Personal Finance

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question. 1. Checking account buffer 2. Insuring collectibles 3. School now or later? 4. Traveling for music 5. Parents helping with home purchase 6. Piano lessons 7. A messy divorce 8. Hiding a credit card 9. Target Retirement Funds still good? 10. Replacing TV with reading I enjoy listening to new music, but when I’m working, I often spend most of my time listening to albums I’ve heard a thousand times. It’s almost like they fit like an old glove. I can tune them out effortlessly because of their familiarity if I need to. On the other hand, when I actually pay attention to them, I simply feel good, even if the music is downbeat. I have albums that are approaching 1,000 plays on iTunes. That’s a lot of playthroughs. Q1: Checking account buffer Does the “buffer” that I carry in my chequing account count toward an emergency fund? To be more precise, we always have $3000 in our chequing account at the end of each month when we’re done paying bills and transferring the excess into various savings account. I find that this gives me peace of mind so that the automatic withdrawals that occur early on in the month are covered even if the first paycheques do not come until the second week of the month. That buffer ($3000) is pretty much one month’s worth of spending for my husband and I (no kids), and we also have one month’s worth as an emergency fund in a savings account (working to build that up to three months’ worth of expenses). So does that buffer count towards my emergency fund? If it does, then I’m 2/3 of the way to having your recommended emergency fund for a couple without kids or a mortgage, but if it doesn’t, we still have a lot of work ahead! We’re waiting to have that full 3-month emergency fund before we start saving more aggressively to buy a house (we’re okay renting for a few more years yet). - Eric It’s really up to you whether to count it. Personally, since it’s serving a non-emergency purpose, I probably would not count it. You can’t just tap it without adding to your life concerns, which is part of the reason for an emergency fund. Still, as long as you have several months of cash on hand, you’re in better shape than the majority of Americans anyway. Q2: Insuring collectibles I have a number of sports cards and other trading cards that are all professionally graded and would have a value, if I sold them on eBay, measuring well into the six figures. Currently, I keep most of them (the most valuable ones) in a safe deposit box at the bank and a few are framed in my home. It occurs to me that I might want to insure them, but I’m not sure how to do that. Any suggestions? - David My first step would be to talk to my home insurer about that collection. Depending on the policy, you may be able to cover these collectibles under your disaster and/or theft insurance as part of your homeowners insurance. If that doesn’t work out, you can shop around for collectibles insurance. Many insurance houses offer policies like these that, depending on the policy, are comparable to adding them onto your homeowners insurance. The safe deposit box is probably the best place to keep the items, but you should still consider theft insurance on them. A bank vault, while very secure, isn’t inpenetrable. Most insurers will insure the contents of a safe deposit box at a pittance because the risk of payoff is so very low, but it’s not zero. Q3: School now or later? I’m a 24 years old girl living alone working full time and I live in Montreal, Canada. I decided to apply to university for the next fall semester and I have some worries regarding living cost and loans. Basicly, we have a grants and loans program from the govern

