Twila Van Leer

Tax Deductions Americans Use

April 9, 2018 By Twila Van Leer

Thousands of Americans are deep in the throes of the annual tax report and looking for any deductions they can claim to lessen the ultimate load. The three most frequently used deductions include:

• Taxes paid to state and local governments. You can write off real estate taxes that go to support local and state government. You can either deduct the local and state taxes or sales taxes, but not both. In the most recent figures the IRS has released, 44.2 million Americans took the state and local tax deduction, with an average of $12,514 per return. Things have changed for those filing returns for 2017. Under new federal guidelines, there is a limit of $10,000 for state and local taxes.

• Mortgage and investment interest. In the past, filers could claim interest for personal debt, but that is not an option any more. The exception is mortgage debt and you also can take an itemized deduction for interest related to investments. Tax reform also has reduced the amount of mortgage interest allowable from $1 million down to $750,000. Mortgage interest represents some 95 percent of the deductions claimed by taxpayers. That includes standard interest, mortgage points and mortgage insurance premiums. Home equity loan interest no longer fits into the deductibles list.

• Gifts to charity. This popular tax break underwent a lot of debate during the restructuring of the national tax laws. But the amount of charitable gifts ($222 billion, usually in cash or checks) and the popularity of the deduction saved it. On average, the typical taxpayer deducted more than 6,000 in charitable gifts in the form of cash/checks or donated vehicles, clothing or stock, for the last year that the IRS reported.

Know Your Credit Score

April 5, 2018 By Twila Van Leer

Your credit score is an essential facet of your personal finances. Even so, a great number of people don’t ever know what their credit score is or how to affect it in their favor.

It makes a difference. Your credit score is one of the factors that lenders look at when they consider whether to loan you money for a home or other big-ticket item. A lower score could mean a higher interest rate or otherwise affect the mortgage agreement. Your goal should be to have a score above 760.

So find out what your score is and then apply these five steps to upgrade:

• Know your risks. You can learn what your current credit report contains by contacting one of the three main credit reporting agencies, TransUnion, Equifax and Experian. Once a year they are obligated to provide a free report. It won’t include your overall score and you usually will have to pay a fee to see that bottom line. Usually, the score will come with a list of risk factors. Study them as a starting point for improvement. There can be as many as 300 risk factors. If you choose not to pay one of the reporting agencies for a score, many credit card companies will include it on statements and there are third-party websites that provide a simulated score. They include credit.com and creditkarma. Their scores may not exactly match those of the reporting companies, but it is close enough to set you on a correction course.

• Pay your bills on time and every time. The biggest factor in determining your credit score is how faithfully you pay your bills. Obviously, no potential lender wants to hand its resources to someone who has a patchy record of repaying. Even a few days late matter. A single missed payment can drop your score by 100 to 300 points. Start by refusing to allow yourself to add to your debt. Charge only what you can afford to pay off every month in full.

• Manage the debt you have. Keep your balances low to build your credit score. Debt utilization – how much of your available credit you actually use is an important part of how you score. Your balance should never be more than 30 percent of the credit limit on any single charge card or on the total of all your cards. If your balance now exceeds that goal, plan to get them paid off as soon as possible. Add as much money as possible on each payment. Decide if you want to concentrate on the smallest balances first or whittle away at those with the highest interest.

• If you don’t have a credit card, open one. A wallet full of credit cards isn’t necessary, but one or two, carefully managed, can help you establish a good score. Don’t just apply without a plan. Know how much credit you need and how you plan to repay it. If you opt not to have a credit card, open a credit account and faithfully pay it. You need some evidence that will get back to the credit reporters to enhance your score.

• Be patient. Good credit is not built in a day. It may take a few months of faithfully paying bills, keeping credit lines tidy and controlling your spending to produce the results you are looking for. But it will all be worth it when you face a mortgage lender across the desk or have other credit requests to make.

Learning From Toys R Us Failure

April 2, 2018 By Twila Van Leer

Toys R Us Closing — Toys R Us announced that it will close or sell more than 700 stores across the country.

Well, Toys Rn’t Us any more. The company’s announcement that it will close or sell more than 700 stores across the country is a commentary on today’s American shopping habits and how retailers are coping – or not.

The toy giant, one of Santa’s favorite outlets, just hasn’t been able to compete with online buying. Its more than 30,000 employees are joining the ranks of the unemployed.

Because Toys R Us filled such a special niche in the market, many families are watching its demise with heavy hearts. Buying toys, they say, is different. They and their kiddies want to touch and test out the products before buying. The end of the toy store will mean the end of a special experience for the children who were treated to regular trips to see the goodies. But the likelihood is that most of these families will join the march to online shopping.

But in the retail market, where survival of the fittest rules, the Toys R Us closing will have its effect on other major outlets.

The companies that make toys and games are likely to feel the difference. Toys R Us has served as a test ground or “incubator” for new toys. Hasbro and Mattel, who have stood at the apex of toy-making for years, will feel the pinch and then likely increase their use of major retailers such as Walmart, Target and Amazon. Toys R Us has accounted for 11 percent of Mattel sales in recent years, and about 9 percent for Hasbro’s sales.

