Tax Time Is Right Around The Corner

The end-of-year holiday season is followed closely by tax season. If you prepare your own taxes – or even if you don't – you'll need to start gathering your financial information in order to complete your tax return. Tax season conjures up images of filers waiting until the last minute – which falls on April 15, 2009 – to slip the all-important papers into the mailbox.

If you're looking for an opportunity to turn over a new financial leaf, getting a jump on your taxes may be just the thing you need to help get you started. You'll need to collect a lot of documentation, and if you're not a neatnik by nature, this can be one of the worst parts of doing your taxes.

Find a large box and start hunting up your pay stubs, account statements and other financial records. As you move into the new year, you'll start to receive statements in the mail that you'll need for your taxes. Look for envelopes marked "TAX INFORMATION ENCLOSED" and put those in your box.

Reporters – those who have information you need for your year-end taxes – have until January 31, 2009 to put your information in the mail. If you need W-2 statements from employers, interest income statements from the bank, or other similar documentation, you won't be able to file your taxes until this information shows up. If you're in a hurry, check online to see if you can get the figures you need ahead of the year-end paper statements.

If you're self-employed, you have all of the payment records you will need to make your year-end report. In most cases, you'll need to make an estimated payment on January 15, 2009 – unless you can get all of the information you need to file your tax return by the time the estimated payment is due. Since reporters aren't required to make year-end tax information available until January 31, you should plan to make your estimated tax payment. If you're entitled to a refund, file your year-end return as early as possible and get your money back.

Once you have your documentation collected, you can file your tax return. You can find computer programs that will help you file your taxes, and studies show that filers who use tax preparation software are more likely to get refunds faster, less likely to omit required schedules and forms, and make fewer mistakes that will delay a refund check. The tax preparation software is tax-deductible, and cuts down on the time required to prepare a return. If you use tax preparation software each year, you can import data you need from the previous year's return, reducing the preparation time even more. You can also file your state income tax return at the same time, if you live in a state that requires filing.

Most electronic software programs also enable you to file your return electronically for a fee. If you don't want to pay to file your return, you can still print off a paper copy of your return and mail it in. Print an extra copy for your own records. Once you've filed your return, keep all of your receipts and other documents together in a single file, along with a copy of your return in case you're required to answer questions about your return.

Geezeo.com Can Help You Help Others With Personal Finance

If you're struggling with debt management, and think you're in this alone, you're mistaken. A new social networking site aims to prove that. Geezeo.com is designed to help members develop workable budgets, offer advice and suggestions to other members, and provide a social forum in which people who are struggling with the same problems can come together and share their stories.

The site enables users to set personal goals. The social nature of the site is intended to provide greater accountability for financial decisions and habits that are designed to help members reach their personal goals. The site also offers tools that individuals can use to help develop budgets and spending plans.

The site provides tools to help members track spending and learn how others are handling similar problems. Users can also enable a public feed that lets friends and other Geezeo.com members know how they're progressing. Depending upon how much information a member adds to the site, the site can provide warnings about due dates for upcoming bills. Users can also comparison shop for the best rates on savings accounts, retirement savings products and other long-term financial products.

The site also provides a platform for starting and supporting niche interest communities. Users can recognize friends – similar to Facebook or MySpace – and participate in interactive discussions, get expert advice, and receive opinions from other community members.

Accounts on Geezeo.com are free and require only a simple registration. Users are not required to offer up financial information to participate.

Should You Be Buying Stocks Right Now?

Stock market gurus say now is the time to pick up some great stocks at a low price. Warren Buffett says he's increased his holdings substantially in the US stock market, but for the individual investor, does today's market represent an unbeatable deal?

The rules about stock market investing haven't changed. If you know little about investing in stocks, it's never a good time to invest. Instead, take some time to learn about the stock market, and what buying stocks mean before you head to the stock tables to make your picks.

There's nothing guaranteed about investing in the stock market. The old saw about past performance not being a guarantee of future results is as true as it has ever been. Few, if any, sectors are unaffected by the recession, and even the players in stronger sectors may have unrecognized vulnerabilities that will drop the price of their stocks overnight.

