Every Household Needs a Piggybank

 

He who is faithful in what is least is faithful also in much; and he who is unjust in what is least is unjust also in much. – Luke 16:10

If there’s anywhere money can get away from you, it’s through your pockets. Today I’m going to discuss those incidentals of the budget. Those things that come up every day and demand cash. Where do you get those small bills in your handbag? The coins that jingle in your pockets? The cash you have to have to hand out to children to pay for some school need, or to drop in the office pool, or buy a cup of coffee on your way to work? They have to be budgeted for, of course, by the month, by the week.photo 1 piggy

Before you get to the household piggy bank, you have to decide how to disburse the cash that produces the left over coins that go into the piggy bank. And yes, it should be cash. Businesses have made it so convenient to use plastic. Even fast-food places take debit or credit cards now. Avoid that temptation. The more you use plastic, the less control you have.

Can You Afford It?

Good money management begins right here with these small purchases. If we don’t have the cash to buy that burger, we can’t afford it. We should just drive on and pull something out of the freezer or pantry for dinner. If our child asks for money for some school funding project, we give them only the cash we have on hand. Even if we have to write a check because the child can’t be trusted with cash, we must make sure the check is backed up with incidental cash.

Make It a Family Affair

Think back to the first argument you had with your spouse. Chances are it was over money. Finances send more couples to divorce court than anything else. We can learn to manage money together as a couple with a cash box. Put an agreed upon amount of cash in the box every week. Both husband and wife can take money out of the cash box as needed during the week.

It’s hard not to be considerate of your spouse if you see the amount of cash you leave. Depleting the box is hard not to see. And if you open the box and it’s empty because your spouse has cleaned it out—that’s hard to miss too. I’m guessing you’ll both have a discussion and come to a meeting of the minds before someone depletes the bank account. I speak from experience. This is our money box. It’s really an old jewelry box, but anything will do. You can see it’s not very large. We don’t keep much cash.photo 2 box

This sounds simple, but it works. Learning the strengths and weaknesses of each while handling petty cash leads to understanding and acceptance.

While both spouses should jointly control the cash box, children should understand only Mom or Dad can take money out.

What about the piggy bank?

Of course children should have their own piggy banks, but Mom and Dad should too. At the end of the week, or end of the day, if you prefer, put left over coins and bills in the piggy bank. At the end of six months, open the piggy bank and spend it on something you both can enjoy—a little reward for managing your money.

If we learn to handle our pocket money well, we’ll find it easier to manage the family’s finances. Those who are faithful in the small things of life will be faithful in the big things.

Therefore, it follows that a couple who can work together managing their small cash will be able to work together on the big things in their marriage. And money management is one of those things where the husband and wife must work as one. It’s typical for one or the other to be better at money management than the other, but both must know what’s going on and come to a consensus about what is to be done.

Coming Up

Graduation is coming up, and during the month of May I’m going to present a series of posts including information every young adult should know before he flies out of the nest.

Save for Entertainment

Then He said to him, “A certain man gave a great supper and invited many.” – Luke 14:16

 

Yes, everyone needs to be entertained at times. Life would be too boring without something to look forward to. Entertainment is definitely a need in the budget, but it can cover a range from zero to sky high. Where it will land in your budget depends on how much is left over after those fixed expenses.

We can all fit eating out occasionally, but it’s something that can add up. I recently hosted a “small” birthday party at one of those higher end chain restaurants. The bill came to about two hundred dollars, not something I can fit in the budget every week.Olive Garden

When you think about it, other than the variety and quality of food, the fast food restaurants serve the same purpose. It provides a place to share a meal with family and friends, a time of fellowship and fun.

Do It YourselfMcDonnell

There’s no better place for fine dining than your own home. The problem is we hardly ever invite anyone. The digital age has cut out socialization in all sorts of ways, dining with each other is one. Even in restaurants how often do you notice people using devices instead of conversing with each other? Let’s assume even this generation would consider it rude to use their smart phones while a guest in someone’s home. Well—maybe not.

But if you’re crunching your entertainment budget, think about block parties, grilling out, dinner parties. If you can afford steak, fine. If not, homemade hamburgers are much better than the burger joint.