I recently caught up on my magazine reading for the first quarter of 2013. In doing so, I discovered a Businessweek article on a very distressing financial matter in Cyprus, one that we should all be concerned about (and particularly the savers among us). The Cyprus bailout is a good reminder for all of us to consider how our bank deposits are protected. Terms of the Cyprus Bailout Cyprus’ economy is in bad shape, leading Cyprus to be the fifth European nation to receive a bailout (the first four were Greece, Ireland, Portugal, and Spain). Last year, its economy shrunk by 2.4% and unemployment reached 12%. Two of its largest banks sustained heavy losses on Greek debt during the restructuring of Greece’s economy and have been surviving on emergency funds from the European Central Bank ever since. In an attempt to keep Cyprus in the eurozone, ECB had threatened to cut off funds propping up Cypriot banks unless agreements were reached. This is particularly not good for a country that has a large banking sector (based on deposits, Cyprus banks are an unsustainable four times the size of its economy). The initial bailout was for a total of €17bn with €10bn coming from the eurozone and €7bn coming from Cyprus. Within a month of this agreement, after more economic analysis, the bailout package was increased to €23bn with the extra €6bn (a total of €13bn) coming from Cyprus itself. So how did Cyprus plan to come up with their part of the bailout? Cyprus decided to use austerity measures as well as a very controversial saver’s tax to raise the necessary funds. The Cyprus Saver’s Tax Aside from austerity measures, selling €400m of gold reserves, and renegotiating the terms of a loan with Russia, the Cypriot government agreed that most of their part of the bailout would come from tapping the savings accounts in its two largest banks. It should be noted that this bailout deal, or the way the Cypriot government decided to come up with its portion, did not need approval from the Cypriot parliament. This is because it was achieved by restructuring the country’s two largest banks rather than levying a new tax on all of its citizens. You read that right; without the consent of its depositors, a new, substantial tax has been levied. Not only has this new tax been levied on a portion of Cyprus citizens, but it is estimated that nearly half of the €70bn worth of deposits in Cyprus’ banks is held by foreigners (the vast majority is believed to be from Russian officials and oligarchs looking for tax havens). The levy was initially set at 6.75% on accounts under €100,000 and 9.9% on any deposit above that sum (with the option to alter this agreement to 3% on the smaller deposits and up to 15% on deposits above €500,000). In return, savers would be given shares in the banks and/or future profits from the country’s gas reserves. This initial agreement was thrown out. An agreement was reached on March 25, 2013. In the end, those with deposits of less than €100,000 will not be taxed to help raise the money for this bailout. Here are some of the details: Laiki, or Cyprus Popular Bank, is to be closed. Its €4.2bn in deposits over €100,000 will be placed in a “bad bank”. Those with smaller deposits will see their accounts transferred to the Bank of Cyprus. The island’s largest bank, Bank of Cyprus, will be spared. However, a huge restructuring is taking place. It is thought depositors with more than €100,000 at the bank will also be involved in the recapitalization, and are expected to face losses of around 30%. Bank of Cyprus will inherit a €9bn debt Laiki had with the European Central Bank (ECB). Temporarily, a €100 limit was imposed on ATM withdrawals in Cyprus (in the month of April the limit was raised to €300). Cyprus must shrink its banking industry to the EU average size by 2018. Eurozone’s Deposit Insurance In these bailout talks one of the initial agreements was to tax 6.75% on accounts under €100,000. This was des

The fiendish Fee Ninjas are back, sneaking through the small  fine print, tip-toeing in the terms and conditions, striking your wallet with ruthless accuracy. These faceless assassins of wealth are stealthy and silent,...Read the Rest »

When you achieve a certain level of success with your business, it makes sense to want to expand. But that doesn’t mean that you have to create a huge corporation. Instead of doing all of the [...]Recommended For You:Are Top Franchises Worth the Initial Investment?5 Business Tips to Help Your Small Business SucceedHow to Buy a Used CarThe 10 Worst Things About Owning Your Own BusinessHow to Start a Small Business LLC Read the rest of How to Start a Franchise and Become a Franchisor at Moolanomy.com.

I have posted Entry #145 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called The Financial Crisis and the Systematic Failure of Academic Economics. Juicy Excerpt: All stock investors should read an amazing paper produced by the University of Copenhagen Economics Department. It is titled The Financial Crisis and the Systematic Failure of Academic Economics. This is the real story, the news that unfortunately does not often enough end up in the newspaper. I’ll set forth a few snippets that you can use to determine whether reading the full paper is worth your time: A Summing-Up: “The economics profession appears to have been unaware of the long build-up to the current worldwide financial crisis and to have significantly underestimated its dimensions once it started to unfold. In our view, this lack of understanding is due to a misallocation of research efforts in economics. We trace the deeper roots of this failure to the profession’s focus on models that, by design, disregard key elements driving outcomes in real-world markets. The economics profession has failed in communicating the limitations, weaknesses, and even dangers of its preferred models to the public. This state of affairs makes clear the need for a major reorientation of focus in the research economists undertake, as well as for the establishment of an ethical code that would ask economists to understand and communicate the limitations and potential misuses of their models.”

