Photo: dizznbonn

“There’s one for you, nineteen for me,” wrote George Harrison of The Beatles. He was talking about the taxman.

If you’re a single person with no dependents, you might feel the same way come April 15, 2010. Because single people with no dependents don’t get to take advantage of some of the richest deductions and credits that help lower your overall tax bill.

Unless you work for yourself, most of the taxes you pay to the federal government come right out of your paycheck. Some people think the IRS does them a favor when the government sends that big tax refund check every year. What they don’t realize is that a refund is just another way of the government telling you they collected too much. That’s like going to the grocery store and giving the checkout guy a $20 bill for $10 worth of stuff and having him tell you he’ll send you the change next year.

Whether you get a refund or end up owing in April is irrelevant. Go back to last year’s 1040 and get a good look at what you ended up paying to the government. And follow the steps below to try to take a smarter approach in your dealings with Uncle Sam.

Sign up for a Flexible Spending Account at work

If you work for a company that offers a Flexible Spending Account (FSA) you should sign up for it. An FSA allows you to set aside a portion of your income tax-free to pay for qualified medical expenses such as deductibles, co-payments and coinsurance for your health plan. It also includes medical expenses not covered by the health plan, such as dental and vision expenses and over-the-counter drugs and medical supplies like contact lens solution. So how much can you save? Check out the calculator at the Federal Flexible Spending Account Website. It will give you a good idea as to how much money in tax savings an FSA will put in your wallet.

Resume your retirement plan contributions

2008 was a nightmare for the stock market. How bad? If you lost 30% of your 401(k) then you did better than a lot of people.

So many people scrapped their retirement savings like that old used car they kept pumping money into. If you did, that’s a shame. 2009 gave us some big gains in the market and if you bought in during the lows of 2008, you made a pretty nice return through the end of this year. You might not be back to even yet, but this isn’t money you’re going to spend in the next five years. For most of us, this is money we’re going to spend decades from now. And a diversified portfolio of stock and bond funds still gives us the best chance for the kind of growth we need to outpace the rising cost of goods.

Those short-term losses also don’t look so bad in light of the fact that a good bit of that money would have gone to the IRS anyway. (When you put it that way, it almost makes you feel good.) If you have a 401(k) at work, your contributions come out of your gross pay. So it ultimately lowers your income for federal tax purposes. It’s the easiest, smartest way to lower your tax bill.

If you don’t have a 401(k) at work, look into a traditional IRA. If you qualify, contributions are tax deductible

Consider buying a home

In case you haven’t noticed, the federal government still wants you to own a house. Here are a few of the incentives they’re offering:

* Generally, the interest you pay on your mortgage is tax deductible.
* The local real estate taxes you pay are tax deductible.
* They’ve extended the $8,000 first-time home buyers tax credit until April 1, 2010. And they’re giving a $6,500 tax credit to current owners if they buy a new home by April 1, 2010.

Now don’t go out and buy a home just to lower your taxes. But if you have some money saved for a down payment, you’re tired of renting and you’re getting killed in taxes, then buying makes sense.

It’s also a good buyer’s market. Don’t get spooked by the nightmare foreclosure stories over the past few years. Remember, the vast majority of people in our country continue to pay their mortgages on time. (And most of the ones who didn’t were in Florida, California, Nevada, and Arizona.) A good home in a good neighborhood will hold its value.

Take a second look at the home office deduction

It used to be a little-used deduction that was designed for self-employed people. In the past, many people were reluctant to take it as it was often viewed as a “red flag” for an audit.

But new technologies mean more and more people are working from home. So even if you work for a big company and your primary office is in your home, then you could be eligible for this deduction. And changes to the rules in recent years mean it isn’t looked on as the audit trigger it used to be.

You’re eligible for the deduction whether you are an owner or a renter. But keep in mind, you can’t just set up a computer in a corner of your bedroom and call it your office. There’s got to be a space in your home that is exclusively and regularly used for your office. (Hint: If there’s a pool table in the room it probably won’t qualify. Unless you’re a billiard ball wholesaler.)

Consider a Roth IRA conversion

This is the one tip that will actually increase your tax bill in 2011 (and possibly 2012), with the goal of decreasing the taxes you pay years down the road.

Let’s say you have money sitting in a traditional IRA. (Maybe it was a previous employer’s 401(k) that you rolled over.) If you convert that IRA to a Roth IRA, you will have to pay income taxes on the amount that you convert. But all earnings you receive on that money will be tax-free when you take it out (so long as it’s a “qualified” withdrawal, which generally means you’re over 59 1/2.)

And the restrictions on making such a conversion ease up in 2010. Currently, if you make $100,000 per year or more then you are ineligible for an IRA conversion, but that rule is being suspended in 2010. If you make a conversion in 2010, you will be able to pay half of the tax you owe in 2011 and the other half in 2012.

It’s not necessarily right for everyone. But if you think you may end up with a lot of money in retirement that hasn’t been taxed yet (like your 401(k) or traditional IRA money), wouldn’t it be nice to have cash that you’ll be able to take out income-tax-free?

2010 Tax Planning Guide Provided by AskMen.

Photo: Wolfgang Staudt

Picture a country with thousands of islands settled in a beautiful blue sea that features miles of topless beaches where guys once drank wine and popped olives without a care in the world. Life was good until the global recession hit. Now they’re brawling in the streets because their government is threatening to freeze their salaries.

That country would be Greece and they’re one of the PIIGS you’ve been hearing about in the news lately. The acronym PIIGS stands for five European nations: Portugal, Italy, Ireland, Greece, and Spain. These nations followed stupid economic policies and are facing a crisis that’s having a bad effect on the global economy.

Some of us have personal experience with foolhardy economic policies and we know how the story ends. Like the guy who was once riding high, buying shots of Patron or bottles at the club and making sure you were drinking on his dime; now he’s the guy who only goes out on dollar draft night, and even then he’s drinking slowly so that you’ll buy the next round. What a tool.

So don’t be a PIIG. Let’s take a look at the mistakes these countries made so we can cull some personal finance lessons from PIIGS.