Also think about inviting people whose budgets may be even smaller than your own. Read Luke 14 for an idea to build up treasure in heaven.

Which reminds me. Another cheap place to dine out, perhaps free, is the church dinner or potluck.

Movie Parties

Next to dining out, going to the movies is the entertainment of choice for Americans—another activity that can strain the budget. It has to be a really good movie for me to go to the theater, especially at today’s prices. Our homes may be the solution here too. It’s never been easier to bring good movies into the house. Just add popcorn and good friends.

Fairs and Festivals

Springtime is full of fairs, festivals and carnivals. These are good fun for the family, especially for children.

Here’s a top ten money saving tip. Take a set amount of cash to these places and events. Leave the credit and debit cards at home. You’ll know when it’s time to go home. You’ll find it easier to say no to a whining child who wants that stuffed toy or another ride.

Enjoy the Outdoors

If you’re an outdoors type of person, your choice of entertainment is as wide as all outdoors. Fishing and camping can be very affordable. Everyone in the family has to enjoy it, though. I gave up camping when my grandsons grew out of cub scouts. Sleeping on the ground with nothing but a nylon wall between me and woodland creatures is not my favorite activity.

Vacation in Your Own Backyard

I’m not talking about your literal backyard, just suggesting people take daytrips to points of interest within driving distance. A lot of our family vacation time is spent going to museums, waterparks, old houses, parks, and lakes. Only recently did I realize there are a lot of places right around home we’d never seen. My only problem with that is my house isn’t close enough to the ocean, and a summer vacation isn’t a vacation for me without an ocean beach. For that reason, I’ll probably cut back on the eating out to save for the vacation. As with everything that isn’t fixed in the budget, there are tradeoffs. The price of gas is high, so daytrips may not be an option. Still, we don’t have to travel to the other side of the country to have a good time.

By all means check into what your state has to offer. You may not be located near the Grand Canyon or Yosemite, or Disney World, but chances are there are places right in your backyard, relatively speaking, that people are traveling from great distances to see.YosemiteGrand Canyon

Leave some money in the budget for entertainment if you can, and if there just isn’t enough, make your own. Look to children for your inspiration. You can take a group of children to a high-priced park and they might be entertained, but you can let them loose in a yard, and they’ll entertain themselves with nothing but their imagination.

Clothes That Fit the Budget

Now if God so clothes the grass of the field, which today is, and tomorrow is thrown into the oven, will He not much more clothe you, O you of little faith? –Matthew 6:30

photo 2 lilies

I was stopped at a red light the other day when I happened to notice a bird pecking around the new grass a few feet from the curb. I’m not a bird watcher and don’t know how to tell one from the other, but I knew this one was new to the area. Maybe he was resting his wings on his migration south.

This bird was beautifully clothed with blue and purple iridescent feathers. All animals are perfectly garbed for their habitat. My dog has the prettiest fur, though she really doesn’t need it in our air conditioned house. But if she lived in the wild, she’d stay warm.

As you’ve noticed, human beings don’t come with clothing. So how does God clothe us? By providing a brain and two hands with opposable thumbs to earn the money to buy the clothes. And we should have enough brain cells left over to manage our clothes budget wisely.

Your Spring Wardrobe.

What better time to think about new clothes? As a rule, I don’t like dressing up, but Easter is the time for wearing your best. Shouldn’t we at least look as good as those lilies pictured here?

Clothes are on the expense side of the budget, but when you think about it, this is an expense that’s more variable than any other. We can spend very little and be well clothed, or we can spend too much in an attempt to…what? Impress people?

Having money doesn’t mean you have to spend it.

This is one of my top ten tips to living richly and nowhere is it truer than applied to the clothes budget. Even if you can afford a $500.00 handbag, should you buy it? I think not. What else can that $450.00 be used for?

Big name brands have spent millions to make us think we have to have a certain brand, and they’ve been very successful. But honestly, there are knock-off brands that look and wear just as well. I know. That’s where I go, and I don’t think my reputation has been damaged over the years.

Clothes should have a longer life than style.