The first rule of investing, therefore, is don't put any money in the market that you can't afford to lose. If you're thinking about investing your life savings in stocks, check that plan. Just as you shouldn't put all of your eggs in one basket, you shouldn't put all of your savings into one stock, or one type of investment. If you're serious about making your money grow, go back to the drawing board and learn how to balance your risk in the stock market by picking up other types of investments, too.

The second rule of investing is know what you're buying. Some people buy stocks on a strictly emotional basis. They like the company or its products, so they buy stock. Other people end up as stockholders by virtue of being employed by the stock issuer. As a rule, emotional investing isn't a very good idea. You run the risk of making a bad purchase decision, and compounding it by holding onto the stock longer than another investor would.

Always look at how you can limit your risk. If you're accumulating company stocks – as you might in a retirement plan – the safer bet is to limit the amount of company stock you own. If you lose your job or the company shuts down, you could also lose a substantial chunk of your retirement savings.

All this having been said, there are some great deals to be had in stocks right now, if you have the stomach (and the cash) to invest. Short-term investments aren't the right tool for most investors, but you can put together a nice, balanced portfolio for longer-term goals at a pretty good discount right now.

Retail Bankruptcies May Impact Holiday Gift Giving

According to an item in Retail Information Systems News, more than 6,000 retail stores will close by the end of 2008. The closures cover a broad spectrum of the retail industry, and include both well-known and regional retailers.

84 Lumber, Ann Taylor, Charming Shoppes (owner of Lane Bryant and Fashion Bug), Circuit City, Foot Locker, Macy's, Movie Gallery, Pacific Sunwear, Pep Boys, Sprint Nextel, Wilsons Leather, and Zales plan a combined total of 1330 store closures. Other retailers like JC Penney and Office Depot have significantly scaled back expansion plans due to the soft economy.

Amid store closures, consumers will have to navigate which of these retailers have filed for Chapter 11 bankruptcy protection. The distinction is important, especially for consumers who have purchased goods that have not been delivered, or services that have not yet been rendered. These consumers face a real risk of loss, if a company's Chapter 11 bankruptcy (reorganization) turns into a Chapter 7 bankruptcy (liquidation).

A consumer's best bet is to pay for goods with a credit card. The dispute process associated with credit card purchases may enable the consumer to reclaim the purchase price through a chargeback. Extended warranty services, installation and setup services, gift cards or gift certificates, and goods paid for with cash are less likely to be recoverable. When a retailer declares bankruptcy, cash-on-hand is used to pay secured creditors and the employee payroll first. These obligations must be met first under the rules of the bankruptcy court. When a retailer is running short of cash, those consumers who purchased pre-paid services or ordered goods for delivery are most likely out of luck.

As a rule, consumers should purchase gifts with a credit card to maximize their ability to collect if the retailer goes belly-up. If you had been hoping to pay cash for the holidays this year, use a credit card to provide some extra protection, and then make a cash payment to your credit card immediately in the amount of the purchases you made.

If that doesn't work for you, limit your purchases to goods only. Skip the extended warranties, setup and installation services, and replacement insurance offers. Consider buying directly from the manufacturer if that's an option.

Don't assume that chargeback protection is available with a Visa or MasterCard gift card in the same way it's available for purchases. Ask the bank or credit union that issues the card for specifics on chargeback protections before you buy the gift card.

Planning For College

In a tight economy, planning for college can be difficult. When more parents than ever before are consumed with concerns about debt reduction, saving for college seems like a pipe dream. In reality, you can save for college, even when you don't have a lot of time to amass cash.

If your children are young, saving for college can be as simple as opening a 529 plan account or similar investment tool. Most states have individual plans, but you can participate in any plan you like. There may be some tax benefits to participating in your own plan, however, so don't overlook those.