Use credit the right way

Credit is an important part of our modern economic engine. Individuals and companies need to be able to borrow money easily so they can pay for things they don’t have the cash for right now. In the hands of prudent, responsible adults, credit is a great thing. In the hands of people who don’t read the fine print (and PIIGS), it can be a nightmare. Specifically, the fine print that says: “Eventually you will have to pay this money back.”

That’s the dilemma facing the PIIGS. They borrowed too much money. The global economy headed south and now they’re having trouble servicing their debt (i.e., paying the interest on what they owe).

The key personal finance lessons from PIIGS here is to understand the three big ways that you can get into trouble with debt. They are:

* Credit card: Nobody likes carrying around cash these days. Credit cards are a convenient way to pay for stuff. However, credit cards also allow you to buy a ton of stuff you don’t need. Remember the fine print. Eventually you have to pay it back — with interest. So don’t get carried away. If it’s not something you need right now or something you’ll be able to pay off when the bill comes, don’t put it on your credit card.
* Mortgage: Home ownership is still a good thing. Real estate is still a great investment. Right now people are buying homes that they’ll enjoy for years and eventually sell at a profit. But don’t get in over your head. That’s what caused our 2008 financial meltdown. Before you buy a home, educate yourself. Build up emergency savings. Know the terms of your loan. And make sure you’re going to be in your home for five years or more.
* Student loan: We’ve always assumed that student loans are “good debt.” “Good” because education ultimately helps you get into a career that will make you more money. Remember, too much of a good thing stinks. Do an online search of Michelle Bisutti and student loans. The PIIGS were doing fine when the global economy was doing fine. They got burned when the recession hit. Similarly, a lot of student loan borrowers are getting burned because they can’t get a job in this economy, which means they can’t service their student loan debt.

Have a rainy day fund

The problem with running up huge debt is that it doesn’t bite you right away. Like the guy buying drinks at the club, you can live like a king for a while. That’s what the PIIGS did. They didn’t get into trouble until the global recession hit. This recession is battering the U.S. economy for sure, but it’s threatening to all but bankrupt these less-stable countries. So, build up a “rainy day” fund in an account that is not your main checking account. Look into online banking sites. ING Direct offers a decent rate of return and lets you transfer money back and forth to your checking account. Financial planners recommend you sock away three to six months of living expenses.

That might seem like a lot, so build it up slowly. Start with $50 each paycheck. The online bank will deduct it automatically from your checking account. Try to increase that amount a little bit each couple of months. Then in a few years, you’ll have a decent “rainy day” fund. If you lose your job or a source of income, or your car dies, you won’t be using your credit card just to survive each month.

Tighten up your monthly budget

Why did these countries borrow beyond their means? Because they were spending beyond their means. They have big centralized governments that offer generous salaries and benefits to their employees. They also provide free health care and retirement benefits to all of their citizens. Now they’re facing the prospect of drastically reducing these benefits and the people aren’t happy, which is why they’re rioting in the streets.

Don’t wait until a catastrophe forces you to make drastic cuts. Rioting in the streets won’t do you any good. Start looking at your budget now for ways to save money. Specifically, try to find savings on:

* Your phone bill: If you’re past the point where canceling your cell phone/wireless contract will incur a penalty, start shopping around. And do you really need a landline in your home? Some people use their cells so much that they can go ahead and do without their old-fashion home phone.
* Your internet/cable: You’re probably paying for 150 or so channels that you don’t use. So think about your viewing habits and consider doing away with pay TV completely. Lots of shows and movies are available online for free at sites like Hulu.com.
* Your insurance coverage: Maybe the gecko’s right. Maybe he can save you 15% or more on your auto insurance. Also, take a look at your health insurance through your employer. Many employers are offering high deductible health insurance plans with Health Savings Accounts, which is a great low-cost option for a healthy single person.

Communication is key

As bad as things are for the PIIGS, they probably won’t have to declare bankruptcy. They will be bailed out by the stronger countries in the EU; specifically France and Germany. And it will be an expensive bailout. So why did those countries let this happen? One of the criteria for being in the Eurozone (the group of 16 countries that use the Euro as their currency) was that they were all supposed to keep their debts at preordained levels. Why didn’t they enforce the rules?

The short answer is because Greece hid their debt. With the help of American banks like Goldman Sachs and complicated debt instruments called currency swaps, nobody knew Greece was racking up huge debts. So, even though their fortunes are linked, the other countries couldn’t have done anything about Greece’s debt until it was too late.

This is a good lesson for those of us in relationships. If you’re engaged, married or living with someone, then chances are your financial fortunes are linked as well — you share. You share utilities, grocery bills and entertainment expenses. If one of you is racking up debt behind the other one’s back, then you’re going to be sharing that as well. And that’s a nasty surprise that can kill a relationship. So be honest about your financial life. If you’re a spender and not a saver, there’s nothing wrong with having someone help you develop better habits. And if you’re the saver and the other person is the spender, then speak up. It’s bad enough when someone gets into trouble over debt when it could have been prevented. However, when that debt threatens to take you down as well, you’re really not going to like it.

Stay out of the piigs’ sty

We’ll continue to keep an eye on the PIIGS crisis and hope that it doesn’t pull the rest of the world into a double-dip recession. However, we really can’t do anything about it. What you can control is your own financial life. The crisis could actually be a good thing for tourists as the Euro is expected to weaken against the value of the U.S. dollar. That means you can drink more wine in French cafes if you head over there. Just don’t put the entire tab on your Amercian Express.

Personal Finance Lessons From PIIGS Provided by AskMen.

The central line is a mainstay of modern medicine: a catheter inserted directly into the jugular to administer drugs, monitor blood pressure, and facilitate a dozen other vital tasks. If a tube running into your jugular vein gets infected, you are screwed. And patients at Johns Hopkins Hospital were getting sick and dying from central line infections.

So the hospital applied a new technique to the problem. It wasn’t a new antibiotic or type of catheter. Author Atul Gawande reports that the new technique reduced the incidence of central line infections from 11 percent to zero. The title of Gawande’s new book gives it all away: The Checklist Manifesto. Did you wash your hands? Check. Clean the insertion site? Check. The whole list has five items.