Being locked into a particular style begins when you purchase the garment. Buying something that’s flashy and different is bound to lose its appeal sooner than a more classical style. Spend more money on the little black dress or the classic black suit. Dress it up or down as you wish. Buy clothes that you’ll want to keep more than one year.

Don’t over-buy. No one needs more than a dozen pairs of shoes. The first decision to make when buying clothes is need. After that is taste.

No one’s ever accused me of having expensive taste. But I’m an old fuddy-duddy. Style means more to young people. I understand that, and young people don’t usually have as much to spend. If your taste exceeds your means, all I can do is point you to thrift shops, and if you’re willing to spend a lot of time shopping for something that appeals and fits, try them.

Modesty is never out of style.

No, not even for young people. It goes without saying, you have to consider your age and body type as well as your means. The dress pictured here is modest and fits a teenager well, but at my age, I’d have to add a couple of inches to the hem.photo kaitlyn2

There’s no doubt some teenagers dress outrageously, but whose fault is it? Young people haven’t developed the brain cells to know better. It’s we parents who bear the responsibility. What are the parents thinking to allow their son to walk around (with difficulty) in pants below the crotch, or their daughter to leave the house dressed like a hooker? I suppose some parents think it’s cool. But caring parents will use the power of the purse to exact discipline. Yes, it does come back to money and our responsibility to spend it wisely. The consequences go far beyond the numbers sometimes.

Let me get off my soapbox and back to the budget. If you don’t already have a certain amount budgeted for clothes, it shouldn’t be hard to estimate a monthly amount for the family clothing costs. Keep it reasonable for your lifestyle and income. Then look for those sales. There’s no need to spend more than necessary, especially for clothes.

Now that we’re dressed up, how about a night on the town. Next week I’ll discuss entertainment expenses.

 

Protecting Your Electronic Money

But know this, that if the master of the house had known what hour the thief would come, he would have watched and not allowed his house to be broken into. –Matthew 24:43

Everywhere money goes, thieves follow. In recent history people began to depend on banks rather than burying their treasure, although there are still those who stash it in the mattress or bury it in the backyard. But banks weren’t a perfect solution. They were still robbed and banks failed.

Then the government guaranteed your funds under the FDIC. Generally, this covers deposits, checking and savings, money market deposit accounts, and certificates of deposit up to $250,000 per depositor, per insured bank, for each account. That covers me and then some, but only against bank failure. There are still those pesky thieves.

Over the years banks have made it more convenient for us to use our money electronically all over the world. The credit card allows access to money up front, and we pay after. Debit cards require payment at the moment we access the money.photo 1 one cc

Plastic is wonderfully convenient for those who control their spending and manage their money wisely. But thieves still lurk, only now they don’t have to break into our houses or banks. They can pull it out of the very air from under our noses. They don’t have to be in the neighborhood. I’ve had credit cards stolen by thieves in Germany and India as well as in a couple of distant states.

Here are some things we can do to protect our electronic money.

Guard Your SSN

The social security number is your identity. Never give it out over the phone to someone who contacts you. EVEN IF THEY SAY THEY’RE A GOVERNMENT AGENCY. Thieves are also known to lie.

Make sure your computer is protected and secure before typing in personal information of any kind. Even though my computer is protected, I never type in my SSN to the computer. This is a real problem during tax time. They want you to electronically file, and you can’t even get forms except by downloading them. I download the forms and fill out everything except the SSN, then print them out, write the number in, and mail the forms by snail mail. I don’t know how long I’ll get by doing that, but that’s what I’ll do as long as I can.photo 3 laptop

Why? Because anyone in the world can take your SSN and open a credit account in your name and number, and use it—a lot. Since you may never know this happens until you try to buy a house or car, it’s a good idea to check your credit score regularly. Creditreport.com and Credit Karma are a couple of the subscription companies. There are others, but take care. Some trick you into subscribing for a fee, and that may not be necessary.

 

 

Spread Your Money Around

Or don’t put all your eggs in one basket. This is especially important if you use debit cards regularly. Set up a separate bank account in a different bank or credit union just for purchases. Keep the balance fairly low, a thousand or so. This way, if your card is hacked, you’ll only lose up to that balance and your entire fortune won’t be in jeopardy.