If you only have a few years left before son or daughter goes off to college, now is the time to make plans that involve less saving and more cost containment. The single biggest way to save on college expenses is to choose a school whose tuition is manageable. That may mean choosing an in-state public university or living at home and attending a local college. Super savers have realized substantial savings by taking the first two years of college coursework at a community college and then transferring to the school of choice to complete a degree. It's not a bad strategy, if you can work with a college counselor to make sure that your community college credits will transfer to your school of choice. Even if you take this route for just one year, you'll save big in the long run.

Talk to your son or daughter about the majors they're interested in and have them do some research on what they can expect to make if they work in that field. Remember, starting salaries are often much lower than median salaries, so don't let them delude themselves about how much they'll be making out of the gate.

If you're on the doorstep of college and you haven't saved, your best bet is to have your child secure loans through the federal government. Think twice about raiding your 401(k) or taking a home equity loan to pay college costs. Also, think carefully about taking loans to help Junior pay his college bills. You have a much shorter payback horizon than your child does, so the bulk of educational loans should be taken out by the ultimate beneficiary of the diploma.

Why Can't We Stay Out Of Debt?

Quick: what's the best way to stay out of debt? Most Americans don't have the answer, but some lawmakers think that part of the solution to debt reduction may be to institute financial literacy classes as part of a K-12 curriculum. In a recent study, more than 60 percent of college freshmen surveyed said that they learned their financial literacy skills from their parents.

That could pose a problem, since most working adults aren't financially literate themselves. A recent consumer survey conducted at FinancialLiteracyQuiz.com shows that less than half of all respondents knew how to define the prime rate and just over one-third knew what the current prime rate was. In more practical terms, only 4 of 10 Americans knew that credit card fraud liability is limited to $50, and only half of respondents knew that property taxes and mortgage interest is deductible.

Currently, just seven states require financial literacy coursework as part of a state-mandated K-12 curriculum. As markets tighten, and consumers struggle to balance their personal debt loads, increasing financial literacy among consumers should be of prime importance. Even basic skills, like balancing a checkbook, calculating a loan payment amount or the repayment value of a loan, or understanding the impact of compounded interest are being lost.

Questions remain, however, regarding the efficacy of such literacy programs. Critics charge that the subject matter is too complex, and the material changes too quickly to develop meaningful educational programs. In addition, there is little proof that such programs have any effect on consumer decision-making and behavior when it comes to financial literacy.

Most credit counselors advocate a combination of personalized counseling, consumer protection legislation and education to help consumers – young and old – learn the basics of financial literacy and debt reduction.

Looking For Financial Security? Start With Debt Management

Financial security is in high demand these days, but frankly, it's a little hard to come by. For people who are new to managing their finances, who want to understand better what's happening on Wall Street and in Washington, or who are seeing the value in debt management, the ideal of making a financial plan can be daunting.

Where you should start depends upon what part of your life you're in. For many people, financial management doesn't really come into focus until a major event or crisis occurs. It could be the loss of a job, a divorce, the birth of a child, or the realization that you'll need to fund a college education or retirement account sooner rather than later that spurs an interest in financial management. For others, increasing difficulty with debt management, a stagnant income and rising costs, or the feeling of not making any financial progress catches their attention.

The first step toward effective debt management is finding out where you are, what you have, and how much you owe. If you haven't encountered problems managing your debts yet, that's good. If you are beginning to find trouble spots, you're still at a point where you can act, and avoid the worst outcomes. Consult with a financial advisor or counselor on what you can do to maintain your good credit and insure yourself against trouble.

If you've already run into difficulty or are finding debt management too complicated to conduct on your own, you can find debt help through a variety of non-profit debt counseling services. You can find debt counselors who will work with you, regardless of your situation. You'll need to pay careful attention to the firm's qualifications, however.

There are plenty of "debt settlement" firms that claim to be able to minimize or eliminate your debts for a fee. If you plan to get debt help through a debt settlement agency, understand who you're working with before you pay anyone any money. The firm should have certified counselors and be recognized or accredited by a national credit counseling agency. They should be able to provide you with a written list of services that they will perform and an idea of how long any repayment plans will take.

Finally, before you pay any money, check with your state Attorney General's office to see if the firm you plan to do business with has a complaint history. If you find many complaints, you should strongly consider finding a different firm to work with.

