Personal Finance 
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American Cancer Society Charity Drive

When I grew up, I never really thought about donating my hard earned money towards any sort of charity or cause outside of buying some raffle tickets or dropping a dollar or two into the Salvation Army bucket. Now that I’m a little bit older and with a little more discretionary income, I’ve come to appreciate the importance of “large donations” (anytime you pull out a check or a credit card, I consider that large) because a lot of organizations rely on that income in order to continue to do their good works.

So, as I’ve done in the past, I’ll be donating money to the American Cancer Society and I ask that you find it in yourself to put a little bit extra in their stocking as well. Why the ACS and not some other organization? My grandmother suffered from and ultimately succumbed to cancer several years ago when I was in college and so it’s a cause I find myself easily supporting.

Originally, I was trying to get other personal finance bloggers to chip in $100 to the ACS and I was going to do a series of posts highlighting those bloggers but perhaps due to the Thanksgiving holiday or bad timing, only four bloggers took me up on the offer. So, I wanted to especially thank Ricemutt of Experiglot, Tricia at Blogging Away Debt and Nickel at Five Cent Nickel, all of whom sent generous donations to the ACS without even asking what was up my sleeve. I also wanted to thank Blunt Money for telling me that she would chip in some once I solidified what I was going to do.

So instead of a “twelve days of giving” as I originally planned, I’m just going to ask you all to find it in your hearts send a little money towards the ACS this holiday season. I’ll also be compiling a list of donors after the jump. (there are also the rules for appearing after the jump)

Donate To The American Cancer Society

Rules For Donor List:

Readers: If you’re just a reader, just send me an email of how much you’ve donated to the ACS and whether this post led you to donate and I’ll put you on the list (You can say you’re Mike from Baltimore if you’d like).

Bloggers: If you are a blogger and want to appear on the list, plus a link, simply send me a screenshot (you can blank out everything except your name, the date and the amount) of your donation over $20 to the ACS and you will be listed. I also ask that you link to this charity drive post as well. (If you don’t care about the link, just send in your info like a reader) Thanks!

Donate To The American Cancer Society

Total Contributions: $1170

Generous Donors:

  1. Ricemutt of Experiglot – $100
  2. Tricia at Blogging Away Debt – $100
  3. Nickel at Five Cent Nickel – $100
  4. Jim at Blueprint for Financial Prosperity – $500
  5. Blunt Money at Blunt Money – $100
  6. Frugal Frugalson at Picking Up Nickels – $250
  7. Hydroponics & Grow Lights – $20

Thank you!


 Debt, Personal Finance, The Home 
23
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Paying Your Mortgage Biweekly

One of my friends recently purchased a home and she was sent a letter (if you recently purchased a home, you’ll probably be familiar with how many letters you will get informing you of great refinancing rates) about a program that would speed up her mortgage payments by sending them in every two weeks instead of just at the end of the month. She was primarily wondering whether it was a scam and whether it “worked” because I suppose the letter, which always looks shady, probably did a poor job of explaining why it would pay off her mortgage faster.

The biweekly mortgage payment strategy is one that’s been in existence for quite some time. It is legitimate and there are two reasons why it’s legitimate:

  • More Payments – Let’s say your mortgage is $1000 a month. When you make one payment a month, you pay a total of $12,000 each year towards your mortgage. When you make two payments a month, you’re now talking about twenty six (26) payments (fifty two weeks divided by two) of $500 which is equal to $13,000 a year – or $1,000 extra. Clearly, if your budget can handle it, this will pay your mortgage off faster simply because you’re paying more.
  • Less Interest – When you pay the standard once a month, interest accrues on your balance for that entire month. When you pay twice a week, a greater percentage of your payment is applied towards the balance and you speed up where you are on your amortization schedule. The principal, in theory, has less time to accrue interest.

So, now that you’re convinced this is a legitimate way to speed up the rate at which you’re paying down your mortgage, let me give you the advice I gave my friend if you’re thinking about getting one of these “services.” Don’t. You don’t need to pay some fancy expensive company for this service, you can usually talk to your lender and they can set something up for you. If they are unwilling and you have no prepayment penalties, just send in the payments yourself. With online banking, it’s easy to schedule regular payments automatically so you won’t even have to buy any more stamps.

So… does anyone know why companies were sending me letters asking me to refinance a month after I just got a mortgage? And why would they ever think I’d accept their offer?


 Personal Finance 
4
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Tax Relief 101: Postpone Extra Income If You Can

This is an old tax tip I was surprised I hadn’t mentioned before but it involves postponing any extra income that you anticipate you’ll get, if you can, until January 1st of next year. By pushing it off until then, you can wait until you file for taxes the following year (April 15th, 2008) before you’ll have to pay taxes on that income.

This works the best if you have some self-employment income, as little as it may be. Try to push off receipt of that income until January and you won’t have to pay taxes on them until next year. If you don’t have any self-employment income but you do anticipate a Holiday bonus of some kind, ask if you can take that in January.