A checklist is not the same as a to-do list. It’s a list of steps to be done in sequence in a particular recurring situation. A good checklist gets used over and over and is refined to the most important steps. As Gawande puts it:

Checklists seem to be able to defend anyone, even the experienced, against failure in many more tasks than we realized. They provide a kind of cognitive net. They catch mental flaws inherent in all of us—flaws of memory and attention and thoroughness.

The checklist has enjoyed equal success in other high-risk professions: flying planes (Captain Sullenberger used a checklist), building skyscrapers, and doling out venture capital. This made me wonder about personal finance—can checklists help us avoid preventable financial mistakes?

I think they can. Let’s start with a checklist you can make right now that will take the stress out of tax time. (Okay, 10 percent of the stress. But still.)

Tax time

April is just around the corner. Do you have all those annoying one-page documents you need? W-2s, 1099s, K-1s? Have you ever done your whole tax return and then received one last 1099 and had to file the dreaded 1040X to amend your return?

Yeah, I did that once. Now I use a checklist. My current one has eight items. It’s not tax time until everything is checked off. If I get a new client this year (please!), I’ll add their 1099 to the list.

Hitting the road

Here’s another dumb thing I’ve done. Twice. I’ve forgotten to pay the rent before going out of town. Dumb, dumb, dumb. Now, in the same place I keep my standard packing list, I have a list of things I might be forgetting to do before I leave on a trip: change money, pay the rent, file away credit cards (and noodle shop loyalty cards) I don’t need to carry in my wallet, check where the no-fee ATMs are at my destination, buy international data units for my phone.

Credit, debit, and direct deposit

Ever gotten the call of shame from the cable company informing you that your card was declined and (strongly implied) you are some kind of deadbeat? All you did was activate that shiny new card the bank sent you, with the new expiration date, and the new three-digit code, and, oh crap.

Guess how you solve this problem? Magic! Okay, a checklist. I keep a list of every place my credit card, debit card, and bank account information (for direct deposit) is on file. When I get a new card, I work down the list. Almost all of it can be done online.

Similarly, I have a change of address list for when we move, so they don’t send my 1099s to the wrong place.

Da bills

You would never just totally forget to pay your water bill and get slapped with a late fee, so I’m not even going to mention it.

The annual report

Every year, after we do our taxes, I like to go through a short checklist that asks questions like:
• Are we meeting our retirement savings goals?
• Do we need to make any changes to our health insurance during open enrollment?
• What vacations are we planning to take in the next year, and how much will they cost?
• Are there any major household purchases we’d like to make in the next year? (Is any furniture wearing out, for example?)

Where do you keep your checklists?

A checklist is no good if it isn’t there when you need it. I’m online most of the time, so that’s where I keep my checklists.

I use a service called Backpack. With Backpack, I can make as many lists as I want, check items off, rearrange items, email myself a list, and share lists with family and friends. It’s like Mint for everything else in my life besides bank accounts and budgeting. There’s a free version that might well have plenty of capacity for your checklists.

You are smart, but…

Throughout The Checklist Manifesto, Gawande uses the word “stupid.” Yes, it is stupid that we have to use a checklist to remember to pack socks for our trip or wash our hands before sticking a tube into a patient’s neck. A checklist reminds us to do simple things we probably wouldn’t have forgotten anyway. It requires us to admit that there’s a bit of the absent-minded professor in each of us.

But checklists work. They help us do the important but boring stuff so our brain can concentrate on more interesting things, like inventing flubber.

I can live with being Fred MacMurray. Can you? I’d like to hear your financial checklist ideas in the comments.

Photo: Steve Rhodes

If your New Year’s resolution included some sort of financial goal, odds are you’ve struggled to keep up with it already. While most people know they should keep some sort of budget, and many genuinely try to, most run into the reality of it all: tracking all those receipts and logging each purchase takes a huge amount of time. Even for those who started with the best intentions, most soon fall behind. That’s why a growing number of people are turning to web- and mobile-based personal finance solutions. Plus, you can access your data from anywhere and it’s easy to keep up with your expenses.

If your main struggle with finances has been forcing yourself to sit down after a long day at work to balance your checkbook, read on for our roundup of a few tools that can turn the tide with the best personal finance apps out there.
you want to:

Manage your accounts with the least work possible

Mint.com: Web, iPhone (free)

Download

Mint is a free web-based application that tracks your spending and your account balances. Mint’s claim to fame is that the site automatically retrieves your financial data from your banks, credit card companies and the like, and tracks your net worth, spending and even divides your purchases into categories for you — so that Amex charge from Taco Bell at 1:43 a.m. on Saturday will automatically get classified as “food.” From here, it’s easy to set budgets for each category and even receive texts or e-mails when you’re low on funds or about to go over your budget in a category.

The downside to all this is that, yes, you’re giving Mint.com all your financial information so they can review your complete financial picture. The information is held on their servers, and they claim to use the same level of security as bank websites do, but you’ll need to head over to Mint.com to see if the security policy is something you’re comfortable with. If you are, mint is a free, powerful and nearly totally automated service to track your finances.

Pros: Free, versatile, automatic, good companion website
Cons: Requires you to share your financial data, not as powerful as more complex tools
you want to:Control what gets tracked and how by hand

Pocket Money: iPhone ($4.99)

Download

If you’re hesitant to hand your finances over to a company like Mint.com to be automated, no need to worry: There are lots of options that allow you to track your spending by hand. And if you own an iPhone, then Pocket Money is worth checking out. Features on Pocket Money include support for multiple accounts — checking, savings and credit cards — and a deep set of options to configure repeating transactions. So you can put in your car payment to apply monthly rather than having to do it by hand each month. The budgeting section allows you to set up the required monthly budgets, but also supports other budget lengths from daily all the way up to annually. Once everything is in, the reporting feature will give you access to graphs and charts to help you analyze your finances. Finally, your information can be exported to both Quicken and MS Money, so you log spending on the road and then work with the data when you’re back home.

Of all the apps we reviewed, this one has the most competition in its category. There are many alternatives to Pocket Money, so look at a few before deciding — many apps have a free demo version available, so there’s no reason not to take a few for a spin. Still, Pocket Money gets our vote for having a large feature set, the ability to export data to other programs, and it even allows in-app purchase of additional reports, graphs and so on for people who want even more features.

