Get Your Debt in Check

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While reports show that young adults aren’t racking up credit card debt, they are in fact failing to save and are unaware of how detrimental their student loans are to their livelihood. 

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This is a song I am all too familiar with. A week after I said “I do” to my husband I walked into Money Management International and asked for help getting my credit on track. I was worse off than most with both credit and student loan debt.  My goal was to get my credit score back up so my husband and I could eventually buy a house. It took me five years and some belt tightening, but I was finally able to obtain a credit score that didn’t make me blush.

According to the Department of Education more than 40 percent of Americans who borrowed from the government’s student loan program are not making payments or are behind. In another study, 40 percent of millennials reported they don’t have a retirement income strategy in place and 57 percent report they haven’t begun saving yet.

To help the future of tomorrow get better at budgeting, paying off debt and saving, Better Business Bureau serving the Northwest offers the following tips:

Be Precise with Budgets

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Your budget should include more than just rent, utilities, phone bill and insurance. Create a detailed list of the things you spend money on and things you would like to spend money on in the future. For example, be sure to put money away for clothes, haircuts, gas, groceries, medical, credit cards, entertainment and vacation. It might be scary to see your money quickly disappear when disseminated, but it will also leave you prepared when you start a new job and suddenly need a new suit and haircut.

Start Saving Now

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If you’re already living paycheck to paycheck it might be difficult to imagine putting money away into savings, but even a little bit counts. Start with the smallest amount you can manage and then slowly increase the number as you start to become more accustomed to living on a fixed income.

Get Debt Help

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If you need help consolidating your debt or creating payment plans remember there is help out there. And some of it is free. When I got married I was in the process of paying off two collection agencies. After speaking with a representative at MMI I got the amounts lowered and only had to send one check each month. Because I was able to consistently make payments I was able to pay off the debt in no time.

Be wary of someone offering to help you consolidate your debt for a “one-time fee.” Many nonprofit debt counseling agencies can you help for free.

To learn more about debt management visit bbb.org/credit-management.

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Five Money Saving Tax Tips for Small Businesses

The tax season is a difficult sea to navigate for any company, but it can be an especially unique challenge for small businesses. While you may have until April to file your taxes, tax preparation should be a yearlong process. Follow these five tips to give your small business a simpler tax season with less stress.

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  1. Know the Important Dates

Depending on the type of business you are operating, there are different filing deadlines that you need to know. For example, if you’re a sole proprietor or a single-member LLC, then your tax deadline will typically be April 15, the same day as personal income tax.

If you have incorporated your small business, then the income tax must be paid three months after your company’s year-end. Corporations have the flexibility to pick a year-end date prior to filing their first year, allowing them to choose a schedule that will best suit their needs. For example, if you have a beauty salon, you may choose a year-end date that falls after the holidays but before the summer wedding rush.

  1. Fund a Retirement Plan

If the amount of taxes you owe for the year is exorbitantly high, consider making contributions to your retirement accounts. As long as neither you nor your spouse has active participant status, your Traditional IRA contribution is deductible. If you or your spouse is an active participant, then your tax filing status and your MAGI determines whether the contribution will qualify as an additional deduction.

If you have not already done so, consider establishing a retirement plan for your small business. Depending on your annual salary and the type of plan you choose, you may be able to contribute and deduct up to $53,000 a year.

  1. Work with a Professional

As a small business owner, you probably wear a lot of hats. No doubt you’re competent in your field of expertise, but when it comes to your business’s finances, it’s best to work with a professional. Bookkeeping can be an overwhelming and tedious task, and hiring a tax attorney or accountant will allow you to focus on growing your business.

Even if you currently handle your business’s finances, tax time is a great time to hire an accountant. Their job is to ensure you are organized, prepare your taxes and make certain everything is in accordance with all CRA guidelines.

Tax planning shouldn’t be a year-end scramble. It should involve consistent preparation throughout the year. By establishing a relationship with a tax advocate, you can minimize your risk of an audit while saving money as your small business expands.

  1. Have Lunch Meetings

Whether you’re looking for a last minute deduction or you want to qualify for more deductions next year, consider hosting lunch meetings. When you dine with your business partners or employees, 50% of the cost of the meal is tax deductible, so long as the meal isn’t too lavish or over-the-top and it is specifically for business.

If meals or entertainment are provided for the benefit of your employees, you can deduct 100% of the cost. Examples of expenses that can be written off at 100% include:

  • Free food and beverages provided to the public for the purpose of promoting your business
  • Company picnics
  • Holiday parties, both in your facility and at a restaurant
  • Meals provided to employees as an incentive to work after-hours or on holidays and weekends
  • Free coffee, bottled water or snacks provided to employees at the place of business

The IRS looks closely at deductions for meal costs, so be sure to keep proper documentation. There are numerous smart phone apps available that allow you to input the date and location of the meal and upload a photo of the receipt, making it easy to keep a record of it.

  1. Charitable Contributions

Small business owners are a generous lot. In fact, studies show that up to 75% of small businesses make charitable contributions. A donation to a 501(c)(3) in the form of cash, volunteered services or sponsorship of a fundraiser can be deducted in whole or in part. As always, careful record keeping is a must. In most cases, an organization should provide you with a written statement that it has received a contribution from your business.

Preparation is not only essential to having a tax season that is free from stress and frustration, but it also ensures that your small business receives all of the tax benefits for which it is eligible. By staying organized and preparing for tax season throughout the year, you can be confident that you are making the best financial decisions for your small business.

5 Ways to Get out of Debt in the New Year

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The New Year is a great time to examine your finances for the year ahead. And attempting to get your budget back on track after heavy holiday spending can oftentimes be cumbersome. So what do you do? Well, you’re in luck. In this post, we highlight five ways to get out of debt after the holidays.