Use Credit Cards for Store Purchases

If you don’t want to go to the trouble of setting up a separate checking account in a different bank, use the credit card for purchases. The thieves are stealing from the bank, not you, and while it is an annoyance to change card numbers, you won’t lose much money. There is a drawback, however. If you don’t pay off the credit card balance every month, you run the risk of going into debt. But if you’re disciplined, this is the best approach.

Change Those Passwords

It’s annoying to keep changing passwords, but that’s the price for the convenience of plastic. Change the password to your computer and your debit card. DO NOT USE PASSWORDS FOR CREDIT CARDS AT ALL. The only reason you’ll need it is for cash advances, and this you should never do if you budget wisely. The cost for cash advances on credit cards is enormous. Repeat after me, I will never use a credit card to withdraw money from the ATM.

Don’t use ATMs in Unsecured Placesphoto 5 atm

Go inside the bank’s building to use your debit card or go to the window to make withdrawals. Don’t use those drive-thrus in isolated places. It’s a good idea not to make withdrawals except during regular banking hours. And please take care during vacations. Thieves know people are relaxed and casual on vacation and likely to let their guard down. Even on vacation, go to the bank or other inside, secure location.

 

Identity Theft Protection

Is identity theft protection necessary? I don’t use it, but if it gives you peace of mind, and it works in your budget, go for it. Lifelock certainly advertises more than any, but as with anything, shop around and read the reviews. Others are Metlifedefender and Idprotectionpro.

Something you should absolutely do is talk to your bank to find what it offers, usually for free. Some banks will send you a text message every time your card is used. If offered, sign up for it. If you get notice of a charge you didn’t make, you can immediately freeze the account.

Sign of the End?

When I considered all the difficulties modern international commerce places on us to protect our money, I couldn’t help but believe it is a sign of the end. It will soon be impossible to protect our identity unless it’s embedded on our person. World controlled money system? Mark of the Beast? Unless we’re prepared, it’ll come like a thief in the night. But for those of us ready to meet our Lord, does it really matter?

 

The Gadget Budget Trap

There was a certain rich man who had a steward, and an accusation was brought to him that this man was wasting his goods. –Luke 16:1

It’s criminal to waste another’s money. It’s sinful to waste resources. But it’s stupid to waste our own. Even so, we do it all the time. The smart thing to do when you have a need for any durable good, and gadgets fit into that category, is to consider the return on investment (ROI). This rule applies if you’re buying equipment to earn money or for personal use.

New or Used?

Used is not always the most economical. I’ve never bought into the idea that a late model used car is best. Yes, its depreciation rate is high up front, but if you intend to keep the car as long as it runs, the new one may be your best buy. How do you know which? Just divide the purchase price by the number of years you intend to keep it. A new car may cost $5,000 more than one three years old, but the price divided over ten years may be less than the used car divided over seven. Time is just as important as cost in the equation. Be shrewd.

Gadgets are another story. The buying public throws away perfectly good items for no other reason than they want the latest and greatest. Apple and the other big producers take advantage of this fact. Why else would they bring out a new model every year? Falling into this trap can put a unnecessary dent in anyone’s budget. If your gadget doesn’t last longer than a year, you’re not getting a reasonable ROI. photo tech

If you’re someone who budgets wisely, you can take advantage of the fact that there are a lot of unwise people upgrading every year. This makes for a lot of good used gadgets, and they are discounted a lot more than good used cars.

Don’t Give into the Kids.

Would you believe all those gadgets pictured above belong to three teenagers? Image how much could have been saved if those items were purchased used from Amazon, e-bay, or any of the reputable sites offering such things.

It’s not a question of need. Kids today do need cell phones and notepads. One day while driving my granddaughter home from school, she was sitting in the passenger seat doing her homework and using her cell phone at the same time. When I grumbled, she showed me her assignment on the phone. Can’t lose your homework that way.

But don’t let them use need to take advantage of you. I shouldn’t have to mention that children will want the latest and greatest. I would guess they’d rather have a used gadget than no gadget at all, though, so stand firm. Use this as a means of teaching them to withstand peer pressure and use good judgment. It’s a life lesson that can save them from a mess of misery down the road.