Pros: Flexible account setup, repeating transaction and auto-repeat speed up entry, powerful budget features
Cons: iPhone only, $4.99 while some other apps are free, advanced features require additional in-app purchases

Send and receive payments from anywhere with PayPal (free)

Download

While not a budgeting software, PayPal has a number of robust features that deserve a mention. If you bill clients directly or work freelance, PayPal payments are a quick and easy way to move money around. With access to the web or your phone, you can send payment requests or even pay others. Whether you’re trying your hand at using eBay as a side income or tracking billing and payments for your personal business, PayPal can be an indispensable part of the process. And if you’re trying to curb your spending, try this trick: PayPal offers free debit card accounts that can be “charged” instantly with funds from your PayPal account. So, move some money to the PayPal card as your “fun money,” and when the card’s out of funds, you’ve exhausted your entertainment budget for the week. This kind of self discipline can help you stick to a budget.

Pros: Free, easily pay and send bills to vendors/clients, debit card lets you keep funds earned via PayPal separate from your other finances
Cons: Only moves money, so you need a second app to track spending and budgets
you want to:

Cut back on impulse spending on credit: Debt Dog ($0.99)

Download

We all know that buying on credit can add a lot to the “true cost” of our purchases, and we’ve been told that paying more than the minimum can dramatically cut the time to pay off debts. But do you know just how to calculate these changes? Debt Dog makes it easy; you just select the interest rate for a purchase, and the amount to be borrowed. Debt Dog then calculates the true cost of the loan (all accompanied by the oh-so-helpful sound effect of money being flushed down a toilet). You get the amount it will cost after finance charges, and how many months it will take you to pay off the debt. You can also add additional payments on top of the minimum and Debt Dog will show the savings in interest and the faster payoff. If you’ve struggled with putting things on your credit card, or you’re thinking of making a major purchase like a car, the eye-opening calculations from Debt Dog are a bargain at 99 cents.

Pros: Simple interface, easy to understand
Cons: Limited application, no down payment option for larger purchases
you want to:

Track mileage to expense for work or deduct from your taxes: MileBug ($1.99)

Download

If you haven’t been tracking your mileage, you’ve been throwing money away. You can, of course, expense qualified travel expenses for your job, but you can also be deducting travel from your taxes. It’s beyond the scope of this article to explain what mileage you can deduct, but study up — at $0.55 cents a mile the deductions can add up to huge savings at tax time. If you’re ready to start tracking mileage, check out one of the many mileage apps in the app store.

We like MileBug; it has a simple user interface and powerful functionality for people who need to track mileage for multiple vehicles or multiple businesses. You simply set the starting odometer before you start your drive, then ending odometer value when you reach your destination. The app calculates mileage then logs the trip. The logged trips can be e-mailed at any point as an Excel-friendly report for you to hold onto till tax time. Best of all, these reports can be filtered to export only work-related trips, trips in a certain vehicle and so on, making it a snap to prepare your company expense report or any other information you need.

Pros: Stable, versatile and affordable
Cons: Doesn’t use GPS to track mileage
app-ly yourself to save cash

While this certainly isn’t a comprehensive list, it should be more than enough to get you started. The app world is exploding in popularity, and there’s sure to be an app that meets your needs for a financial program. Research a few, take some for a spin and decide what works best. The secret to successful budgeting is to stay on top of inputting your financial activity, and the best way to stay current is to have mobile access so you’re always up-to-date.

Laid off? Time for Grad School?

So you had a job that you liked (and hopefully not loved) but you, like 9.3 million other Americans, are now jobless. Sitting around in gym shorts sending desperate resumes and cover letters is getting tiring (how many times can you hear the words “hiring” and “freeze” next to each other?), and you’ve always dreamed of being a therapist or photographer or just getting an MBA so you can tell your former Ivy League colleagues to shove it. Should the crappy economy drive you to get a Master’s Degree?

First consider my story: I got a fine degree in the liberal arts. You know the kind, practical, career-oriented and… other buzz words that I am not finding in Nietzsche’s Collected Works. Despite how well prepared I was for the real world (snark!), I decided to go back to school for journalism. After some time in the Illinois corn fields, I had a snazzy master’s degree. But, wait, no one cared about a degree in journalism. And because the “advanced professional” degree basically crammed a four-year program into one, I had the same classes and teachers as students four or five years younger than me, but no internships—those things that get your foot in the door. In fact, on more than a few interviews, I was told that the degree kept me from getting potential jobs because employers were afraid that I’d ask for more money. (And trust me, I’d be doing the same grunt work as a not-yet-jaded 21-year-old.) Ouch.

Some degrees are just a very expensive way of boosting your personal morale when there’s a scary gray area in life—and convenient patch in a university’s bleeding budget–and some are actually empowering career moves. Before you move to the cornfields, please, please do these three things:

Do a cost/benefit analysis

The Council of Graduate Schools sings a pretty convincing tune in its publication Why Should I Get a Masters Degree. The number of degrees awarded in 2007 was up 43 percent over a decade earlier. (Please note that the latest data available is generally for 2007 and 2008, the 2009 school year doesn’t have much released data yet.) According to the publication, a person with a grad degree earns on average $10,000 more per year. He also moves up faster in his career and is more likely to be employed. (The Council also argues, nonsensically, that getting a graduate degree can actually improve your health—in fact, there is a correlation between education and health, but correlation is not causality. Thank you, liberal arts degree, for something useful!) And, yes, the Bureau of Labor Stats agrees, education pays.

The average yearly cost for postgraduate study towards a master’s is $21,900 for a public school and $34,100 for a private one, according to the Department of Education. That is up 60 percent in just one decade. And those numbers are ballooning even more now. A graduate degree at the University of California, Berkeley: $26,000 per year in fees in tuition, plus $1,170 added on after the recent budget catastrophe, bringing just tuition to $27,170 per year of study. Multiply by two, and add about $8,000 to $10,000 per year for living costs. Your loan = $74,340.