I just found some data from the IRS on tax refunds, which, I found interesting (and hope you do too). Let’s look at the numbers. As of May 10, 2013, 134,349,000 tax returns have been submitted. This excludes extended returns, but is a large majority that will be submitted for the 2012 calendar tax year. 113,954,000 of the 134,349,000 returns were e-filed (impressive). This is a 1.7% increase over last year. And 101,082,000 of the 134,349,000 returns received refunds (not impressive). You know what that means… It looks like Tax Refund Windfall Syndrome (TRWS) got the best of us once again! Average Tax Refund The math works out to just over 75% of all returns resulting in a refund. The average tax refund works out to $2,651. This means that Uncle Sam received an average of $2,651 in interest-free loans from 101,082,000 lenders (aka taxpayers), for a combined $228.46 billion. Pretty ridiculous. The silver lining is that the average tax refund has actually declined 2.1% from $2,704 at this point last year. Baby steps, as some finance guru might say. How does 2013 stack up against the historical average? Average Historical Tax Refund: Over time, the historical average tax refund has gone up and down, but is on a recent downward trend (my guess: incomes have slowly increased since the Great Recession). Here is a look at the last 6 years. Average 2008 Refund: $2,728 Average 2009 Refund: $3,036 Average 2010 Refund: $3,003 Average 2011 Refund: $2,913 Average 2012 Refund: $2,803 Average 2013 Refund (thus far): $2,651 If you’re looking to dig in further to some data, check out the IRS individual income tax database. And remember, if you’re expecting an outsized tax refund, you can change your withholding tax allowances to increase your withholding, and owe more taxes at the end of the year. It may seem counter-intuitive, that sending a check or getting a smaller one is good, but that is the case. Tax Refund Discussion: What was your tax refund this year? Were you happy, sad, indifferent? Do you aim to decrease/increase your refund next year? Related Posts: How to Check your Tax Refund Status The Best & Cheapest Way to Efile 2013 Tax Brackets Average Tax Refund: How Does This Year Stack Up to the Historical Average? is copyrighted by 20somethingfinance.com without consent to republish.

Farmers know how to get the most out of every dollar spent. Nothing goes to waste when you live on a farm — they even recycle manure! For many farm families, living frugally is a way of life passed down from generation to generation. Frugality is an intentional part of raising farm kids. Here are five lessons on frugality for kids from the farm. Money Lessons for Kids from the Farm 1. Recycling is essential. Food scraps get fed to cats, dogs, cows, and other livestock instead of being put in the trash or down a garbage disposal. Old tractor tires are used to grow potatoes or serve as swings and flower beds. When a building needs repairs, materials are often found already on the farm. Old roofing isn’t discarded. Nails are pulled from old boards for re-use, and roofing that’s no longer fit for the farmhouse is recycled for the chicken coop or wood shed. Bailer twine is saved for tying up plants, securing loose items, and even holding up your britches in a pinch. Look under the kitchen sink, and you’re likely to find a ball of used tin foil, carefully washed and stored for re-use. 2. Nature is great entertainment. Farm kids often grow up with less interest in television, video games, and toys. You’ll rarely hear a farm boy complain he’s bored. Nature is perfectly adequate. The birth of a baby cow, seedlings sprouting in the garden, and frogs, fish, and crawdads to be hunted all serve as amusement for a farm kid. An apple tree becomes a fortress, the hay loft is great for an afternoon nap, and muddy fields are instant fun on a hot summer’s day. Manmade entertainment pales in comparison to the free entertainment provided by nature. 3. Responsibilities come first. Farm animals are dependent on the farmer to meet their needs for food, water, and shelter. Fixing the fence is a continual process to keep animals safe, and animals often eat before the farmer does. The entire family pitches in to get chores done; work is simply a way of life. Farm kids learn work ethics and life skills that are essential in the workplace. 4. Work for today, but plan for the future. Farm kids learn that saving for the future is critical. Equipment wears out, and repairs are a regular part of farm living. Preventative maintenance will increase productivity and lessen the cost of large repairs. When farm machinery wears out, purchasing new replacements can cost thousands of dollars, so saving for future purchases is a constant practice. Food is canned and stored for the winter, while excesses are sold for profit. 5. Relationships are important. When a neighbor calls and asks for help putting up crops, you always say, “Yes.” You never know when you’ll need a favor returned. Mending fences with your neighbors is a phrase from the farm that’s learned early on. Keeping on good terms with your neighbors and each other makes working and living together easier. If a nearby farm family falls on hard times, the surrounding neighbors often pitch in to prepare meals, help with livestock, or tend crops. Unexpected life events can be devastating, but with community support, a farm family doesn’t have to face total ruin when funds are tight or sickness strikes. Even if you don’t live on a farm, you can still teach your kids these life lessons about money and frugality. Intentionally building money skills and work ethic in your children is an effort that always pays off. Have you learned any money lessons in unexpected places? This article originally appeared on MoneyNing.com. Let us know what you think (or read what others thought) here. Related posts: Why You Shouldn’t Pay Your Kids an Allowance Why Frugal is About Living 5 Fun and Cheap Ways to Entertain Kids