As Consumer Debt Spirals Up, Educational Organizations Try Their Hand At Debt Reduction

Three organizations dedicated to financial literacy have joined forces on a year-long coast-to-coast bus tour to provide consumers with information about debt reduction, money management and improving their financial positions. The National Association of Personal Financial Advisors (NAPFA) Consumer Education Foundation, TD AMERITRADE Institutional and Kiplinger's Personal Finance magazine will start their tour on September 29 in Jersy City, New Jersey.

The overall message the companies hope to deliver is that it is never too late to start preparing for your financial future. Volunteer financial advisers will be available at each tour stop to give free advice, conduct workshops, answer questions and address audience members' financial concerns.

The initial tour dates will feature stops in Connecticut, Georgia, Maine, Maryland, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, Virginia and Washington, DC.

The companies were spurred to act by the alarming growth in credit card debt between 1989 and 2006, when consumer debt grew from $69 billion to $1.8 trillion. Today, consumer debt is hovering around $2.6 trillion. The goal of the tour is to help consumers understand the inherent dangers of carrying too much debt, and helping them to reverse this trend.

The group's Web site is www.YourMoneyBus.com

Do Debt Counseling and Debt Negotiation Work?

When your debt becomes overwhelming, naturally you want to find a solution that can help. You may see advertisements or receive email from firms that claim to be able to reduce your debt, improve your interest rates, or restore your credit rating. At best, these are lofty promises; at worst, they're scams designed to take advantage of those who can least afford to lose additional cash right now.

Depending upon the debt-counseling firm you choose, you may be able to lower your interest rate and develop a plan that will enable you to pay off your debts. No one, however, can restore your credit score or remove truthful negative information from your credit report.

Debt settlement and debt negotiation are popular approaches right now and they can work, but they're not universally available. If you've made your payments regularly and run into problems like an unexpected job loss or a medical crisis, your creditors are likely to work with you. There are several solutions that they may apply to your situation, including lowering your interest rates, your monthly payments or deferring principal or interest payments until such time that you're ready to resume making regular payments.

If your payment history hasn't been good – that is, you've been late or skipped payments regularly – your creditors are unlikely to recognize your extenuating circumstances and pitch in to help. That's why it's important to maintain a good payment history, even if you can't make full payments every month.

There are some psychological benefits to debt counseling that can make the process worthwhile if you want to pay off your credit cards and develop better financial habits. First, it puts someone in your corner. Managing a crushing debt load alone can be overwhelming. Having someone to help with guidance and debt negotiations can provide a psychological lift. Second, it provides a knowledgeable counselor who can give you correct, timely information about your situation, and help you develop a plan to dig yourself out. Third, a good debt counseling firm can help you see hope in what seems like a hopeless situation.

It will take time to pay off your credit debt, but with a good debt counseling firm and a debt negotiation plan, you can both reform your spending habits and reduce your credit balance sooner than you think.

Finding The Right Credit Counseling Firm

No one enjoys financial trouble. It's stressful and embarrassing. The most promising routes out of debt – debt settlement or debt negotiation – often require skills that most individuals don't feel like they possess. Good information about debt settlement is hard to find and debtors often feel like they're going it alone against corporate financial giants.

Credit counseling can provide valuable services to individuals in financial trouble, but most people wait too long to ask for assistance. Is credit counseling worth the trouble? How can you find a reputable credit counseling firm to help you with debt settlement or debt negotiation?

First, it's always preferable to negotiate or settle your debts than it is to declare bankruptcy, or even let an account go into collections. If you're concerned about your credit report – and you should be – a negotiated debt or a settlement will indeed make a negative impact on your credit. The mark won't be as negative as a bankruptcy or an uncollected debt. Information about a negotiated debt will remain on your credit report for seven years, while bankruptcies will stay on your report for ten years.

Second, when you determine that you want to look for a credit counseling firm for assistance, look for agencies that are members of the local Better Business Bureau or a national body of credit counseling firms. Ask if the agency is accredited, and if so, by whom. Avoid "self-accredited" firms. You want to find a firm that has been accredited by an independent third party. Before handing over any of your personal information, verify that the firm's credentials are in order.

