I participated in the 191st Carnival of Personal Finance today, check it out at Dollar Frugal!
You Might As Well Burn $5!
A blog about spending wisely in your twenties, with advice on everything from cooking to saving money on gas; how to teach yourself to save money instead of spending it, traveling without breaking the bank, and much more.
Tuesday, February 3, 2009
Just as soon as I understood how the magical elves calculate credit scores, they had to go change it up on me!
Monday, February 2, 2009
Tuesday, January 27, 2009
Monday, January 26, 2009
You've probably already heard the fuss about getting IOUs instead of refund checks here in California. That said, according to this, if you file early enough, you should get your refund as usual. Last year the FTB (Franchise Tax Board) processed my refund in a matter of days. As usual, I'm neither expert nor professional, but this is probably the last day to file with even a slight hope of getting your return processed before the February 1st deadline and the 30 day hold.
A fact you may not be aware of is that if you get legally married late in the year...say, the day after Christmas - you're required to file your taxes as though you were married for the entire year. Even if you get married at 11:59 pm on Dec 31st, the IRS considers you to have been married for the entire year.
2008 is a particularly useful year for this. Remember the Economic Stimulus rebate? Single folks got somewhere between $300-600? Married folks got $1200? The amount of your economic stimulus rebate was based on your 2007 taxes, because you hadn't filed your 2008 taxes yet because the year wasn't over. You 2008 self was getting money based on what your 2007 tax return indicated about your 2008 return which would be filed by your 2009 self. Sort of. Anyway, that's part's boring. (Though there may be DeLorean joke in there somewhere.)
Point is, if you received a $373 rebate check as a single person in 2008, and then got married later in the year to a spouse who got a $600 check, the government owes you $227 - because the IRS considers you to have been married during the handout. $1200-($373+$600) = $227, for those of you who hate 'rithmetic.
If someone claimed you as a dependent on their 2007 taxes, exempting you from the rebates at the time, but no one can claim you in 2008 - the government owes you a stimulus check.
If you had a baby in 2008, you also qualify for more money.
Basically if your life changed at all in 2008, you might qualify for more money.
Where do you claim the credit, you may ask? Good thing I read the IRS website, so you don't have to:
Form 1040 - Line 70
Form 1040A - Line 42
Form 1040EZ (the one most of you will likely use) - Line 9
All of the tax forms will come with an instruction worksheet on how to calculate your stimulus credit. So if you're doing your taxes on paper using pen and ink by the light of a gas lamp, knock yourself out calculating that. Or enter "RRC" on the appropriate line and the IRS will calculate the stimulus credit for you.
If you're filing online, most online tax preparation programs will calculate this for you.
Most folks reading this blog, except maybe my mom (hi mom), qualify to free file. So please, PLEASE, don't hand a tax prep firm your hard earned money to file your probably very uncomplicated taxes for you. Don't give them money to give you a refund anticipation loan at a ridiculously high interest rate when the government will direct deposit your refund in a week or two if you file early. Seriously, you may as well - well, you know.
Friday, January 23, 2009
Ever since I started writing this blog and generally pulling ahead financially, my friends have been asking me about finances, especially credit. Specifically they want to know how on earth a credit score is calculated. I found the answer about 2 years ago in a book somewhere, and I've been spouting a vague recollection of it ever since (luckily, it turns out my vague recollection was closer to "spot-on" than "oh crap, I totally remembered that wrong.")
- 35 percent - PAYMENT HISTORY. Obviously any lender is going to want to know how reliably you pay your debts. Some of us got shady car loans at 18 and never did reign ourselves in so that we could pay them on time and now we have an ugly, ugly blemish on our credit reports because we were really, really dumb back then. You know, just some of us. THE FIX: For goodness' sake PAY YOUR FRAKKING BILLS ON TIME. Your payment history is the single largest piece of your credit score. Call your bill collectors (your cell phone company might be a place to start) and ask them to start reporting your payments to the credit bureaus. If you have no revolving credit accounts to pay off on time, get a tiny secured credit card (Many secured cards are total scams, so do some research. I recommend the Bank of America Platinum Visa. $29 a year, and you can secure it with as little as $300. I paid it off every month and received my security deposit back after 9 months. I now have an unsecured card that's been paid in full, on time for nearly a year. ) Credit card debt is something I've somehow (magically?) never racked up. But if you have credit card debt, start making bigger, on time payments. For advice on finding the money to do that see: the rest of this blog.