That sounds well and good, but there are some degrees that just don’t pay off in the workplace, and some that do. Andrea J. Koncz, Employment Information Manager at National Association of Colleges and Employers, brings up a few professions that do show major pay increases:

Bachelor’s Degree Computer Science – $61,467
Master’s Degree Computer Science – $68,627
 
Bachelor’s Degree Electrical Engineering – $60,509 
Master’s Degree Electrical Engineering – $70,921
 
Bachelor’s Degree Mechanical Engineering – $59,222
Master’s Degree Mechanical Engineering – $66,961

Cartooning? Editing? Sports announcing? Check salary.com, and be prepared for the worst.

Understand that it’s now more competitive, especially at the cheaper schools

Grad school applicants always rise in a poor economy; The Council of Graduate Schools reports that applicants were up 4.8 percent in 2008, after being up 8 percent in 2007. This trend is making it harder to get into school because of the increased competition.

Because of the economy, people are also going after the perceived value of public schools. Public schools were almost twice as likely as private schools to report increases in enrollment for 2009-10 (47 percent vs. 26 percent).
So, basically, you might be looking at as tough of a market for school as for jobs. Even if you are willing to invest despite skyrocketing costs, you may not even you your foot in the door, so best to apply to many schools.

Know the difference between wishful thinking and inspired thinking

If you always had a dream to do something, and you’ve got the excuse and time to finally do it, wonderful. The blog Unemploymentality brings up a good point if you are feeling blindly for that inspiration, though. They says that if you claim the maximum amount of unemployment, you’ll clock in around $21,060 per year, while the average grad student stipend is $18,779. You’ll be counting less change as a couch surfer. Another ouch.

And more to the point, buying into yet another dream that graduate school is selling you could just be deferring the problem of unemployment another year or six, all the while acquiring more and more debt. A great article from the Chronicle of Higher Education suggests that you bite the bullet and get some kind of experience, even if it is in a field that you think is “above” your education. All experience leads somewhere and teaches important skills, even if they aren’t the ones you think you need.

At least one self-made woman and career advisor, Penelope Trunk, advises to stay away from graduate school. She says it forces you to overinvest in something while the reward is just too risky. Trunk says, you’re better off working on a chicken farm. Literally.

They argue with their husbands, care for their kids, and pamper their pets. They get makeovers and remodel already-extravagant homes. And they spend, spend, spend. They’re the Real Housewives of Bravo TV’s successful reality series, and watching them offers an entertaining glimpse of living large. If you look beyond the glam though, the “Real Housewives” are just real women – with lots of credit lessons to learn. We spoke to some “real” housewives who found out the hard way just how important it is to keep an eye on their finances.

Clueless about Credit?

Gretchen Rossi, the youngest “housewife” at 32, is a member of the cast of “The Real Housewives of Orange County.” Rossi was a realtor when she quit to care for her fiancé until he succumbed to leukemia. Though he left Rossi a sizeable gift in his will, she contends that as an independent businesswoman who purchased her own home, car, and other possessions, she doesn’t need a man to take care of her – or her finances.

Cassandra Ladd found herself taking the financial reins from her husband early in their 18-month marriage. The 24-year-old public relations agent from Austin, TX, admits she had limited experience paying bills but quickly discovered her groom was in much worse shape. “He went six months without paying his cell phone bill in college. Luckily for us, it was in his mother’s name.”

Ladd switched all bills to her name but has noticed finance charges increase when she made a late payment. “That’s a mistake I only made once,” says Ladd, although she’s unsure how it has affected her credit score because she’d never obtained a credit report. She speculates, “My credit score can’t be good as I’ve got lots of college debt, even though I pay everything on time… now.”

Credit Lesson Learned: Know the Score

Your credit score is a three-digit number that speaks volumes to lenders about your ability to repay a car loan, mortgage, or credit card debt. All scores are calculated on payment history, amount owed, length of credit history, and types of credit used.

The best way to know your own score is to request one personal credit review a year from any of the three main credit scoring bureaus. It won’t hurt your credit, and the results may surprise you. While Gretchen Rossi’s ability to purchase a home and a car indicate that she has a reasonable score, Cassandra Ladd’s youth and the amount she owes are all factors in how she’ll rate.

Budget, What’s a Budget?

Sheree Whitfield of the “The Real Housewives of Atlanta” is a divorced mother of three who appears to juggle her business and social lives with aplomb. But Whitfield’s confession that she doesn’t budget her money did come back to haunt her. When the hefty settlement from her former husband failed to materialize, Whitfield’s mansion fell to foreclosure. Though she managed to send her debut fashion collection down the runway, Whitfield’s financial future may be at risk.

Clarky Davis wasn’t big on budgeting, either. The self-professed “Debt Diva” with a money management blog to match, says, “I was the poster child for poor financial decisions,” buying clothes, shoes, and nights out on credit. It wasn’t long before the North Carolina native had closets full of clothes and $10,000 in debt. But careful budgeting and a strict payment schedule pulled Davis out in three years.

Credit Lesson Learned: Play Your Cards Right

You have to be in it to score. Lenders want to see that you’ve established a good payment history and having one or two credit cards are essential for building a financial profile. Just don’t bite off more than you can chew.

Paying your credit card bills on time each month is a must to keep your credit score strong, advises Davis, noting the goal should be to reduce your debt to available credit ratio. Those payments must fit your budget while allowing you to maintain living expenses without relying on more credit. Davis says, “Payments should be significant enough that you’re whittling down your principal, not just covering interest. Try to always pay more than the required minimum monthly payment and if possible double that payment.”

I Don’t Want to Talk About It

Though Tamra Barney, the 42-year-old stay-at-home mom of four on “The Real Housewives of Orange County” is often outspoken, she and her husband don’t know how to talk constructively about money. The result? Their finances have taken a hit and their decade-long marriage may be on the rocks.

This doesn’t surprise Darshanna Hawks, who knows first-hand how difficult it is for couples to talk about money. Hawks, a relationship coach in Charlotte, NC, says she and her husband did not discuss their finances the first few years. “We lost money due to mismanagement and not tracking anything in the past,” admits Hawks. The couple implemented a “prosperity plan” that Hawks says is a positive spin on a budget. Now she helps other couples navigate their way through these highly charged conversations, and recommends finding a financial advisor or credit counselor. “[Find] someone who has no bias to help facilitate a conversation, go over the what-ifs, and make a plan.”