Repair or Replace?

My husband is of the opinion that everything I want to replace has at least two good years left. I divide these years into the tinkering stage and the duck-tape stage. But I’m in agreement that my computer should last as long as possible. This laptop has been to the shop three times. I’m loath to give it up. It still has Windows 7 on it. Need I say more? When it does die, I’ll be looking for a used one.IMG_0071 computer

Budgeting for Gadgets and Other Durables.

Yes, yes, yes. You must budget for durables, but they are not included in expenses. Short term saving is usually the way to go. Only as a last resort should you use your emergency fund or put these purchases on a credit card, except when you intend to pay off the credit card when it’s billed.

The steward in Luke 16 was unjust, self-serving, and a crook, but he was shrewd. If we are to live richly, we have to be as shrewd as the unjust of this world. Just because we need a gadget doesn’t mean we have to have the latest model. The item that satisfies the need at the lowest price is shrewd. Being able to afford it isn’t a good reason for wasting money. We are accountable down to the last cent. Those who are accountable for the least will be given more. That’s an irrefutable law.

How do we protect ourselves from the wicked but shrewd of this world? That’s a topic I’ll address next week. Until then, budget and spend wisely.

Beware the Marketplace

The wisdom of the prudent is to understand his way, but the folly of fools is deceit. –Proverbs 14:8

I was supposed to write about discounted and used items this week, but when I selected this verse another topic sprang to mind—avoiding deceit in the marketplace.

The sheer volume of products and services can be overwhelming. Variety breeds advertising and product branding, neither of which are deceitful, but any seller is going to slant his product any which way he can.

As an aspiring author, I’m aware of branding in the wide-open field of publishing. One would think there isn’t much room for deceit in publishing, nor in other industry. The author’s books speak for themselves, as all goods and services eventually succeed or fail based on the merits. Still, millions of consumers are duped every day.

I’m of an age when I don’t pay much attention to advertising. That’s why advertisers target the young. And the more variety there is, the more dissatisfied I become because what I’m looking for is never quite there. You know what I mean? Why is it that, once I like a product, they quit making it? Why is it that when I want a particular flavor, size or color, it’s always sold out? There is a reason.

Tricks of the Tradephoto 3 icecream3

Companies have all kinds of tricks to snare even discriminating shoppers like me. Some years ago I discovered a new ice cream flavor. Out of hundreds of flavors this stuff stood out—big chunks of premium chocolate in wide ribbons of velvet caramel and fudge embedded in a rich vanilla flavor like the old-fashioned kind before they began adding artificial flavors and preservatives. Not only did it taste good, it had a couple of grams less fat than regular ice cream and sold for less than premium brands. How did they do it?

Two well-known clichés come to mind. If something is too good to be true, it is, and all good things come to an end. There on the ice-cream carton was a little circle with the words, “limited edition.” This has been a favorite technique of businesses for ages. It’s called bait-and-switch. This wonderful ice-cream was put out by the company to lure customers like me. Then when we got used to this flavor and this brand, the wonderful ice cream would be quietly discontinued, or if continued, those big premium chocolate chunks would shrink to little imitation chocolate slivers and the big blobs of caramel and fudge would shrink to ribbons the size of the lead in a pencil. Artificial flavors replaced the genuine.

There’s nothing wrong with this. You have to expect it in a capitalistic economy. How else could the Dow have broken 16,000? But the wise shopper will be aware of such tricks.photo 4 stocks

The Savvy Shopper

And the wise shopper will seek recommendations and reviews for mechanics, doctors, lawyers, hair-stylists, contractors, plumbers, electricians, any provider you’re unsure of. Amazon and Angie’s List are the big review providers.

Do others a favor and post reviews of those who are particularly bad as well as those who are good. This is the best way to keep businesses honest.

Although you’re a savvy shopper, there are those who aren’t. Charlatans prey on the old and young and poor.

