Did you get a big income tax refund?

Three-quarters of taxpayers overpay Uncle Sam; the average federal income tax refund last year was $3,003!  I know that economic psychologists tell us people love to get those refunds of overpaid taxes; they feel like it is a windfall. But it is totally irrational. (I wonder how many tea party-ers over pay their taxes.) If you carry a balance on a credit card, it's crazy to over pay your taxes! Reduce your withholding and direct those funds to paying down that high interest debt faster.  If you don't have a substantial emergency fund, reduce your withholding and set up an automatic deposit to an online savings account as a painless way to save. No Roth IRA? T. Rowe Price will let you start an individual retirement account with as little as $50/month with an automatic investment plan. Unfortunately, too many consumers splurge on consumer purchases with their refund money (note all the advertising to get you to use your refund to buy furniture, TVs, etc.) rather than investing it to secure your future. Nag, nag, nag... don't be a bag lady in your old age!

Adjust your W-4 withholding using the website: http://www.irs.gov/individuals/article/0,,id=96196,00.html

Taking the mystery out of retirement planning: Focus on women and retirement

“Four in 10 working Americans say they will never be able to afford to retire, a Harris Interactive survey of 1,005 adults for the American Institute of Certified Public Accountants found.  In addition, 55% do not know how much they will need to afford retirement, and among those who think they know, they are low-balling the figures. Asked how much they would need for a 20-year retirement starting at age 65, those earning $50,000 to $75,000 gave a median estimate of $250,000.”

Need some help getting motivated and implementing a plan for retirement? View a series of 52 slides with audio produced by the US Dept of Labor in cooperation with the Social Security Administration, the Women’s Institute for a Secure Retirement,  and others.

You can view the event at:
http://event.on24.com/r.htm?e=301567&s=1&k=65A6A95A461C5293DD249BDF5256B72C

How to conquer killer markets, con artists, and yourself

The little book of safe money: How to conquer killer markets, con artists, and yourself

by Jason Zweig, personal finance columnist at the Wall Street Journal.  I haven't read this yet but Zweig is one of my favorite finance writers. Zweig interprets research in psychology, economics, and neuroscience as they relate to personal finance. 

“This book is the latest in John Wiley's "Little Book Big Profit" series. The purpose of the series is to bring the brightest minds to readers so they can pick and choose from the best investment advice available. The book's 22 chapters live up to this purpose, giving the reader solid, research-based and practical information about investing.”

“Zweig offers three commandments related to investor risk-taking. He follows with the importance of budgeting and reducing debt, realizing that you cannot have both low risk and high yield in the same investment and knowing the six basic rules for keeping cash safe. You'll learn why money market funds don't belong in a retirement account but TIPS do.”  Learn much more from this perceptive writer who can translate complicated research concepts into practical advice.  (quotes from review by CFP^® Jon Ford).

Available as an E-audiobook from Logan Library.

Know your retirement personality

“There is more to a successful retirement than finances. Personality can play a big role. Take our 5-step profiler to discover your attitude toward life change, risk and uncertainty as these viewpoints determine how you’ll react to the change from work to retirement. Different personality types react to assorted ways to change. Knowing your personality will help you set realistic retirement goals and plan for the lifestyle that best fits you. Complete our profiler tool and you’ll receive your personality type description along with tools and resources to help you transition into retirement.” This 5 question quiz from Transamerica may shed some light on how you will adapt successfully to the transition from work to retirement, which, of course, is not always from full-time work to full-time leisure.  “Most pre-retirees plan to blend work and play to help smooth their financial transition. A total of 67% plan to work in some capacity as they get older.”

http://www.securepathbytransamerica.com/tools/Retirement-Personality-Profiler.aspx

Take Control of Your Financial Future: Tips to Think About at Tax Time and Beyond

“During tax filing season, many of us spend a great deal of time focusing on our finances—and we are not always happy with what we see. According to the FINRA Investor Education Foundation's recently released State-by-State Financial Capability Survey, only one in six respondents said they were satisfied with their current financial condition. No matter the season, now is the time to take stock of your finances. Here are five key areas to consider, and links to information to help you get started.” http://www.finra.org/Investors/ProtectYourself/InvestorAlerts/MoneyManagement/P123393

April Is Financial Literacy Month: Test Your Investing Knowledge

“April is Financial Literacy Month, an opportunity to brush up on your financial knowledge and pass along what you've learned to someone else. Take the FINRA Investor Knowledge Quiz to get started. When you're done, we'll show you the correct answers and provide you with links to more information.”

http://www.finra.org/Investors/ToolsCalculators/P116940

Have fun!