A college degree is almost a requirement to get any job these days. Employers want to see an Associate’s degree at minimum, but a Bachelors degree is preferred. At the same time college costs continue to skyrocket making getting a great education an expensive proposition for many. One of the ways that you can improve your education is to go online. Many schools now offer online courses that can help you work toward your degree. My husband teaches online courses for Utah State University, allowing students a degree of flexibility in their educational pursuits. Additionally, schools like Harvard and the University of North Carolina also offer online courses. While you want to make sure that you are taking a trustworthy online course, an even more important issue might be that you need to focus on whether or not you are well-suited to online learning. Getting an Online Degree: Is It Worth It? Here are some things to consider before you jump straight into an online degree program. Just as Much Work — Or More Work — Than a Traditional Course Eric Chen is an Associate Professor of Business Administration at the University of Saint Joseph in West Hartford, Connecticut. “Perhaps the biggest misconception about online programs is that an online course is less work than a traditional course,” he says. “Online course offerings are often more work.” Even though many online courses allow a student to work at his or her own pace, the reality is that there is a lot of work that needs to be done. And a student has to be motivated to complete the assignments and engage in self-directed study. “It is still up to the student to participate online and document the student’s learning activities,” Chen points out. “In fact, online course offerings actually require that the student be more disciplined in order to successfully complete such a course.” While there are degree mills out there, offering unaccredited courses and degrees that don’t take as much work, a legit course will likely come with its own challenges and require that you put in as much — or more — time as you would if you were taking the class on a traditional college campus. Who is Suited for an Online Course? If you want to take an online course, whether you are trying to finish up a degree, or whether you are trying to achieve a specific certification in order to qualify for a raise or promotion at work, it’s a good idea to make sure that you are well-suited for an online education. “The best online learner is one who takes responsibility for his or her learning,” Chen says. He says that the students who often do well with online courses have the following traits: Motivation Organization Technological familiarity “The best online learners I’ve seen at the college level happen to be adult learners,” Chen says. “Those who have embraced technology, those in management positions who have incentive to finish degrees quickly in order to get promoted up the chain, and those whose travel schedules do not allow for regular meetings at a predetermined time every week.” He says that many younger students struggle with online courses. They may have more technology savvy, but they don’t often have the maturity to understand what it takes to be successful. “Younger students often get tripped up by the illusions that the flexibility [online] learning offers,” Chen says. After watching my very tech-savvy younger brother attempt online courses for the sake of flexibility, I can see his point. The idea that there is “plenty of time” to catch up, and the idea that the online class can be finished later often means many students never end up finishing, since many online courses still require that you complete the work (and take the exam) within a predetermined period of time. “Students should carve out dedicated time to devote

Remember Book It? I used to love that program… free personal pan pizzas from Pizza Hut just for reading. I used to read Encyclopedia Brown and Hardy Boys and all those books for free. When I learned I could get free pizza for reading… it was like Christmas in June. It was incredible. Well, it’s almost summer and TD Bank is once again offering a summer reading promotion in which customers with a Young Saver account (kids) can get $10 if they read 10 books. All you need to do is have your child read ten books, fill out the summer reading form, and take it to the bank. They’ll get $10 deposited into their account and the fun of reading ten books. If you aren’t a TD Bank customer, this isn’t that great of a promotion if you’re promotion hunting. Most banks offer closer to $100 for you to join them, though their promotions aren’t as easy to fulfill as this one. They usually require direct deposits and minimum balances. If you are already a TD Bank customer, and your kids don’t have a savings account, this isn’t a bad time to consider introducing them to saving. And reading. $10 will be deposited into a new or existing Young Saver account. One coupon per Customer during the promotional period. Cannot be combined with any other offers. Valid May 5, 2012, through September 29, 2012. Must be 18 years of age or younger to participate. Bring form of ID for child for new account opening. TD Bank Summer Reading Program from personal finance blog Bargaineering.com. The post TD Bank Summer Reading Program appeared first on Bargaineering.

I grew up in a single income family with one stay-at-home parent. My spouse also had the same situation for part of her childhood, with her mom returning to work when the children were older. Our daughter started with one stay-at-home parent and moved to two stay-at-home parents when I took early retirement in 2007. While I think two stay-at-home parents has some advantages, I do worry a little about my daughter knowing the situation is not the norm. I have explained to her that most families have one working parent and some families have two working parents. I also have explained to her that it will be important for her to work and have a career as an adult. Both my spouse and I have done part time seasonal jobs while retired. So our daughter has seen both of us work, although not continuously in full time jobs. (I was working full time until our daughter was three years old, but I doubt she remembers much of my time in that job.) I've also started giving my daughter small "jobs" in which I pay her for tasks outside her normal chores. At this point, my plan is to be not working any wage jobs in 2014. So it will be important for us to continue developing a good work ethic for our daughter. For more on Crossing Generations, check back every Thursday for a new segment. This is not financial or parenting advice. Please consult a professional advisor. Copyright © 2013 Achievement Catalyst, LLC