Credit Lesson Learned: Seek Professional Help

Though the credit problems that land you in the office of a credit professional will be reflected in your credit report, don’t worry about credit counseling affecting your score… it won’t. Even with assistance, it is important to scour your report for errors, keep an eye out for identity theft on dormant accounts, confirm your credit line(s) with creditors, and review your spending habits.

Whether you are affluent or just getting by, draw up a sensible budget, pay your bills on time, and set reasonable financial goals. If you establish good financial habits you’ll be well on your way to maintaining a good credit score.

Credit Lessons from Real Housewives is provided by Experian.com

Photo: Mike Fillion

With only two weeks left in 2009, you might think that it’s time to throw
in the towel on your 2009 taxes. Not so fast! This is the prime time of year
to implement some smart tax deduction strategies. With minimal effort, you
can still have a huge impact on your 2009 tax return by decreasing your
realized income. If any of these strategies appeal to you, speak with a tax
adviser, pronto.

Strategy #1: Fund your Retirement:

You may still be able to add more contributions for your 401k in 2009.

Additionally, you will be able to make tax deductible contributions to a traditional IRA up until the 2009 tax filing deadline (April 15, 2010) for the 2009 tax year. The IRS maximum allowed 401k limit is $16,500 in both 2009 and 2010. For those 50 and over, the catch-up contribution brings you up to $22,000 both years. For IRA’s, the limit is set at $5,000, while the catch-up is $1,000 for both years. Check with your employer ASAP to see if it’s not too late to kick up your contributions.

Strategy #2: Hold Off on the Roth IRA Conversion:

Owners of traditional IRAs can convert all or a part of their accounts to a Roth IRA if their 2009 modified adjusted gross income is under $100,000.

Any amount converted is taxable income, but is thereafter eligible for the
potential tax-free distribution rules of Roth IRA’s. The big news is that
starting in 2010, the $100,000 income threshold is removed – anyone can do a conversion. For 2010 only, you also have the option to spread the income from conversion over the following two years (2011 and 2012). Many have been waiting for this opportunity.

Strategy #3: Sell Losing Investments (and Big Winners):

The S&P 500 index went from the low 900’s to a low of 666 (funny number,
right?) in March, back up to a 2009 high of 1,119. That’s one heck of a
volatile year. All in all, the market is up over 22% for the year. Depending
on when you’ve bought and sold, you might want to consider unloading big
winners to offset your losers, or big losers to offset your winners. First,
you must subtract your losses from any capital gains you’ve made. Next,
additional losses can offset up to $3,000 of your 2009 ordinary income.

Have larger net losses than $3,000? Losses above and beyond what you used to
offset your capital gains and ordinary income can be carried over into
future tax years. Before implementing investment loss strategy by selling
mutual funds, make sure that you won’t incur any penalty for holding shares
for too short of a period of time.

Strategy #4: Capital Gains Tax Cuts:

Under the Tax Increase Prevention and Reconciliation Act (TIPRA) of 2005,
US taxpayers in the two lowest tax brackets (10% and 15%) will pay no
capital gains taxes on long-term investments sold in 2009 and 2010.
Long-term capital gains result from profit made via appreciation of a
security (stock, fund, etc.) held for more than one year.

Strategy #5: When you Donate to a 501(c)(3), Everyone Wins:

Tax deductions for charitable donations can be claimed for the year in which
the donation is made. Perhaps it’s time to rummage through your house to
find valuables you no longer need or want that others can gain value from.
You may obtain fair market value on these items. Or, simply open your
checkbook or donate cash.

Donations of $250 or more must come with a written receipt or letter from
the 501(c)(3). When submitting your donation, ask for and keep all of the
appropriate documentation and receipts associated with all donations so that
you are safe in the event of a possible future tax audit. If you are
donating goods, document a description of everything given.

Strategy #6: Prepay your January, 2010 Mortgage:

If you’re a homeowner, you may want to consider making your January mortgage
payment in December, which will give you one more month of interest to
deduct from your 2009 taxes. Check with your mortgage provider to see if an
early payment is possible. It may be a great way to offset extra income
windfalls in 2009.

Strategy #7: Get Healthy on your Medical Bills:

If you have have large and predictable medical and/or dental bills that need
to be paid, consider making all the payments before the year is over. The
IRS allows families to itemize and deduct medical and dental expenses that
exceed 7.5% of their adjusted gross income, so if you’re close to going over
that percentage it may be wise to pay the bills to be able to make the
tax deduction.

It won’t affect your 2009 taxes (since it was already deducted), but don’t
forget to use up the rest of your 2009 FSA funds if you are in danger of
losing them in the new year.

Strategy #8: Prepare for 2010:

Using Mint.com to classify all of your deductible expenses in 2010, can allow
you to tag anything as tax related. Download your transactions to a
spreadsheet and send it to your accountant. If you’re doing your own taxes,
this info will give you a big head start in using online tax software, such
as TurboTax, which offers federal
filing free. If you expect that you’re due a hefty refund, file asap, so
that you can get back your return and re-invest it. Also, speak with your
employer about your withholding taxes if you have found that you owe too
much taxes or are getting a large refund.

Using TurboTax’s TaxCaster can help you estimate your tax burden and see the impact of any last-minute deductions.

For more of GE Miller’s writing, visit personal finance blog
20somethingfinance.com.

Photo: Simon Blackley

A guy walks into a mechanic and asks for a tune-up.

“Looks like your car needs a lot of work,” says the mechanic. “After a quick inspection, I estimate about $1000 worth of services.”

It may sound like a joke, but car owners are often hit with an unhappy diagnosis like this. Many of us have little-to-no car expertise. We feel helpless at the sometimes-merciless hand of our mechanic. After all, who are we to say when a spark plug needs changing or steering should be flushed?

Jon Bartunek, owner of his family’s Union Street Garage in San Francisco who has worked in the car repair business since he was ten years old, has some empowering tips and guidelines to offer.

“Many car repair shops are in the business of selling auto repair, not the business of repairing autos,” says Bartunek. “Keep in mind that any good shop is a combination of both, but you want the mechanic you work with to have your best interest in mind.”