Be Aware of the Following

  • Computer games that target children to put charges on their parents’ credit cards. Keep a close check on your children’s computer usage and protect those devices by password.
  • Telemarketers who scam the public with contests, vacations, investment schemes, and a hundred other ways. They change their tactics so often, it’s hard to keep up, but discuss this with your elderly parents and their friends. If you hear of a scam, pass the warning on by word of mouth and social media.
  • Pawn/check cashing/gold buying businesses that target the poor. Some of these businesses are legitimate, but it’s a shame they’re necessary. If a friend or relative is having a hard time, lend them a hand. You’ll be blessed for it.
  • Slot machine and gambling establishments who entice people to lose their rent or grocery money. Run them out of business, if you can. Pressure the local authorities to take action to outlaw them. Remember what happens when good people do nothing.

If you’re savvy enough to care about your budget, you’re probably not easily deceived by dishonest advertising and business practices. But any time money is involved, there’ll be ways to lose it.

Next week I’ll get back to the budget, but being aware of deceit in the marketplace will always save money. The prudent shopper will know what’s going on.

Money Really Does Grow on Plants

Another parable He put forth to them, saying: The kingdom of heaven is like a man who sowed good seed in his field. –Matthew 13:24

As I was writing a blog about gardening, it hit me that spring was the perfect season to remind people if they grow their own food, they’ll not only eat healthier but cut their grocery budget as well. Why don’t we? Some are like me and just don’t have a talent for growing plants, but the greatest reason is convenience. Grocery stores are a lot more convenient than clearing land, preparing the soil, planting, watering, harvesting. Besides, most of us don’t have a lot of real estate to invest.

We do Things When the Need Becomes Great Enough.

Everyone was called on to contribute to the war effort in WWII. One of those ways was to grow a Victory Garden, the idea being if people grew some of their food, there’d be more to send to the soldiers overseas. Gardens sprang up in the country and in towns. I’m sure even apartment dwellers had their container gardens. That was a real “get ‘er done” generation.photo 3 victory garden

We don’t have a world war going on now, but the economy has made it expedient to do anything to stretch the budget. Produce is an expensive item. You can do a lot of stretching with not much effort.

Consider a Herb Garden.

The price of fresh herbs is outrageous, and if you want “organic” you’ll pay even more. It takes little effort to construct a box planter, and those helpful garden supply people can answer any question. Just remember they may want to sell you more than you need. A container, soil, and a sunny spot is all required. Put it outside if it’s warm enough, or keep it in a window, and you can grow herbs all year. The garden may inspire you to cook more, and the dishes you do cook may be more flavorful, motivating everyone to want to eat in, and eating in will definitely save money.

Expand to a Kitchen Garden.

If you have the space and the energy, think of a kitchen garden. Lettuce, cabbage, carrots, radishes, beets, tomatoes, onions, berries. All those salad and stew vegetables that cost a lot in the grocery store, and you don’t know how they were grown despite what they claim. Adding all those vegetables to your family’s diet can only improve your health, so you’ll save on health care costs too.

I admit the only vegetables I’ve successfully grown are spinach and tomatoes. They’re the only vegetables I’ve ever tried to grow, but they make a good salad. If they just grew at the same time… But I count the effort worth it. I get two months of the freshest, most tender spinach possible, and a whole season of the sweetest, juiciest tomatoes on the planet.

Go Big Time with a Truck Garden.

photo 4 truck garden

With enough land, you can even grow a truck garden and have an abundance of vegetables. You can stock your freezer and pantry for the whole year. But anyone serious enough to have a truck garden already knows that. Here’s something else to consider.

Grow more than vegetables.

Most large gardens produce more than the needs of the average family. Gardeners are a generous people, and they share with friends, relatives, and neighbors. I’ve been on the receiving end of their generosity many times.

Even so, sometimes produce dries up in the field or is thrown away. I’ve seen this happen many times, and it’s a sad sight when so many are malnourished. Take care not to let this happen. Call on your church or children or anyone to help harvest the vegetables and take them to food shelters or just leave them at the corner of a street in a needy neighborhood. They’ll be snatched up.

We have the ability to sow good seed in the spirit as well as in the ground, and while saving money in your budget by growing your own food is good, this by-product of generosity is more important. If you truly want to live richly, there’s no better way than this.

