Get the Facts

This missed tax break helps to reverse the effect of payroll taxes and to assist middle- and low-income wage earners. Although it paid more than 26 million workers almost $59 billion last year, the tax credit doesn’t reach some families who need it the most.

The earned income tax credit covers different types of families with various income limits and credit maximums. Joint filers with three or more children are eligible for a maximum credit of around $5,750 if they earn less than $49,000 a year. If you do not have any children, you could be entitled to up to $464 if you earn $13,660 or less per year and are single (or $18,740 for married couples).

To claim this credit, you must meet the following criteria:

• Must have a valid Social Security Number
• Must have earned income from employment or from self-employment
• Filing status cannot be married, filing separately
• Must be a U.S. citizen or resident alien all year, or a nonresident alien married to a U.S. citizen or resident alien and filing a joint return
• Cannot be a qualifying child of another person
• If you do not have a qualifying child, you must:
  - be age 25 but under 65 at the end of the year,
  - live in the United States for more than half the year, and
  - not qualify as a dependent of another person
• Cannot file Form 2555 or 2555-EZ (related to foreign earn income)
• Must meet EITC Income Limits, Maximum Credit Amounts and Tax Law Updates

Key Qualifiers

If you qualify, take advantage of this tax break this year. Also, don’t forget—tax returns are due on April 17, 2012 (that’s an extra two extra days).

Sources:

http://www.dailyfinance.com/2012/02/21/the-tax-break-that-millions-miss-out-on/

http://www.irs.gov/individuals/article/0,,id=96466,00.html

Ask Yourself Why You Need an Emergency Fund

First you should consider why an emergency savings plan is important in the first place. Consider what would happen if your vehicle needed major repair or if you needed a major medical procedure. Would you have enough money to cover those expenses out of pocket? What if you lose your job, where will the money for your living expenses come from without a regular paycheck? If you don’t like the answers to these questions, you should begin planning now to start an emergency fund.

Find Out How Much You Need to Save

So, how much savings do you need? You should aim at having six months of living expenses easily accessible. This should include enough to pay your rent/mortgage, utilities, insurance premiums, food, travel expenses and anything else crucial to keeping your life running smoothly. For example, if your monthly living expenses total $2,500, your savings goal should be $15,000. This can look like an impossible number to reach, but don’t let fears of never reaching it prevent you from starting. Each dollar you put into an emergency savings fund will be there to protect you should you need it. It’s better to start saving and be slow at reaching your goal than to never start and be financially unprepared.

Make a Plan for Contributing

With your financial savings goal in mind, how are you going to add to your fund? First, take a look at your budget and find an area that you could trim or eliminate completely. For example, if you go out to dinner frequently, start eating at home more often and put the money you save into your emergency fund. Or, pay off credit cards and put the money you save on interest into your fund. If you can find several small ways to cut from your current spending habits, you can easily redirect those funds to your emergency plan, making you more financially savvy and safe.

Make The Most of Your Savings

Now that you have a budgetary plan for adding to your savings, you should consider how you’re going to make your reserve work for you. Most banks high yield savings accounts to members. Stash your savings in one of these and let it grow interest for you, making it even bigger with time. It’s important to keep in mind how easy it will be for you to access your money. Locking it into a CD or similar accounts, you’ll likely lose money on the early withdrawal penalty.

Keep it on Lock-Down

There’s one more step to ensuring you have a stable plan for dealing with financial emergencies. Don’t touch it! Well, unless there’s an emergency. Dipping into your emergency plan for non-emergency reasons is a sure-fire way to diminish its growth and find yourself stuck again with no savings. If a qualifying event does come up and you need to dip into your fund, be sure to take only what you need and replace it as soon as you can. That way, you’ll always know you have extra money tucked away for the next rainy day.

Check Your Credit Report

You are legally entitled to a yearly credit report. You can get this for free at Annualcreditreport.com. The best part about checking your credit report through this site is that it has no effect on your credit score. There are several things that factor into your credit score, including on time bill payments, rent history and items in collections. Knowing what your score is and what negative  items are included in  your report is the first step to improving your score. After all, you can’t take care of a problem if you don’t know what it is.

Pay Off Existing Debt

Once you have a full picture of your pre-existing debt, make sure and pay it off. Having any delinquencies, collections, or any judgments will gradually bring your credit score down over time. It is entirely possible that there are debts on your report that are erroneous or completely unknown to you. Clearing these things up will not instantly boost your score, however it will definitely stop future decreases in your report.