Read on to find Bartunek’s words of wisdom to help you through the car maintenance and repair process without spending an unnecessary, exorbitant amount of money. Bartunek shares his knowledge on how to be informed before and after service, the common traps car repair shops will use to get more money from you, and what you absolutely must require of any mechanic who performs work on your car.

A reputable mechanic should provide:

ASE [National Institute for Automotive Service Excellence] or AAA [American Automobile Association] certification, and/or a state license, which is required in many states

• A clean garage, free of empty cans, dirty rags, and old tires
• A friendly, polite staff that communicates well
• Before service: an itemized bill with a written estimate for repair work
• After service: a detailed invoice of work done and parts supplied

How to approach a new mechanic

Get a recommendation. Ask someone with a similar income level and car type if they have a good relationship with their mechanic. Don’t ask a friend who has a car or lifestyle that’s very different from yours because they may work with someone who’s not suitable for you.

Use the owner’s manual. This manual is your most valuable defense tool when visiting the mechanic. You should never, ever walk into a mechanic like the guy in our opening example and say, “I need a tune up.” This is way too vague and your professional may see this as an open invitation to charge you up to $1000 for miscellaneous unnecessary services such as spark plug replacements when you don’t need them. Bartunek advises, “Cars don’t need tune ups like they did years ago. Go by the services in your owner’s manual. Most list the necessary services according to the mileage you have on your car. Just saying something as simple as ‘I need my 30,000 mile service,’ shows your mechanic you are informed and not someone he can easily take advantage of if he is so inclined.”

Get an estimate. Before service, make sure your prospective mechanic gives you a detailed parts-and-labor estimate so you’ll know exactly what he plans to do and what went wrong if you have a post-service failure. Never accept a verbal estimate or a sheet of paper that says something unspecific like, “Fix Car – $800.” Make sure you sign the itemized estimate and walk away with a signed copy.

Ask questions. Never be afraid of asking questions such as “Do I really need that?” or “I don’t see any symptoms of failure. Is work on that part absolutely necessary right now?” If your mechanic makes a generalization like, “The part is old,” ask for details. Find out if it’s leaking, losing pressure or what the specific problem is. Then ask to see the part. A good mechanic should be able to physically show you the problem with the part on your car or explain it to you by using a removed car part. Similarly, if the price quote sounds expensive, tell the mechanic what you were hoping to spend and ask him if you can get by safely with a less expensive job.

Finally, if you think the job sounds expensive and your car seems to be working fine, get a second opinion.

Common traps

Drastic statements like, “We need to tow your car out of here because we don’t want to be responsible for you driving it,” are almost always a scam. Bartunek has seen many car owners succumb to these warnings and end up paying an arm and a leg to get their car back from the mechanic in “driveable” condition. He advises, “If you drove your car into the mechanic with no issues, most likely you can drive it away from any threatening advice without any problems.”

Coolant and power steering flushes are common services some of the larger mechanic chains will propose in order to make money. Check your owner’s manual to see how long your fluid is supposed to last so you know if your mechanic’s suggestion is warranted.

Do your research before having a catalytic converter or other emissions part repaired. Some of these pieces have a very long factory warranty including free replacement of covered parts.

A muffler that lasts a lifetime does not exist. Many of the larger companies give you free replacements and make their money on expensive exhaust system repairs.

The $55 brake pad job is also a scam nine times out of ten. No shop can make money on a $55 dollar brake pad replacement job. It’s an excuse to suggest the replacement of other parts such as brake rotors when you don’t need them.

Keep up on car maintenance

In addition to being a savvy buyer of proposed services, it’s important to keep up on regular car maintenance to avoid unnecessary breakdowns or repair costs. Here are Bartunek’s suggestions:

Get regular fluid changes as per your owner’s manual. This includes oil as well as brake, windshield and coolant fluids.

Replace the air filter when needed or suggested in the owner’s manual.

Keep tires inflated properly for your safety. Check once a month and before long car trips to make sure your tires have a little bit less than maximum pressure.

While all these warnings and rules may be overwhelming at first, there are some great mechanics out there. If you remember these tips, you’re much more likely to find a helpful professional than a wallet-draining scam.

New! Compare Auto Insurance with Mint.com.

Photo: iChris

By last summer, our tiny house was bursting at the seams from a decade of bargain shopping, vacation souvenirs, outgrown clothes and upgraded gadgets and appliances. We had already suffered the separation anxiety of several runs to Goodwill when our neighbors invited us to join other families in a communal yard sale.

Based on past experience, I was loathe to the idea. I didn’t think the earnings would be worth the hassle, but we had too many valuable items to simple give them away to charity and too many items for the hassle of auctioning them off one at a time on eBay.

By the time it was over, we had a fanny pack full of cash, really nice suntans, a lot more room in the house, and a list of tips for what to do and what not to do. And clearly, we’re not the only ones: Craigslist ads are up by more than half and garage sale permits have more than doubled according to some sources.

There’s a lot of conflicting advice out there from professionals, so we’ll tell you what they say, but also what worked for us.

Cathy Pedigo, author of the book, “How to Have Big Money Garage Sales!” claims you can more than triple your profits if you follow her advice, which she tests personally. One weekend she’ll host a garage sale using other people’s tips and tricks; the next weekend, she sets it up her way, based on 25 years of personal experience. The results:

Their way: less than $200

Her way: more than $1,000

Maybe you’ve never worked at the mall, but you’ve been there, no? The main thing to remember for a successful yard or garage sale is to use your shopper’s instincts, Pedigo says.

Whether your intention is to make money (why not?) or just to get rid of stuff, experts, confirmed by personal experience, will tell you to treat your sale like a business in terms of merchandising, marketing and pricing. In our case, even though our primary motivation was a massive reduction in clutter, we still earned more than enough to compensate for the hours we put in.

Merchandising

Allow plenty of time for preparation. We started weeks ahead of our sale, cleaning out cupboards, dressers and storage spaces to identify everything we wanted to sell before cleaning and sorting it. But come our first Saturday, there were still cartons’ worth of stuff we forgot to put out. As a result, we repeated our sale the following weekend based on lessons learned.