Experts in the toy market predict that smaller toy companies will have a hard time because Toys R Us accounted for up to 40 percent of their sales, in some instances. The Walmart and Target stores have less space to display toys and may offer fewer of the toys produced by the smaller companies. Hasbro and Mattel may look at creating smaller toys to survive in the new marketing schemes.

The large malls where the toy company has tended to settle its stores will find themselves with big blanks to fill. Some of them have watched the Toys R Us struggle and have been looking for new tenants already.

Not everyone is assuming that Toys R Us is down for the count. Some retailers that appeared dead have created new incarnations for themselves. Consider American Apparel, which declared bankruptcy and closed its stores last year. It was revived by another company and is enjoying a second life as an online-only clothing store.

Jeffery, Toys R Us’ long-necked giraffe spokes-animal, could find new ways to sell his wares. There will always be a market for toys.

Buying A Home? Check This List

March 30, 2018 By Twila Van Leer

Buying a home, for many Americans, is like slipping into a foreign country. Myths about mortgages abound. Go into the process as well prepared as you can by considering these facts:

• Perfect credit is required. Not so. Having a higher credit score is helpful and may get you a lower interest rate, but it is not the only factor a lender considers when you come to borrow money for your home. If you can show that you are able to repay a loan you probably can swing the loan if your credit score is above 670.

• Rising interest will prevent your owning a home. Rising interest rates do, as a matter of fact, affect how much of a loan you can qualify for and the kind of loan you might be offered, but it doesn’t mean you are out of the market. CoreLogic projections show that an 0.85 percent increase in interest will cost the buyer another $100 per month. That may seem like a lot, but it is less than the period of all-time high interest rates in the early 1980s, when a fixed 30-year mortgage rate was at 18 percent.

• You need a 20 percent down payment. Conventional home loans may make this requirement, but there are other options. FHA loans require only 3.5 percent down. VA loans may be financed for up to 100 percent of the price. Lending institutions often have provisions for loans with a minimal amount down, say $1,000. The downside of a small down payment is that you may be required to buy private mortgage insurance.

• Prequalification means you have the loan. Going through a prequalification process determines how much mortgage you can afford by computing your income and liabilities, but it is not a binding agreement. The potential lender will look at additional documentation before you are fully approved.

• A 30-year mortgage is best. It’s the most popular option, but not the only one. A 15- or 20-year loan can save a lot in interest payments. An adjustable rate mortgage starts with a fixed rate then is adjusted according to market factors. That means your payment will fluctuate over time.

Don’t compare mortgage options based on their advertised rates, but look at their annual percentage rate, which lenders are required to advertise, along with mortgage interest rates. The APR includes estimated fees and other charges, giving you a more accurate picture of what you can expect.

How To Get The Best Airfares

March 21, 2018 By Twila Van Leer

If you fly a lot, you should be routinely getting the best possible fares. So here are seven tips that will help you accomplish that:

• Research. Comparison sites such as Kayak or Google Flights can provide current prices. Use the calendar view to see how prices line up at different times of the year. When you know what the regular prices are, you’ll recognize a deal when you see it.
• Stay updated. Some sites update frequently to advertise flash sales and error fares. Airfare watchdog, Thrifty Traveler and Secret Flying post deals throughout the day and supplement with Twitter and Facebook posts. Many deals are time-sensitive and you have to be flexible to take advantage of them. If a deal seems right for you, don’t wait. Book it immediately.
• Look for shoulder season or off-season flights. The high-demand months are March, April, July, August and December. That’s when fares are highest. They correlate with school breaks and holidays. “Shoulder” months are May, June, October and November. Not only are flights less expensive then, but weather is usually milder and there are fewer crowds to deal with. Off-season months are January, February and September, and you’ll find the lowest fares then.
• Fly on Tuesdays, Wednesdays and Saturdays. Airfares are priced on supply and demand, so these days offer the best fare deals because of low demand. Demand is highest on Mondays, Thursdays and Fridays.
• Book early, but not too early. The best time to find the best rates is 45 to 90 days before you plan to fly. Too early or too late can lock you into a rate that might drop before your planned departure.
• Use the 24-hour cancellation policy. If you see a cheap fare in which you are interested, snap it up. That gives you 24 hours within which to make further considerations. Use the time to check to see if you can find a better deal. You haven’t anything to lose if you decide to cancel if the airline you chose has a 24-hour cancellation policy. Obviously, you need to be aware of that before you make the jump.
• Get back the difference. If you have booked a flight and subsequently see the same flight on a different airline at a lower price, check and see if the original line has a price-matching policy. Some airlines charge a $40 service fee, but you don’t have to use the policy often to recoup that cost.
Booking the best airfares is a complex mix of research, flexibility, decisiveness, timing and luck. Vigilance is the operative word. But the effort can pay off and you can save enough money for even more flights. It’s worth it.