If you can push off $1,000 in income (and assuming you’re in the 25% tax bracket), you’ll have an extra $250 to play with next year. Enjoy!


 Debt, Education, Personal Finance 
38
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Student Loan Deferment vs. Forbearance

If you have a student loan and recently starting taking advantage of your employer’s education reimbursement program, you’ve probably heard the words deferment and forbearance thrown around quite frequently and you probably aren’t 100% sure what the difference is (unless you were a wordsmith/geek and knew what forbearance meant). Due to a mix up with Johns Hopkins, they reported me as less than part time and my deferment became a forbearance, which resulted in about $340 of interest that accrued during that period of forbearance (which led me to research the difference). While it’s not a thousands of dollars, I’m not paying $340 when I don’t have to (no one should).

Webster Dictionary Definitions:

  • Forbearance – a refraining from the enforcement of something (as a debt, right, or obligation) that is due
  • Deferment – the act of delaying or postponing

So, how does this affect you, a student loan holder? In both cases, you will no longer be required to make your regularly scheduled student payments. With a forbearance, the interest accrual process still continues, you simply aren’t required to make any additional payments. As interest accrues, you may decide to pay that off or not, that option is left up to you. Any unpaid interest that accrues and isn’t paid off within the period of forbearance is capitalized (made part of the principal). With a deferment, your loan is frozen in time – interest doesn’t accrue and you aren’t required to make any payments.

How do you get a deferment instead of a forbearance? Usually a student loan servicer will grant a deferment if you are enrolled in classes at least part-time, defined by the institution you’re currently attending. They do not have their own universal definition of part-time, they rely on the university or college to make that determination.

A forbearance is usually granted on request and with proof of some sort of reason. Your student loan servicer will have a forbearance process and you will simply have to follow that process, which will include an application.


 Investing, Retirement 
13
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Contributing 90% Of My November Salary to 401(k)

Oh yeah, you read that correctly… I will be contributing the maximum percentage allowed by my employer, 90% (my employer’s max), in the month of November, in an attempt to get my aggregate 401(k) contributions for 2006 as close to the maximum as possible. According to my last paystub from my former employer and my last paystub from my current employer, I’ve contributed a total of $4,352.09 to both 401(k) plans, which is $10,647.91 less than the 401(k) maximum contribution of $15,000 per year for 2006.

Why am I doing this? I want to reduce my taxes and as someone with no children, very little in the way of debt (only student loans and a mortgage), these are the years I want to try to put as much away for the future as possible before other financial demands come along. Right now I view the income from this site as supplemental and I’ve made a point of trying to use the extra income to maximize my contributions.

On the retirement contribution front, I’ve already contributed the maximum to my Roth IRA, I’ll be contributing the maximum to my SEP-IRA (20% of self-employment income) once I finish my taxes, and I’ll try to max out the 401(k) with this little scary 90% maneuver. Before anyone starts to warn me about putting too much away and not enjoying life, don’t worry, I enjoy life plenty and I’m not one of those Extreme Savers you read about on Yahoo Finance. I save when it’s sensible and enjoy when I don’t feel like being sensible.

It’s a little scary contributing 90% of my full-time income (leaving me with a scant 10%) and relying on my site’s accounts receivables – I guess this is what those full-time bloggers feel like when they make that plunge (except I’ll be jumping into a kiddie pool knowing I’ll leave in a month or two).


 Taxes 
0
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Start Thinking About Filing Your 2006 Taxes

Thanksgiving is over (even though the leftovers are still packed into the fridge), the Happy Holidays are just around the corner, now is the time to make those end of the year tax decisions before you get overcome with all the craziness of the holidays. So, I dove into the archives and saw that last year I wrote a whole bunch of posts related to year-end tax moves that still apply (most of them) to this year, so I thought I’d link to them so I’d know where they were:

And, if you don’t like taxes, read this argument about how the tax system will collapse in ten years.


 Personal Finance 
4
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Carnival of the Capitalists

Welcome everyone to this week’s edition of the Carnival of the Capitalists, one of the oldest and more celebrated carnivals out there, and this week, even though many of us in the US are all fattened up on some turkey, we still have a nice helping of leftovers to get you through the start of yet another regularly scheduled work week.

Enjoy!

(Click to continue reading…)


 Credit, Personal Finance, Shopping 
13
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Ethical Question: Getting Perks & Returning Products

Jonathan explains a loophole in the Discover holiday promotion at Mills malls where you can buy $200 of stuff on your Discover card, get the $20 gift card, and then return the stuff while keeping the $20 gift card. As a very vocal and ethical group (which is a great thing and evidenced in numerous posts in the past), I wanted to know what you all thought of this. Is it right? Would you do it?

My personal take is that it’s a little dishonest (I saw ‘a little’ only because I don’t like judging other people) because you are taking advantage of the system by buying something with the intent of returning it later just so you can get a receipt for the $20 gift card. But how does this compare with looking for receipts on the ground (you’d have to look a long time to find receipts on a Discover card but whatever)?

I really want to hear everyone’s thoughts on this one… thanks!


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