Next, we underestimated the amount of time it would take to carry everything out to the driveway and arrange it before the horde of early shoppers (often professional) who inevitably ignore your start time. Swap meet dealers will paw through boxes before you’ve even put them down and offer insultingly low prices. But they don’t care if things work, buy books by the box and snap up antiques without scrutiny. They will drop cash and be gone before you know it.

So we improved our system by loading everything into tables inside the garage so they could be hauled out in place first thing in the morning—and starting work before dawn.

All the experts agree that organization is important. Sort by “department” too because each shopper has things they are looking for. Place items back into their original boxes or keep original tags for that “like new” look. An extension cord lets people test appliances and electronics. Hoard plastic shopping bags.

Tables are important because shoppers shouldn’t have to do too much bending and squinting. We placed lower quality or lower price items beneath tables in boxes. All clothes were hung on hangers across the bottom rail of the raised garage door (with tarps hung to block access to the rest of the garage). Flashier items went out by the street to catch the eyes of passing motorists.

Use a front-facing fanny pack as a cash register and make sure you have enough singles and change before you start.

Finally, like a store, manage your risk. Check local laws to see if you need a permit. Have liability coverage in your insurance and check for sprinkler holes and other hazards in your sale area. Don’t sell anything that has been officially recalled—such as kid’s toys. Never put something truly valuable out on a table if it could be easily shoplifted. Jewelry or watches don’t take up a lot of room, so they can be grouped on the table in front of your “cashier.” Keep valuable items in front of you, or put out their empty boxes until someone asks to see them. Keep your house doors and gates locked. Next Page.

photo: fristle

This is part 2 in a 2 part series on how to lower your auto insurance premiums. The first part covered 10 variables that you can control when it comes to lowering your premiums, while this post will talk about 10 factors that are out of your control – and what to do about them.

Same Message, Different Company. Different Message, Same Company?

We’ve all seen the ads about how switching your auto insurance from ‘the other’ company to ‘our company’ has saved the customer an average of $XYZ. It’s most likely left you wondering how every single insurance company can save you more than every other one. What that same advertisement doesn’t tell you, of course, is how much the guy/gal who didn’t switch saved by staying with their current auto insurance provider or going to a different one.

And while we’re on the topic of auto insurance commercials, I’d like to take this opportunity to call out the marketing department of Geico. Seriously, guys? The gecko was a pretty cool guy and the caveman thing was slightly funny at first, but it’s simply gone too far. And now the googly eyes on a pile of dollar bills that somehow plays that 80’s song by that guy who is trying to sound like Michael Jackson. And running all three ad campaigns on the same medium at the same time? Collect yourselves, people!

Let’s continue with the ads. Wouldn’t you love to hear “Customers who switched to us saved $215 (while those who didn’t switched saved $357)”? When shopping for auto insurance, unfortunately, there really is no easy answer to the question of which company offers the lowest rates. The reason being is that most insurance companies, by design, use a different proprietary formula to determine what price they can specifically offer you. Some of the variables that go into this formula can be controlled by you, but most cannot.

So what should you do? How do you find the lowest rate? Before we go into premium savings strategy, it definitely pays to know what variables insurance companies are looking at when calculating your risk. Let’s take a look.

The Auto Insurance Premium Factors that are Out of your Control

Fair or not, auto insurance companies (and insurance companies in general) are master statisticians and they have determined the risk to have you as a customer for just about everything down to what color shoes you wear. These are traits or characteristics that you mostly don’t have control over, but are often used to calculate your auto insurance premium. Sure, you can change some of these things, but you would rarely change them just to get a break on your auto insurance.

1. Your age: Most policies give a reduction at 21 years of age, or with 5 years experience. A further reduction can be expected at around 24 or 25. Once you hit the ripe age of 70, you can expect the opposite to occur.

2. Your gender: Women are statistically safer drivers. This one surprises me as I’ve been a passenger while my wife is driving. She was in three accidents prior to meeting me and with my set of eyes to prevent her from driving through red lights when her attention wanders, she hasn’t been in any after meeting me. Sorry, honey, it’s true.

3. Where you live: Locales with high rates of accidents or theft can result in a higher premium.

4. Your past driving record: Some insurers look back three years, others look back five years or longer. Depending on the company that is quoting you and how recently you had a major traffic violation or accident, this can have a huge impact on your premium. Don’t worry about that pile of parking tickets in your glove box as they do not impact your driving record and premiums.

5. Your marital status: Married drivers can pay less than single drivers.

6. Occupation: Doctors tend to get in less accidents on average than ice cream truck drivers. Go figure.

7. College degrees: Most insurers give discounts to alums of certain universities.

8. Years of driving experience: similar impact as age.

9. Business use of vehicle: If using your vehicle as part of your job, you are at risk of a higher premium (and probably rightly so).

10. Multiple Vehicles: Are you insuring multiple cars on the same plan? If so, it could result in lower premiums for each vehicle.

Now that you know what you can and cannot control, what can you do about it?

The answer is simple. Shop around. Frequently.

It’s true that you may not have control over a lot of what your premium is based on, but your saving grace is that the auto insurance companies don’t all agree on how to precisely calculate your risk. Until they do, it pays to shop around.

When Should you Shop Around for Auto Insurance?

For starters, it might make sense to shop around after the following events take place:

• When you turn 21.
• When you turn 25.
• 3 years after you have a traffic violation or accident.
• 5 years after you have a traffic violation or accident.
• When you move.
• When your miles driven decreases significantly.
• When you graduate.
• When you get a new job.
• When you get married.
• When you get a life insurance policy.
• When you get a home insurance policy.
• When you add another car to you plan.
• When you install a theft deterrent device.
• When you get a new car.
• When your credit score has improved.
• Whenever you feel like it!

Final Thoughts:

There is no auto insurer who offers the lowest rates to everyone. But there is an auto insurer who offers the lowest rate to you specifically. You just need to find them. And it might be a different insurer six months or a year from now than it is today. That’s why it pays to know what the insurance companies look at, what discounts you might be able to swing, and to shop around frequently.

For more of G.E. Miller’s writings, visit personal finance blog MicroFrugality.com.

New! Compare Auto Insurance with Mint.com.