Whether it’s a pot of herbs set in your kitchen window or a field of vegetables to fill up your own pantry and share with the needy, nearly everyone can benefit from working in the good earth. So get those little seedlings growing.photo 1 speedlings

Next week I’ll be discussing buying second-hand, where you can find items for one-tenth the price of new, and serve the purpose just as well.

Record Keeping for Taxes

Stand therefore, having girded your waist with truth, having put on the breastplate of righteousness – Ephesians 6:14

Telling the truth may be complicated by failure to remember what the truth is. This sometimes happens while filling out tax returns. Most people don’t make mistakes on a return because they set out to defraud, but simply because they don’t have the facts straight.photo calculator

Unfortunately, the only way to have the facts straight is to keep records. I don’t like record keeping. Strange to say since I worked in that line and I like numbers, but that’s the way it is. Record keeping is tedious, so many small things to account for like bills and receipts and payments. There are various ways to approach this.

The Shoe Box

In this method you just toss everything in a shoe box. At tax filing time, you take your box down to the tax return preparer and set it on his or her desk. Unfortunately, the preparer doesn’t like this approach and probably won’t accept it. H/she wants you to give the amounts to fill in the blocks—just the facts. So you’ll have to go through that box and add up the amounts before you go. I’ve got to tell you this approach will cause you drink too much caffeine and tear your hair out. And it may lead to some big mistakes.

EZ If You Can

For those who file the EZ method, this will work. All you have to report is earnings. Standard deductions are worked into the charts. Only W-2s and 1099s are required. These are fairly easy to keep up with, although I confess I’ve managed to lose one or two over the years. If this method of filing fits your situation, you don’t need help with preparation. In fact, the IRS will figure it for you. State returns may be just as easy. Read over the rules every year to make sure you qualify.

Simplified Bookkeeping

If you take deductions like home mortgage interest, state and local taxes, charity, medical expenses (lots of changes in that this year), you can get by with simple ledgers for each deductible. Recording the expenses as they occur on an excel spreadsheet will do nicely. It’ll add and subtract for you. Be sure to date and identify, and don’t forget travel expense allowed for a particular deduction like medical or charity. Actual expenses are almost always more than the standard allowance tables. Stuff the receipts into envelopes or file folders, identified for the applicable deductible.

When tax time comes around, you’ll have the amounts ready to plug in or give to your preparer to plug in. Yes, this method is tedious, but much more reliable than digging through a shoebox of receipts and trying to remember what goes with what. Record the information at least weekly, and ladies, don’t wait three months before cleaning out your handbag as I’ve done in the past. I’ve found a receipt for a local taxes at the bottom of my bag that had scribbles on the back and folded so many times I could barely read the numbers.

Home Based Business

There are millions of home based businesses in the United States, and even the most simple sole proprietorship demands a bookkeeping system, if not the traditional double entry type, at least a debit/credit incoming/outgoing facsimile with a ledger for each expense. In fact, as soon as you determine your enterprise is a business and not a hobby, and write out your business plan, it’s time to set up bookkeeping. Here’s my money saving tip of the week.photo 2 Self Empl

When your tax return gets to the degree of complication that self-employment requires, it’s time to seek professional help. Find a tax accountant experienced in small business and sole proprietorships. Before your appointment, make a list of all your questions, and when you go in, pick the accountant’s brain. Cover every state and local law and regulation as well as federal. It may cost more, but this is the only time you’ll need to consult him or her. Before you leave, make sure you understand how each item on the tax forms was obtained and why. Your copy of these forms and the answers to your questions will be your prototype for your future returns. If you’re intelligent enough to run a business, you’re plenty smart enough to do your own in the future. Yes, there are changes to the tax code each year, but rarely will they affect you, and even if they do, you should be able to figure it out.

Speaking of changes for home businesses, there is a change this year that simplifies taking a deduction for the home office. Instead of jumping through hoops like most tax forms require, you can now multiply your home office’s square footage by $5.00 up to $1,500.00. But actually, if you take my advice and get a one-time professional help, you’ll be able to jump through the hoops and fill out the regular Form 8829 and Schedule C without having to worry about an IRS audit. Provided you have a good bookkeeping system in place.