Look for a 501(c)(3) non-profit organization that's based in your community. Ask about their fee schedule, and avoid firms that want to be paid in full up front. Some firms charge a set-up fee and an on-going monthly fee. These aren't unusual, but the fee schedule should be reasonable. Monthly fees that exceed $25-$50 aren't reasonable.

Ask how much of your monthly payment will be applied to your credit balances, and how you will know that your debts are being paid. Ask if the agency offers consumer education classes. If they don't, steer clear of the firm. Ask for a written plan that shows how long it will take to resolve your debts. Depending upon how much you owe and how much you make, eliminating your debts could take as many as five years.
Credit counseling can be an excellent way to help you resolve your debts, as long as the agency you use is reputable and offers a reasonable way for you to meet your credit obligations. You'll also find many firms that will take advantage of your situation, so use extreme care when selecting a credit counseling firm.

Don't Wait To Get Debt Help!

If there's one mistake that people make when it comes to debt, it's not recognizing when they're in over their heads. Debts can mount instantly or slowly over time, but at some point, the debts become overwhelming. Unfortunately, people often wait until late in the game to look for debt help. They may only acknowledge that they're in trouble when they start receiving collection calls or a foreclosure notice.

Debt help is available long before problems escalate to this level. While it's possible for an individual to reach a debt settlement agreement with creditors, borrowers often feel more comfortable with the professional assistance they find at a credit counseling agency. Reputable counselors can help negotiate debt settlement agreements and provide real debt relief.

If you've recently lost your job or are going through a divorce, these events are likely to have a negative impact on your credit. You can discuss your circumstances with a credit counselor who can help you determine whether or not you might benefit from debt help of some sort.

An unexpected job loss can wreak havoc on your finances, especially if you're unable to pay your bills while you locate a new job. If this is your situation, talk to your creditors immediately. They may have options for you that can help you through this rough period.

With regard to divorce, be especially wary of debt divisions in divorce settlements. Although your ex might have agreed to pay off the credit card debt that accumulated during the marriage, the credit card company can still hold you responsible for the debt accumulated in the marriage if your ex doesn't make the payments as agreed. Many people don't discover this until the debt is already in collections. If you think this may occur, you can discuss your options with your attorney and a credit counselor. You may be able to settle these debts if your ex-spouse can't or won't pay.
Waiting for things to get better is never a good option when your credit is on the line. If you encounter difficulties, talk to your creditors immediately and be honest about your situation. If you simply stop making payments, you may find that you've closed off some good debt relief options.

Why Bankruptcy Isn't A Better Option For Most Consumers

Many things can bring a consumer to the point of bankruptcy: job losses, health crises and divorces can all be found at the root of many individual bankruptcies, but even stable, two-earner households declare bankruptcy. Today, more individuals and families are choosing debt settlement over bankruptcy as their first choice in debt relief.

On paper, bankruptcy seems like a great option for consumers who owe far more than they make, or can reasonably repay. In reality, declaring bankruptcy isn't as easy as it once was, and there's a long, painful recovery period following bankruptcy. Laws in the US regarding consumer bankruptcies have changed, and have made it more difficult for the average consumer to throw in the towel.

While it may seem like a nice idea, a more satisfying approach to debt relief for both the creditor and debtor is debt settlement. Debt settlement is frequently the least expensive option for both the creditor and the debtor. Creditors can often be flexible about interest terms of a consumer credit agreement as well as the balance owed, and would rather accept renegotiated terms than spend hundreds or thousands of dollars trying to collect debts, risk a complete discharge of the balance owed, or accept a significantly reduced payment from a collection agency that buys uncollected debts.

Debt settlement also enables consumers to avoid losing their possessions. In bankruptcy, personal possessions are often seized as part of the settlement process. Debt settlement provides the creditor with repayment (which is what the creditor really wants) and increases the likelihood that the debtor will satisfy his or her outstanding debt, often in a short period of time, allowing for a faster recovery from any negative marks that may have been placed on the consumer's credit report.