- 30 percent - OUTSTANDING DEBT. Some of us are a little screwed in this department - we had crappy car loans or we bounced a teeny tiny check when we were 18 and it's gone to collections and it's grown so big that we are NOT ponying up $120 for a freaking Vanessa Carlton CD. (Shut up.) Some of us fell flat on our backs in bars when we were 21 and sprained our necks - an injury we didn't even know was possible until we did it - prompting a hospital visit we still haven't paid for (though we were theoretically insured at the time, it would be awfully difficult to prove now.) Not that I did any of those things, but - you know, maybe some of you guys did. This outstanding non-interest earning debt obviously affects your overall score. More important than that old debt that is your DEBT to CREDIT RATIO - if you've got revolving accounts (credit and charge cards) just how much of that available credit are you using? THE FIXX (two Xs, like the band - hee!): First, for some freakish reason that I still don't quite understand - paying off all of your aging non-interest earning (ie, not credit card) accounts might actually dock your score in the short term. If those random debts are old enough, they'll drop off after seven years. If you're not looking to finance anything anytime soon - letting them disappear is better. As far as your debt to credit ratio, it looks good to only use a small portion of the credit available to you. If you've got a $10,000 credit limit, try to use just $2500 or less at a time. Using only 25% or less of your available credit looks good to lenders - and then they'll want to give you money if you ever want a house or something. A good way to keep your credit usage low is to use your card ONLY for paying a few bills - then pay the credit card bill every month.
- 15 percent - LENGTH of CREDIT HISTORY. This one is particularly unfair to younger people. If you're a totally responsible 20 year old (and they do exist), your relatively short credit history is going to hurt you - past behavior being indicative of future behavior, they don't think your two years of paying off the credit card your mom co-signed for you counts (though it should). THE FIXX (dun nuh nuh nuh saved by zero...I'm so sorry) If you have no credit history at all, get a really, really low limit card. Use it very little, pay it off every month. It takes about 3 years for your good credit behavior to "count" - that is, 3 years before the credit bureaus see your timely payments as a habit rather than a fluke and raise your score significantly.
- 10 percent - NEW CREDIT (INQUIRIES). Getting a new credit card, loan or other credit account will negatively affect your score for a short time. But not for very long. Even letting a lender LOOK at your credit score docks you points, the theory being that too many inquiries means you're desperate and broke and looking for a handout you'll never pay back. If you've given someone permission to look at your credit report, it's considered a hard inquiry, and it docks your score by 5-10 points. A bunch of hard inquiries within a short period of time are counted as one (to account for consumers shopping around for the best rate.) If you pull your credit yourself, it is considered a soft inquiry and does not dock your score. THE FIX: The good news is that hard inquiries drop off your report after two years, so if you've got a bunch of inquiries dragging your score down, they'll be gone fairly soon. Beyond that, just be selective about who pulls your credit and pull it rarely.
- 10 percent VARIETY OF ACCOUNTS. This is the mixture of credit accounts you have. Installment loans (cars, student loans) and revolving accounts (credit & charge cards). THE FIX: Lenders like to see a healthy variety of accounts, but not TOO many accounts. Generally you want 2-5 revolving accounts and 1-3 installment accounts. ( But don't quote me on that, I just remember reading it somewhere, no lawsuits if I remembered incorrectly!)
Tuesday, January 13, 2009
Why anyone buys anything new is beyond me. We got our Kenmore microwave for $7.50. We got a wicked sweet coffee table for $15. There are folks who might spend upwards of $500 or more on just those two items alone.
Sunday, January 11, 2009
Thursday, August 28, 2008