What will you do with your $500?

Utah State University benefit-eligible employees who have been enrolled in the health care plan since July 1, 2010 will soon receive checks for $600 minus “appropriate payroll taxes.”  (I’m estimating about $500 to invest.) The funds are available because “USU’s self-insured health plan has experienced lower than expected claims.” According to USU president Stan Albrecht, “we believe that these lower claims reflect conscious choices about personal health and wellness and the use of our University health plan.  These positive choices have created an opportunity for the University to extend this one-time wellness dividend.”
 

First, thank Wellness Center director Caroline Shugart for her unrelenting efforts to encourage improved fitness and exercise behaviors! 

Also, this is a good time to re-visit the “Small Steps to Health and Wealth” website, promoted by Financial Planning for Women, to adopt a few more positive behaviors: http://njaes.rutgers.edu/sshw/

Best uses for those funds: pay down credit card debt, fund a Roth IRA, or open a 529 college savings account for your child, grandchild, niece, nephew or whichever child you expect to be caring for you and your money in your old, old age.  

For help in choosing a mutual fund for your IRA go to the FPW website: http://www.usu.edu/fpw/schedule/powerpoints.htm (review the PowerPoint presentations on Mutual funds, IRAs, and Retirement or go to “college 529 plans.” Right click and use the "Save As" option to download the PPTs to your computer for viewing).

Do you live in an historic home in earthquake country?

While dining on sushi in a lovely 1916 brick home last night the topic of the Japanese earthquake came up. When I asked if anyone at the dinner party had earthquake insurance, it was clear the answer was no.  Today's (4/10/11 p. B 1 & 8) Salt Lake Tribune featured an article, "Utahns urged to gird historic homes for quakes." Virtually all of Utah (and much of the west) is earthquake country. It's not a matter of IF but when our big one will hit. Because Japan leads the world in research on building structures to resist damage from earthquakes, most of the buildings would have weathered the quake with mild to moderate damage. However, the massive devastation was due to the tsunami. In addition to buying earthquake insurance, minor structural and interior changes will reduce the damage from a quake. Check out my postings of 3/10/10 and 3/3/11 for basic info on planning for a quake and quake insurance. HO insurance does NOT cover earthquake damage! (You can search my blog for key words to find previous posts about topics of interest.)

However, historic unreinforced masonry buildings need additional structural reinforcement. Thanks to SLT writer Lisa Schencker for these links:

Bracing for the big one: Seismic retrofit of historic houses

http://history.utah.gov/historic_buildings/information_and_research/bracing_for_the_big_one.html

Utah Guide for the Seismic Improvement of unreinforced masonry dwellings (lengthy document):

http://ussc.utah.gov/utahseismic/

Don't procrastinate. Stay tuned for an update on flood insurance.

The Story of Bottled Water

For those of us who remember life without bottled water, it is sad, pathetic, and frustrating when consumers spend money on water packed in a throw away plastic bottle. The bottle is made from petroleum and shipped across the country (wasting more petroleum), and then 80% of the bottles end up in landfills or incinerators. Even worse, much of the supposedly recycled bottles are shipped to developing nations like India (wasting more petroleum in the process) where they add to the pollution problem.

While consumers routinely claim to be immune to advertising, bottled water is a classic example of “manufactured demand,” using scare techniques and images of pure fantasy to entice buyers. Pepsi’s Aquafina and Coke’s Desani are simply filtered tap water sold at 2,000 times the price of tap water! Despite its advertising claims and images of pristine sources, Fiji water is lower quality than Cleveland’s tap water. Imagine paying 2,000 times the price of gas for your car! Yet consumers succumb to this insanity daily.

