Personal Finance Blog

Tips And Stories To Help You With Managing Money

Saving Money With Home Care Maintenance

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heating-coolingIt’s tempting in today’s tight economy to put off the routine maintenance and repairs that every house requires. But delaying may cost you more in the long run. Little problems tend to grow into large problems when they are ignored.

As a rule of thumb, the cost for regular inspection and maintenance is $200-$300, depending on where you live.

Maintain Heating & Cooling Systems

Spring or fall are the best times to call in heating, ventilation and air conditioning experts for such inspections. They are less busy than at the height of the hot or cold seasons. An inspection could avoid such problems as:

  • A poorly working furnace blower. To repair or replace, the cost is about $100 to $150. Ignoring the little problem can result in a broken heat exchanger, which could cost from $300 to $1,000 to replace.
  • A broken reversing switch in the heat pump. The cost to repair or replace is $100-$300. If ignored, the system switches from the heat pump to a more expensive auxiliary heat that will bring higher heating bills.

The average cost of an inspection is $65. Add another $85 or so for cleaning, including removal of built-up creosote, which could cause chimney fires. Annual service becomes a safety factor as well as keeping your furnace efficient.

Inspection may discover such things as the loss of a chimney cap, which will cost about $150 to replace. Otherwise, rain water can get into the chimney, damaging the liner and damper or even cause saturation damage in the mortar joints, problems that could cost $2,000 to $4,000 to remedy.

A cracked chimney crown may by repaired for $300 to $500 and caulking of flashing can be done for $80 to $100. Waterproofing exterior brick may add $350 to $600 to the maintenance bill, far less than if the damage is allowed to continue and rainwater and mold continue to do their work.

Inspect For Termites

Preventing damage from termites is another way to reduce eventual maintenance costs. The insects can damage trimming, framing, drywall, carpet, copper and other soft metals. Even swimming pool liners are not safe. The little pests cause more than $5 billion in damages to American homes every year. The cost of an inspection is a pittance compared with what it could cost you to repair termite damage. Inspections are recommended every one to three years.

Keep Decks In Good Repair

Keeping a wooden deck in good repair makes sense. Moss and mold can damage the wood and also make the deck slippery and unsafe. Any time the weather is dry and warm, have the deck power washed and then sealed will prevent water damage. Untreated, the deck may warp, loosening nails. A well-tended deck can last 20 to 30 years, experts say, at minimal cost.

Washer & Dryers

Thoroughly cleaning a dryer vent can improve efficiency and greatly reduce the potential for fire. If vents are clogged, the appliance may overheat, increasing that potential. Regular maintenance and cleaning are your best bets against incurring significant damage.

Cleaning Carpets

Every 12 months or so, carpets should be deep cleaned. The cost is in the range of 50 cents per square foot. More frequent treatment may be necessary for high-traffic areas. Over time, dirt can bind to the carpet, shortening its life. A clean carpet also offers healthful advantages such as reduction of pollen, bacteria and insecticides and other harmful substances that creep into your carpeting. The cost for premature replacement is about $3,000 for 1,000 square feet of carpeting.

Watch Out For These Money Drains

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Save money on things you can easily do yourself.
Save money on things you can easily do yourself.
Many Americans feel they can’t build savings because there simply isn’t money left after the essentials are covered. But with a little creative effort, you can find a bit here and a bit there to stash away.

With personal saving at its lowest level since 2001 (expected to fall below 1 percent by the end of this year) there must be some creative thinking to get things turned around. Experts at bankrate.com have identified the following popular items as 10 of the “ biggest money drains,” that leave too many families broke and without a savings cushion:

Coffee. At an average price of $1.38 per cup (or more, depending on whom you buy it from) your daily cuppa can cost you at least $3.60 per year, money that could be building your savings account.

Cigarettes. The average price-per-pack in the United States is $4.54, adding up to about $1,660 each year.