Pay All Future Bills On Time

Once you know what your credit score is, make sure to pay all of your bills on time and in full. Neglecting to do so will result in a negative hit on your credit report as billing companies regularly report to credit bureaus. Also, even though it won’t show up on your credit report, paying bills on time shows that you are capable of managing a monthly budget and slowly raise your score. Don’t forget, there are some companies (such as select cell phone providers) that actively report on time payments. This is a great way to passively raise your credit score.

Improving your credit is a slow and sometimes difficult task, though it’s always worth it. If you have a bad history with credit cards and you would rather take an alternative approach to raising your score, then these tips can help. Remember, your credit report is designed to rate your financial responsibility. The best advice? Be financially responsible.      

HTTP versus HTTPS

The following information is sourced from Wikipedia:

1. HTTP is short for Hypertext Transfer Protocol, and is the foundation of data communications for the World Wide Web (WWW)
2. HTTPS is short for Hypertext Transfer Protocol Secure, and is a combination of the Hypertext Transfer Protocol (HTTP) with SSL/TLS protocol to provide encrypted communication and secure identification of a network web server. HTTPS connections are often used for online payment transactions.

HTTPS is a simple a way for the website to protect data. So, whenever a transaction on a banking or loan site is completed, it is done so safely.

VeriSign Trusted

The VeriSign Trust Seal brings trust to businesses by helping them establish credibility online. The VeriSign Trust Seal appearing on a site, means that VeriSign has verified the identity and the rightful owner of the Web site. Visitors can click the seal to confirm the information. Displaying the VeriSign Seal also means that the site has passed a daily malware scan.

Tips For Staying Safe Online

It’s easy to stay safe online if you take a few precautions as suggested by VeriSign:

• Click the VeriSign Check to verify the identity of the site.
• Be cautious if a website appears poorly built or programmed and doesn’t provide any verifiable security information. Email or call the company before providing any information if you’re still not sure whether it’s legitimate.
• A genuine website should include the company name immediately before the suffix in their URL. For example, http://www.trust.com is a valid site, presented by VeriSign. However, http://www.trustthecheck.1234.com could be a fraudulent Web site spoofing VeriSign’s site.
• Financial websites will never tell you that you must provide your username, password, PIN, or other sensitive information.
• The address bar for a secure webpage should begin with HTTPS not HTTP.  The extra “s” stands for “secure.”
• Use a new high-security Web browser that recognizes websites using Extended Validation (EV). When using a high-security browser, verify that the address bar turns green before entering any personal information.
• Avoid websites that have many obvious typographical errors, because many phishing and spoofing sites originate in foreign countries and are written and programmed practically overnight.

Check The Address Bar

For an even easier tip, remember to check the address bar every time you’re about to make an online transaction. Sometimes you will see the address bar highlighted in Green or Blue.

Check out his short tutorial video on budgeting for 2012.

Recently, U.S. News came out with 50 Ways to Improve Your Finances in 2012.  While 50 might be a bit high as a number of resolutions, adding a few of these tips to your yearly goals can lead to a healthy boost in financial confidence. Here are 5 that are definitely achievable.

Live Below Your Means

Start out with small changes such as staying away from purchases that you know you can’t afford. Use a bargain or store brand whenever possible. Avoid acquiring more debt by taking the time to plan out finances. Balance your checkbook each month. Want more ideas? Check out Danny Kofke’s book A Simple Book of Financial Wisdom, where he explains how he’s been able to live below his means even while supporting a family.

Update Passwords

One way to avoid becoming a victim to online scams is by creating stronger passwords and have different passwords when using multiple sites. The easier and shorter a password is, the easier it is for scam artists to figure out it out, hack into your account, and retrieve your private financial information. Easy ways to add complexity to your password choice is by adding numbers and symbols or using full sentences as one long word.

Decrease Utility Bills

If you can’t make a bigger change like reinsulating your home, start by using a programmable thermostat that automatically shuts off at a certain temperature. Small changes like turning off lights in rooms you aren’t in, shutting off the air vents and doors in rooms you aren’t using regularly, and unplugging appliances at night can make a difference. They even make power strips not that automatically cuts power to devices that don’t need it when they are in the off position.