Something else that’s new provided by the IRS is electronic filing that’s supposed to be as easy as those computer tax programs in the stores. You know, it’ll take your information and tabulate the forms for you. I haven’t tried it myself since I file by paper and snail mail. I just don’t trust my SSN on the computer. But if you have any spare time, visit IRS.gov and make yourself at home. It’s more user friendly than healthcare.gov, I promise.

Keeping records will help you know and report the truth, and as we all know, that will make us free. So put on your armor of truth and have the records to back it up.

Why Pay Taxes Before They’re Due?

Render therefore to Caesar the things that are Caesar’s, and to God the things that are God’s – Matthew 22:21

Taxes are a periodic expense      photo 3 1040
Most of us don’t think about taxes—until they’re due. Except for sales taxes, which might as well be considered a part of the purchase, payment is scheduled periodically, usually annually. But like all periodic expenses, they have to be budgeted each month. Actually, income taxes are collected periodically, with each paycheck, assuming your income is paid by an employer. Everyone knows that, but here’s something a lot of people don’t know apparently. They overpay, and do so deliberately, because they use this as their savings account.

How can I say this so I don’t hurt anyone’s feelings? This is D. U. M. B.

Since I worked in accounting, I got to know a lot of accountants. I didn’t know one of them to ever get a refund on their taxes. There was this one accountant who made it a ritual to wait until April 15 to start working on his taxes, and he was in the car line-up at the post office at twelve o’clock midnight. I don’t cut it that close, but I wait until the last week. I knew this other accountant who always filed for an extension. Why, I don’t know since you have to pay the amount you owe on April 15, whether or not you file for an extension to file the forms.

What does this tell you? That the people who know how the system works never overpay. They put off what they pay until the last minute because the money stays in their hands, not the government’s, and time is money. The government doesn’t pay you interest.

It’s complicated on purpose

The federal tax code is over 70,000 pages long and growing. Every page has been lobbied for and continues to be. Remember when Bill Cosby explained why they couldn’t get the children to leave home. With eyes bulging, he said, “These people are serious.” A funny line when referring to kids who want to keep living off their parents. Not so funny when it’s those who want breaks written into the tax code so they don’t have to pay as much as the rest of us. But make no mistake, those who lobby for their favorite part of the tax code are serious—a lot more serious than the American public who pay before they have to, then have to pay preparers because it’s too complicated to do their own and follow the rules contained in 70K pages. The preparers have their lobby too.

I doubt that anyone in government really wants this to change. The only movement to come around for the purpose of tax reform and reduction is the TEA Party. Taxed Enough Already. A catchy name. Some serious people got involved, serious enough that the supporters of the status quo started a media blitz to cut this effort off at the knees. Is it any surprise that the IRS targeted organizations associated with the TEA Party? It might be that the TEA Party is a serious threat to the tax structure, not because the members are conservative.

Since tax reform isn’t likely to happen any time soon, we’ll have to deal with the situation, which means budgeting for taxes–federal, state, and local. If these aren’t taken out of your paycheck, you’ll have to account for them in your monthly expense budget, but you can keep the money in your bank account until the taxes are due.

People who use tax withholding for savings do so because having someone else hold their savings keeps them from spending it. That does make sense, but it also indicates those people can’t control their money. No one can live richly unless he can control his money, so more on that subject later.

Get an instant pay hike

If you get a sizeable refund this year, do yourself a favor and have your withholdings adjusted to reduce the excess. You’ll get a pay increase just like that. But you’ll also have to put the increase in your savings to pay for that vacation or down payment on a car or whatever. Don’t do it expecting to earn much interest but simply for the principle of the thing. You’ll be on the way to using your money as it’s meant to be used—to serve your needs and wants.

Pay Caesar what he’s due, but not before it’s due.photo 5 tax clock

Next week I’ll discuss tax preparation for those who do their own, or even those who don’t. You may discover it’s simpler than you think, because most of those 70K pages of tax code don’t apply to most of us. Make sure you don’t pay more than is due either.

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