Alcohol. Costs vary widely, depending on your choice of beverage, where you live and your favorite watering hole. But, with tip, the average cost of one beer is $5. If you indulge in two per day, the cost could mount to $3,650 per year. If your spirit of camaraderie leads you to “treat,” friends, the cost goes up commensurately.

Bottled water. A liter is, on average, $1.50, multiplying to $540 a year if you stop at one per day. The habit not only costs you, but is a detriment to the environment as the plastic containers stack up.

Manicures. It’s a feel-good luxury you can’t afford if you haven’t any savings. A $20-per-week visit to the manicurist robs your savings of $1,068 in a year. A bottle of nail polish is approximately $5.

Car washes: The average cost is $58 with detailing thrown in. But if you take the option every two months, that’s $348 per year.

Buying lunch every day. The daily cost of eating lunch out every workday is about $9 – $2,350 per year. Making a lunch at home is a nuisance, but the sacrifice will seem worth it as you watch your financial safety net grow stronger.

Vending machine snacks. Each little visit to the machine costs about a dollar, about $260 per year if you succumb every working day to the lure of chips and chocolate.

Interest on credit card bills. The median amount of credit card debt in America is $6,600. The average credit interest rate is 13.44 percent. Making just the minimum payment, it will take you 21 years to ride yourself of that debt – if you resist the urge to perpetuate it. Make real effort to whittle the amount down faster by making additional payments on the principal.

Unused memberships. If you have a $40-per-month membership in a spa or gym or any other type of activity that requires a regular fee and fail to use it, you’ve lost $40 per month. Use it or get rid of it.

You can’t just change your appetite. You have to change your point of view. But with a little self-discipline, you can find the wherewithal to help your savings grow. You’ll be happy that you did.

Handling Tax Audits Successfully

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Don't ignore tax audit notifications. Be prepared to face an audit.
Don’t ignore tax audit notifications. Be prepared to face an audit.

Tax Audit? Don’t Panic

Well, the annual tax mania is over once again. Now you can sit back and relax. Unless, of course, you are one of those that the IRS singles out for an audit. Less than 1 percent of the tax-paying public gets that experience, but it can be unnerving.

Audits are what have given the tax agency its ogre-ish reputation and generated visions of torture and merciless browbeating by suit-clad agents.

Here’s how to address an audit if it happens:

To begin with, an innocent looking letter from the IRS, arriving by U.S. mail, should be taken seriously. Don’t ignore it. Failure to respond almost always triggers escalating pressure from the taxing agency. Better to have your tax accountant respond, if possible. Experts in such matters suggest you never try to deal with an audit on your own. Not many run-of-the-mill taxpayers have the expertise to deal with the figures and the myriad laws that surround them.

Often, the experienced tax experts can spot the difficulty in a return at a glance and resolve it without a hassle. Simply determining which office within the IRS has initiated the audit will reveal the problem.

The experts advise that you never speak to the IRS representatives yourself.

Be prepared to provide whatever substantiating information is necessary to resolve issues. Keeping detailed records throughout the year is the starting point. Small businesses, in particular, need to be certain that personal and business finances are not intertwined.

The statute of limitations on an audit is three years, although the IRS can request an audit up to six years if there is reason to believe there have been substantial misrepresentations on the return. That means you must keep the relevant materials for at least that long. Receipts, pay stubs and other items used in preparing your return should be safely filed away until there is no longer reason to believe you might be audited. Most experts suggest a seven-year period before you toss the information.

The information you provide in response to an audit is filed via Form 4564. It can be delivered to a tax agency in person or mailed. Ask for a face-to-face meeting between your representative and an agent if you feel it is necessary to explain particular items in your return. Mail audits can be time-consuming.

How long an audit takes depends on the complexity of your tax situation – and how many other taxpayers the auditor is dealing with. Generally, a taxpayer has 30 days in which to respond after receipt of an audit notice, and the process then proceeds depending on the particulars. If the conclusion is that you did not pay enough taxes, payment plans can be set up, if necessary. If you don’t feel satisfied with the result of your audit, you can ask for a review.

