Most tax software (any worth its cost) will automatically compare your information with the available deductions to make sure you don’t leave anything on the table.

With software like Turbo Tax and HR-Block Tax Cut, there’s no reason to fall victim to these tax mistakes.

Of course, if you wrongly claim a dependant, no software is going to be able to catch that so you still need to know what you’re entering. But as a user of Tax Software, it’s comforting to me to know that most of the top 10 tax mistakes are not my problem. What about you?

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When To Switch Car Insurance.

Posted on | February 28, 2010 | 1 Comment

If you’re like most people, once you get your auto insurance you stick with the company until they increase your premium, or give you grief over filing a claim. But you can actually save some money switching your car insurance in some circumstance.

You can save money when you switch insurance providers at the right time.

You can save money when you switch insurance providers at the right time.

Here of five of those circumstances where you might find cheaper car insurance if you switch your car insurance provider.

1. Your credit score has changed you first purchased the policy.

If your credit score is significantly lower or higher than when you originally purchased your insurance policy, then you probably should start shopping around when it’s time to renew. The reason is that many national car insurance companies use your credit score as part of their formula for determining your premium. People with higher credit scores tend to get lower insurance premiums. Conversely, those with low credit scores tend to pay more.

So it makes obvious sense to shop for a better rate when your score has improved, but why shop around if your score has gone down? I mean, aren’t you at a disadvantage and probably pay more?

Yes, but not always.

Some insurance companies weigh your credit score less than your driving history. So, if you have a lousy credit score but an accident free history, you may get a lower premium on your auto insurance if you shop around and find a company that weighs the score less heavily.

If you fit the low credit score category, then you should try to improve your credit score, and contact your state department of insurance for help in finding an insurer who favors driving records over credit histories.

2. You just started working from home.

Many insurance companies charge higher premiums for driving more miles. It just makes sense - the more you drive, the greater the chance of being involved in an accident, and the greater the likelihood you will file a claim.

But if you’ve started working from home, or drastically cut your commute distance it may make sense to either notify your insurer or start looking for a company that will give you a discount on your auto insurance for driving less.

The range of what is considered for the low-mileage driving discount depends on the state.

3. You’re in the middle of a long-term car lease or loan.

With car loans reaching the 60 and 72 month range, people can end up owing more than the car is worth and insuring the car for more than it’s worth. Long lease financing favors lower monthly payments, but the car depreciates faster than the principal is paid on the loan, and the can leave you owing money if your car is totaled since the insurance company will only pay for the market value of the car.

One solution to this problem is GAP insurance, which covers the gap in what the insurance company would pay and how much you still owe on the car loan. Many insurers offer a discount on GAP insurance if you switch your auto insurance to them.

Of course, a better solution would be to take out a shorter term loan and not end up upside down in the first place, but not everyone has the income to manage that.

4. You buy a home, or obtain a company car.

Homeowner’s need homeowner’s insurance, and many insurers offer a multi-policy discount if you buy both homeowner’s and auto insurance from them.

If you recently were given a company car as part of a promotion or new job, then you may even be able to get a multiple-car discount.

5. Your children reach driving age.

Once junior is old enough to start driving, and gets his license you’ll need to notify your insurance company. There won’t be any discount for adding junior to your policy, but some companies are more competitive than others when it comes to insuring younger drivers.

Photo by daniel.sound.

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TracFone Promo Codes For March 2010.

Posted on | February 27, 2010 | No Comments

Looking for TracFone promotional codes? Here are two just for the month of March.

20 bonus minutes when adding 120 minutes or more of airtime.

Just like it sounds, if you’re adding 120 minutes or more, you get an additional 20 minutes free when you use the promo code 13131. Valid March 1st - 31st, 2010.

40 bonus minutes when adding 200 minutes or more of airtime.

If you’re adding 200 or minutes of airtime to your TracFone, then you get an additional 40 minutes free when you use the promo code 30617. Valid March 1st - 31st, 2010.

I’ve used TracFone for about 5 years now and haven’t had a complaint. It’s good coverage and a great price. I pay about $20 every 3 months and can simply stop paying anytime I no longer want the service. No contract, and no bank account draining fees. If what you need is a simple, bare bones cell service then TracFone may be worth your time to look into.

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What Is The Best Place For My Savings To Grow?

Posted on | February 26, 2010 | No Comments

I recently got a question in an email and thought I’d make it a post, since it’s a pretty general question and suits this blog topic well.

Here’s the question:

I have a couple thousand dollars saved up, but it’s just sitting in a bank account right now not earning very much. I see a lot of sites like yours recommending ING high yield savings, but that yield is only 1.15%. I’m wondering what will give me the best return on my savings for both the long and short term?

-John.

Well, there is no single answer. There’s nothing that will give you the most return both short and long term. If there was, all other investments would be rendered useless. In fact, return is based on risk, and since not all places to put your money carry the same risk, not all places offer the same reward.

In general, the highest return for the long term is stocks, followed by bonds, followed by CDs and bank savings accounts. But I think John is asking the wrong question, or maybe he’s just skipping ahead. What John really needs to ask himself is: How much risk can I take?dollar symbol and arrows

Anyone can find a chart or set of data to show that one savings vehicle or investment class beats another over some given period of time. But what does that really tell you?

For example, stocks lost value over the last 5 years while gold almost tripled. But that doesn’t mean you should put your savings in gold alone. Gold did almost nothing for the 20 between 1981-2001.

The best place to put your savings is determined by the amount of risk you can take, and that is largely dependent upon when you need the money.

If you’re saving for retirement and that’s 20 years or more away, then a mix of stocks and bonds is probably best since they provide the greatest average growth over that time period and can usually out pace inflation. But stocks are risky, as we’ve seen during the 2008-2009 crash. Cash and gold were about the only things that didn’t lose value.

But you wouldn’t want to keep your retirement savings in cash because over 20 years, you’d likely lose money to inflation and end up with less real value than you could have.

But that’s savings, not growth.

If you’re saving money for retirement or college and that event is 15 years or more away, stocks and bonds are the way to go because you need your money to grow over that time, and savings accounts won’t get the job done.

If you’re saving for a down payment on a house, or a new car then you’re better off with a high yield savings account or CDs. You’re giving up growth and accepting a lower return because you’re saving your money for a specific near term goal.

In the long run, growth is more important than preservation of capital (savings). But when your goals switch from long to short term then preservation is key.

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