1) Set New Spending Limits

Identify areas in your life where you tend to overspend that fall outside of the “needs” bucket. Then, create a budget for the different types of purchases you want to indulge in throughout the month and put a cap on each. Doing so will help you control excessive spending and keep disciplined on what you can do without.

2) Stop Spending Money You Don’t Have

Get into the habit of only spending money you do have, instead of adding more charges to your credit cards. Know what you owe, make a list of how you plan to pay off what you owe, and stick to it. And if you have extra cash, use that toward paying down your credit card balances. Further, start off by cutting back on simple things like buying coffee; instead of buying lunch, pack it; and/or save gas by riding a bike or taking the bus.

3) Go Beyond the Minimum Payment

Don’t wait for that bill to arrive before taking action. Instead, try making weekly payments and more importantly, steer away from setting yourself up for a long commitment with your credit card company by just paying the minimum due. Let’s look at an example that uses a credit card balance of $1,500 and APR of 18 percent – if you only pay the minimum due of $37 per month, it will take you 159 months to pay off that debt with a total interest charge of $1,760. However, if you pay an additional $10 it’ll only take 44 months to pay off your debt with a total interest charge of $557.59.

4) Ask for a Lower Credit Card Rate

This may sound like a no-brainer, but just simply call your credit card company and ask if your rate can be lowered. Say you have $5,000 in debt on a credit card with a 20% APR. If you pay $150 per month, it’ll take you 50 months and $2,360 in interest to pay off that debt. Reduce that interest rate to 15 percent and you save roughly $800 in interest and six months of payoff time.

5) Consider a Balance Transfer

If you are eligible for a balance transfer at zero percent for a period of time, sign up as this may be another alternative to reduce your interest charges. Also make sure you understand what the transfer fees are so that you’re prepared. For example, you can save $265.48 on a $5,000 debt with a typical balance transfer, assuming a three percent balance transfer fee, a 12-month zero percent intro APR, and the debt being paid off within a year.

We hope you find these tips helpful! Let us know what you do to get out of debt after the holidays in the comments section!

10 Tips for Stress-Free Holiday Shopping

The holidays mean family, friends, parties and shopping. The more friends and relatives you have, the more shopping you are required to do. Not only do you have gift shopping to worry about, but there is also all of the shopping you have to do for the parties, dinners and other events you will be attending and hosting.

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Image courtesy of Salvatore Vuono at FreeDigitalPhotos.net.

The bottom line is that shopping is a big part of the holiday experience, and many people get stressed when it comes to holiday shopping. But there are several things you can do that will take the edge off your holiday shopping, and let you get back to enjoying the season with the people you love.

Get Organized

If you start your holiday shopping without lists of what you need to buy and for whom, then you are asking for trouble. Get on your computer, or grab a pen and a pad of paper, and make shopping lists for everything from gifts to Christmas dinner. When you start your shopping, all you need to do is satisfy your lists, and you are done.

Don’t Wait

Many of the most efficient holiday shoppers are usually done with their shopping before the holiday season even begins. These are the people who check online for great deals, and who spend a lot of time in stores comparing prices. Even if you don’t have the time to shop all year round, you can still get a jump start on the holiday season by starting your shopping in September and getting done before Halloween arrives.

Utilize the Internet

The ability of the Internet to reduce holiday shopping stress cannot be overstated. Some retail websites will have holiday promotions during the summer that offer prices better than you would find on Black Friday. There are plenty of apps you can use (and Internet programs that can be used on your desktop computer) that will let you know when the products you want are at their lowest price points. You should utilize these resources and save yourself a lot of money and time.

Develop Some Black Friday Tactics

When it comes to holiday shopping, avoiding Black Friday could turn out to be a mistake. Instead of getting crushed by the crowds in the retail stores, you should try to use some smart tactics to get the great deals without the stress. For example, try visiting major department stores in smaller towns to avoid the huge crowds. Some of those smaller stores still have Black Friday inventory later in the morning, so you can use those rural stores to sleep in and still get great deals.

Don’t Forget Cyber Monday

The Monday after Black Friday is known as Cyber Monday because many of the larger online retailers put up special deals that morning. Since Cyber Monday does not require you to find a parking spot or beat any crowds, you should consider teaming up with someone to expand your resources and take advantage of as many deals as possible.

Make Gifts

If you are a handy person who is good at arts and crafts, then consider making some of the gifts you will give away this holiday season. Some people enjoy good handmade gifts, and you can save a lot of time and money by being able to make your own presents.

Always Be Shopping

When you are out and about, you should always have your holiday shopping in mind. You can even carry your gift list with you and make a note when you see something in a store that you think a friend or relative would like. Window shopping throughout the year gives you specific items to look up when you start your holiday shopping, and can make the entire process much easier.

Make A Budget and Stick To It

A big source of stress for holiday shopping is spending money you do not have. If you have the option of starting a Christmas club at your job or your bank, then do so and put a little money away each week for holiday shopping. When it comes time to start buying for those lists you have, stick to the budget you have created and reduce your stress.

Spread Out Your Shopping

A large majority of holiday shopping stress comes when people try to do all of their shopping in one day. If you start early enough, then you have plenty of time to spread your shopping out and keep the stress level down.

Avoid the Traffic

If you want to avoid stress during holiday shopping, then do your shopping when the traffic is at its lightest. Weekday afternoons and weekend evenings are usually the best times to shop and avoid the traffic.

If you have the right plan, then holiday shopping can be fun instead of stressful. Take the time to be prepared, and don’t let the holidays get the best of you.