Logan, UT has some of purest water on the planet coming out of our taps. Don’t be a schmuck! Save your money and the environment; use a steel water bottle. Watch the 8 minute video and kick the bottled water habit: http://storyofstuff.org/bottledwater/

Even worse, millions of pounds of discarded plastic is floating in the Pacific Ocean forming an ‘island’ at least twice the size of Texas –  from the film Flow.

Beware “spear-phishing” emails

Over the weekend hackers gained access to bank and retail customer email addresses when they breached security at a marketing firm named Epsilon in one of the largest security breaches ever. The theft of bank and retail customer email addresses will likely result in an increase in phishing attacks — e-mails that claim to be from a legitimate business but are designed to steal account numbers or passwords. In traditional phishing attacks, criminals send millions of e-mails that appear to be from a bank or other legitimate business, hoping that some of the recipients will be customers of that business and will respond to directions to “update your account information” and divulge account information.  “A spear-phishing e-mail is far more dangerous because it can include a person’s name and is sent only to people who are known to be customers of a certain business, greatly increasing the likelihood that the targets will be duped” according to The New York Times. Affected companies include: Citibank, JPMorgan Chase, Target, Walgreens, Barclays Bank, US Bancorp, Marriott, Ritz-Carlton, L. L. Bean, Home Shopping Network, Best Buy, Walt Disney, TiVo, and the College Board.

So be ultra wary when opening your email.

Guide to saving for college for all income levels

 The best resource on saving for college is Joseph Hurley's website: http://www.savingforcollege.com/  The site is crammed with helpful, authoritative information on why to save, how to save, where to invest, how to use the money most efficiently, and even info on matching state funds to help low income families save in 529 (tax advantaged) college savings plans.   

The Utah Educational Savings Plan (UESP) http://www.uesp.org is one of the best plans in the nation (avaialable to non-residents as well as Utah residents). Utah taxpayers can direct their Utah state income tax refund to be deposited into their Utah Educational Savings Plan (UESP) 529 account(s) by simply marking the UESP savings option box (line 46) on their individual Utah state income tax returns.... If it's too late to do this but you received or anticipate a refund, sign your kids, grandkinds, nieces, nephews up for the UESP plan. What better gift than to start their college savings account and encourage them to learn the savings habit?  There is No minimum investment required to open or maintain a Utah Educational Savings Plan college savings account so NO MORE EXCUSES! Save on federal and state taxes.

Think you can't afford to save for your kids' college educations?  UESP will match up to $400 annually on contributions for low income families. See details at Fast Forward Matching Program http://uesp.org/matchingprogram.html Put that tax refund to work and start saving today! And ask the grandparents to contribute, too.

How to take money out of 529 (college savings) plans

The April 4 Wall Street Journal explains some of the finer points of the best way to use the money in 529 college savings plans. If, for example, tuition is $10,000 and you are eligible for the $2,500 American Opportunity tax credit (applies to the first $4,000 in tuition), don't withdraw more than $6,000. Who should the check go to? Checks from 529 accounts can be written to the student, the account owner (typically a parent) or the school. The article warns that some schools may reduce financial aid if a student receives funds from a 529 account (according to Joseph Hurley, http://www.savingforcollege.com/. For spring tuition be sure to pay the expenses in the same tax year as the funds are withdrawn (generally not a problem for fall semester). If someone other than a parent owns the 529 account, and if your child is eligible for financial aid from the school, it may be best to save those 529 funds for the last couple of years of their undergraduate degree to maintain eligibility for aid. Any excess can be used for grad school or by a sibling.

By the way, 529 plans aren't limited to kids. Anyone of any age can save for college tuition (you don't need to sign up to earn a degree). Adults who plan tot go to grad school in the future or just want to take a course or two can benefit from the tax advantages of 529 college savings plans.

Who gets grandma's yellow pie plate? Your guide to passing on personal belongings

"Everyone has personal belongings such as wedding photographs, a baseball glove or a yellow pie plate that contain meaning for them and for other family members. Planning to pass on such items can be challenging, and may lead to family conflict.

"This web site provides people with practical information about the inheritance of personal property. Our goal is improving family decision making through education and research."

http://www.yellowpieplate.umn.edu