Utilize Tools From Your Bank

Get discouraged when trying to plan out your monthly expenses? Just turn to your bank. From apps to websites, banks are continuously creating easier ways for people to be able to tack their expenses and budget their finances. The best part is that these are usually free so take advantage of the organizational help.

Double Check Your Insurance

As you shift into spring-cleaning mode, it’s a good idea to look over your insurance polices and make sure that you are paying for the most efficient plan. Analyze you and your families needs and make sure that the policy you are currently paying for covers these. If not, it might be time to shop around and see what other providers have to offer.

• Gather receipts – If you haven’t itemized deductions before, maximize your tax return with commonly missed income tax deductions. Deductions such as charitable contributions, business expenses and childcare can add up.

• Make a checklist of income sources – Make a list of what you should be expecting from income sources in the mail. Identify all income sources such as employers, banks, and mutual funds. This way no form is overlooked.

• Consider IRA contributions – Contributions made up until the tax filing deadline will still count for the previous year.

• Reassess withholding instructions – It has always been known to minimize withholdings to have money at your disposal throughout the year. However, with savings account interest rates near zero, those savings account rates will earn you very little on your take-home pay during the year.  They will earn you nothing if those incremental amounts never make it into your savings account. Those savings rates may improve if you set withholding levels so you receive a refund you can deposit as one lump sum.

• Prepare for next year – Learn from any mistakes this year to prepare for 2013. Keep all receipts and important tax documents in one place so they are ready for the following year. Creating a process and keeping tax forms in order is the best way to avoid filing at the last minute.

Taxpayers will have an extended deadline this year (until Tuesday April 17, 2012) to file 2011 tax returns and pay any tax due. The IRS has also made a few improvements to help make this tax season easy for taxpayers, including new navigation features on IRS.gov and an interactive video to help with tax issues.

Homeowners who have been holding out on refinancing their homes are about to be rewarded.

Annamaria Andriotis from the Wall Street Journal stated in her December 31st post, “The average interest rate on a 30-year mortgage fell to 4.05% for the week ended Dec. 23, the lowest in 60 years, according to HSH Associates, a mortgage-data firm. And rates on jumbo mortgages—private loans that in most parts of the country are larger than $417,000—also have hit new lows, averaging 4.61%.”

The Savings Can Be Impressive For Homeowners.

Due to the new low rates, banks have been creating specific incentives to get homeowners refinancing and taking advantage of these excellent deals. For example, New Jersey homeowners are now charged a flat fee of $499 by Valley National Bank for closing costs on mortgages as high as $1 million, and since closing costs typically run around 2% of the total loan, that’s a significant savings. Around $15,500 for a person with a mortgage of $800,000.

Another example of excellent discounts involves Union Bank. Most banks will only refinance mortgages under $2 million, but Union Bank will refinance mortgages up to $4 million for it’s customers. This is an effort to bring more high-net-worth customers into the bank.

While the majority of homeowners in the United States are in this bracket, it’s a positive sign of an impressive mortgage rate and homeowners cashing in on the savings.

Current Refinance Rates (as of 1/3/2012)

The following rate information is taken from MonitorBankRates.com

Conforming Adjustable Home Loans

• 1 year adjustable refinance rates today are averaging 3.63%, down from last week’s average 1 year adjustable jumbo refinance rate of 3.71%
• 3 year adjustable refinance rates current are averaging 2.54%, down from last week’s average 3 year adjustable refinance rate of 2.71%
• 5 year adjustable refinancing rates are averaging 2.83%, up from the prior week’s average 5 year adjustable refinance rate 2.73%
• Current 7 year adjustable refi rates are averaging 2.91%, down from the previous week’s average 7 year adjustable refinance rateof 3.00%
• 10 year adjustable refi rates currently are averaging 3.50%, a decline from last week’s average 10 year adjustable rate of 3.54%

Adjustable Jumbo Loans

• Current 1 year adjustable jumbo refinance rates are at 4.50%, unchanged from last week’s average adjustable jumbo refinance rate
• 3 year adjustable jumbo refinance rates today are averaging lower at 3.36%, unchanged from last week’s average 3 year jumbo adjustable refinance rate
• 5 year adjustable jumbo refinance rates currently are averaging 3.00%, down from last week’s average jumbo adjustable refinance loans rate of 3.07%
• 7 year jumbo adjustable refinance home loan rates today are averaging 3.47%, down from last week’s average 7 year adjustable refinance home rate of 3.50%
• 10 year jumbo home refinance rates are averaging 3.82%, down from the prior week’s average 10 year jumbo refinance rates of 3.90%