And there is always the possibility that the audit will find that the government has overcharged you. A little sweetening of the return is ample payment for the consternation you may feel when the word “audit” pops up.

Retirement Planning Should Begin When You Are Young

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Begin thinking about retirement plans when you first start earning money.
Begin thinking about retirement plans when you first start earning money.
Waiting until retirement is around the corner to get serious about preparing for it is a serious mistake. The ideal time to start thinking about post-employment issues is when you are still in your 20s or 30s.

Consistently setting aside money and then monitoring it to see that it is earning the best possible returns is your best bet for being financially secure when the front porch swing beckons., according to financial planners.

In fact, the Wells Fargo Institutional Retirement and Trust, which tracks trends, has reported that a growing number of workers aged 18 to 39 are participating in employer-sponsored programs aimed at retirement. The percentage taking advantage of their company 401(k) opportunities has risen from 43.9 percent three years ago to 50.4 percent, the trust reported.

Part of that increase can be related to a rise in the use of automatic enrollment in such plans in recent years. However, although the number of participants is increasing, the rate of average deferrals has dipped slightly, from 5.2 percent three years ago to 5.1 percent now. Some employers automatically enroll their workers initially at low deferral rates, such as 3 percent.

Merrill Lynch analysts say that savings trends are encouraging. In the first half of 2014, the number of first-time contributors rose 37 percent. In the so-called millennial generation, the figure went up to 55 percent. That age group makes up 20 percent more of the total working force then it did in mid-2013, the analyst said.

Some forward-thinking people just entering the workforce are making retirement part of their thinking. College students are increasingly asking for advice before they being their careers. Today’s “beginners” are more savvy about financial matters and more apt to be aware of how much they must save now to enjoy retirement later. They are willing to sacrifice a little over the term of their working lives for the sake of a worry-free retirement. Those who are familiar with the data assure younger workers that they don’t have to give up all of life’s pleasures for the sake of retirement security. There is room for both careful, consistent savings and the occasional splurge, they say.

Some younger workers are taking more careful note of how their parents are faring as they leave the job market. They are listening to the nagging concerns that Social Security may not be able to cover all the Americans who will be eligible in the upcoming years.

Consulting with a financial planner at the outset of a career is a smart move. In general, the advice is to invest in safe, tax-deferred plans such as 401(k)s or investment portfolios heavy on stocks.

Including retirement issues in your financial planning may have an effect on your lifestyle, the experts say. Some young people are not including home ownership in their plans. Frugal living through the work years may mean a comfortable future, with more gold in the golden years.

Watch Bank Statements For Fuel Fraud

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Watch your bank statements to make sure there are no fraudulent charges.
Watch your bank statements to make sure there are no fraudulent charges.
The price of gasoline is lower than it has been for a while. Still, nobody wants to pay for gas someone else pumped into their vehicle and charged on your debit card. It happens more frequently than you’d think. In some areas of Florida it has become epidemic.

How does it happen and how do you avoid it? First and foremost, check bank statements regularly to spot any unexplained charges.

Suspicious charges on your card for gas tend to be in large amounts, often higher than the amount you could possibly put in your vehicle. In the industry, they call the unlawful activity “skimmer tampering.”

Thieves can get your card number in several ways, according to an industry spokesperson. They are skillful and inventive in lifting your numbers and putting them on a new card, she said. They use them frequently in gas stations or convenience stores. Often, they will purchase large amounts of diesel fuel that they can quickly unload for cash.

How to protect yourself? Check your bank statement weekly, watching for anything that seems unusual or out of place. A charge made in a neighborhood or at a gas station you don’t frequent or in an amount that is unusual is a dead give-away.

Stop using the card and alert the vendor immediately.