Conventional Adjustable IO Adjustable Home Loans

• 3 year interest only adjustable refinance rates and are averaging 3.21%, down from last week’s average interest only refinance rate of 3.22%
• 5 year IO adjustable loan refinance rates today are averaging 2.89%, a decrease from last week’s average five year interest only home refinance rate of 2.97%
• 7 year interest only adjustable loan refinance rates are averaging 3.16%, down from last week’s average 7 year interest-only refinance rates of 3.25%

Adjustable IO Jumbo Loans

• Today’s 3 year jumbo refinancing rates are averaging 3.66%, up from last week’s average jumbo adjustable interest only refinance rate of 3.62%
• Current 5 year adjustable jumbo interest only refinance rates are averaging 3.38%, down from last week’s average IO home refinance rate of 3.48%
• Today’s 7 year jumbo interest only adjustable refinance rates are averaging 3.64%, down from last week’s average jumbo 7 year home refinance  loan rate of 3.76%

Trust Your Gut

Diane Diamond reminded everyone in a recent article for the Huffington Post, “If it seems too good to be true, it probably is.” Getting tempted by the promise of a designer bag 70 percent off or a camera advertised for a fraction of the typical sale price often means that you might actually be looking at counterfeit or pirated products.  The FBI and Immigration and Custom Enforcement (ICE) have been aggressively pursuing these illegal sites and alerting consumers. Diamond recommends that the best way to protect your purchases though, is to stick with companies that you know and trust.

Never Send Personal Information Through a Text

Earlier this year, a series of SMS phishing or “smishing” attacks hit consumers through one of their most intimate accessories–their phones. USA Today best defined smishing as being “like phishing, a technique that uses e-mails that look legitimate to trick victims into handing over vital information, but instead with messages to a mobile phone, not a computer.” Most of these messages are sent from what looks to be your bank with messages such as there has been suspicious activity in your account or your account has been closed. But make no mistake–banks will NEVER ask for private financial information in this way. Should you ever receive this type of text, MSNBC’s Herb Weisbaum says that it is always a good idea to alert your bank or financial institution directly. Do not reply or click any of the links.

Avoid Pop-Ups

Just because you are on a trusted website, don’t necessarily trust the pop-up windows that come up. Some of these contain threatening computer viruses or might be looking to steal private financial information. Be extra leery of pop-up ads when they show up right before pressing the purchase button, CBS financial contributor, Carmen Wong Ulrich cautions. To avoid these threats, she recommends disabling pop-ups in your browser settings and be cautious of feedback request forms that pop up right before or directly after a transaction. For more on the different types of holiday scams that are out there, check out Consumer Reports’ recent list.

Send E-cards

Instead of sending out paper invitations, save money on postage by sending out email invitations instead of paper ones. Websites such as evite.com and pingg.com offer free customizable and artist-designed invitations to send to all guests.

Organize a Potluck

Don’t prepare a large feast this year on your own. Ask friends to bring side dishes, drinks and desserts to the bash to help cut costs and prep time.

Secret Santa Exchange

If exchanging gifts at the party, make it a Secret Santa exchange where guests draw names prior to the party and give gifts anonymously. Invitees would need to only purchase one gift instead of buying everyone presents. However, if you’re feeling generous this year, request that guests bring one gift to be donated to a charity such as Toys for Tots or Salvation Army.

Dress It Up!

Handbag.com offers a fun money-saving conversation starter — fill a box with items around the house or purchase inexpensive hats, glasses, wigs and other props at dollar stores or thrift stores for guests to wear.

Create and Recycle Decorations

Get crafty and make your own eco-friendly decorations like homemade paper snowflakes or paper christmas wreaths. FavorAffair.com writer  KarenSullen suggests organizing a holiday swap party to trade old decorations with family and friends or a Trim-A-Tree Party, asking guests to donate an ornament or a decoration that can be used at home.

Holiday parties can still be a blast without spending hundreds of dollars. There is no need to spend money on elaborate entertainment or decorations. Keep it simple with these tips and your party will be the talk of the town into the new year!