Sunday, April 25, 2010

“Personal Finance Examiner | - Examiner” plus 3 more

Personal-Finance - Bing News

“Personal Finance Examiner | - Examiner” plus 3 more

Personal Finance Examiner | - Examiner

Posted: 25 Apr 2010 11:56 AM PDT

Personal Finance: Tax-rate plans leave uncertainty - Philadelphia Daily News

Posted: 25 Apr 2010 06:12 AM PDT

The tax-season headache has passed, but stress could intensify this year amid possible tax increases and uncertainty that confounds planning.

Taxes may go up for individuals making more than $200,000 and couples more than $250,000, and perhaps people below that. But how much, and when, is uncertain. The so-called Bush tax cuts from 2001 and 2003 expire at the end of this year, and President Obama has suggested increases for high-income people.

The uncertainty has some financial advisers unwilling to implement typical tax-planning strategies.

Generally, as taxpayers put finishing touches on a return, advisers remind them to plan ahead. Often, the advice is to delay taking income as long as possible if taxpayers can postpone a bonus or wait to bill a client. Another common suggestion is to be on the lookout for deductions and claim them for the current tax year rather than waiting.

But if taxes rise for people with higher incomes, delaying income could be expensive. Taxes for people in the 33 percent bracket could rise to 36 percent, and the 35 percent rate to 39.6 percent. In addition, a new 3.8 percent Medicare tax on investment income takes effect in 2013. So significant deductions could be more useful later.

Planners see little concern for moderate-income clients because Obama has promised to keep their taxes from rising. For them, the advice is the same as usual: If you got a large refund this year, change your withholding so you keep more pay. In addition, make larger contributions to your 401(k) or a tax-deductible IRA if you have no retirement-savings plan at work.

Further, CCH tax analyst Mark Luscombe said to make energy-savings improvements to your home in 2010, before a tax credit expires.

For higher-income people, strategies are more tentative:

Capital gains. When stocks, bonds, or mutual funds held for a year or more are sold, the gains are taxed at a maximum rate of 15 percent. But that could rise to 20 percent for higher-income people, perhaps creating an incentive to sell and lock in gains this year. It also could be wise to take a loss on an investment this year because large losses can offset future capital gains or $3,000 a year in income in future years.

Dividend stocks. If dividends start to be taxed at a 39.6 percent rate for high-income taxpayers, as some propose, they will be a little less attractive to investors than those now taxed at 15 percent, said Tim Steffen of the Robert W. Baird Private Wealth Management group. Investors may want a blend of dividend-paying stocks and so-called growth stocks to diversify portfolios. John Skjervem, Northern Trust Corp. executive vice president, points out that baby boomers might want dividend-paying stocks for the income they will produce in retirement.

Municipal bonds. Munis could become more attractive to investors in high tax brackets because many are insulated from taxes. But Skjervem warns that many cities and states are in serious financial trouble, putting investors at risk that a government body won't pay muni investors.

Getting the bucket right. Investors can put investments that will be subject to high dividend and capital gains taxes into IRAs, which are insulated from taxes. Skjervem said he did not like taxable accounts to be exposed to stock funds or hedge funds with high turnover; he prefers such investments in IRAs.

IRA conversions. This year, investors at any income level can convert traditional IRAs into Roth IRAs and pay the necessary taxes over two to three years. If you are in a high tax bracket, consider carefully whether you want to pay taxes on the conversion in 2011 and 2012, when your tax rate could be higher than 2010's.

 

Gail MarksJarvis is a personal-finance columnist for the Chicago Tribune. E-mail her at gmarksjarvis@tribune.com.

 

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Personal Finance: It's time to brush up your financial ... - Sacramento Bee

Posted: 25 Apr 2010 12:00 AM PDT

When it comes to personal finances, it's hard to feel savvy. So many choices, so many confusing concepts.

IRA vs. Roth? Credit report or a credit score? Fighting foreclosure, figuring credit card debt. And what the heck's a credit default swap, anyway?

Amid the economy's muddied waters, there's clearly a need for some clarity.

According to recent surveys, many Americans still feel uneasy about their personal finances, despite signs the economy is improving. About 30 percent of adults expect their household's financial condition to be worse in the next six months, compared with 21 percent who say it'll improve, based on a Harris Interactive poll in January.

Seizing the moment this April, which is National Financial Literacy Month, all kinds of businesses and nonprofits are kicking up their efforts to spread "financial literacy" among more kids, teens and adults.

This week, the Assembly passed a bipartisan resolution declaring April fiscal-fitness month in California.

President Barack Obama did essentially the same nationally early this month. Noting the country's ongoing financial distress, Obama said both Wall Street financiers and everyday citizens share the blame.

"While our government has a critical role to play in protecting consumers and promoting financial literacy," the president's statement said, "we are each responsible for understanding basic concepts: how to balance a checkbook, save for a child's education, steer clear of deceptive financial products and practices, plan for retirement and avoid accumulating excessive debts."

Easier said than done, perhaps, but it's not for lack of information. Plenty of "quality personal finance" tools are available, but they're not reaching everyone who needs them, said state lawmaker Ted Lieu, D-Torrance, who co-authored the state's financial literacy resolution with Assemblyman Roger Niello, R-Fair Oaks.

To get you connected with some of those consumer tools, here are some new resources rolled out for National Financial Literacy Month:

• A new Spanish-language website, sponsored by the nonprofit National Foundation for Credit Counseling, is geared to providing the Latino community with everyday money-management help. It's got budget work sheets, financial calculators and tips on homebuying, saving for college/retirement, and avoiding foreclosure and/or bankruptcy. It's at www. termineconsudeuda.org.

• A California teen won a national "Be MoneyWise" poster contest, sponsored by the NFCC. Adrian Kimmok, an 11th-grader in Torrance, picked up a $500 U.S. savings bond and a trip to Washington, D.C., this month. His winning poster was among more than 3,000 entries from students in grades three through 12. See it at www.nfcc.org.

• Consumers can sign up for weekly tips – via e-mail – from the Federal Deposit Insurance Corp. at www.fdic.gov/consumertips. Launched in March, the tips include such topics as financial fraud, online money scams and credit card changes.

• Want your financial tips via Twitter? The National Jumpstart Coalition, www.jumpstart.org, is tweeting daily with financial literacy tips aimed at families. Our favorite last week: "Read today's newspaper and choose a money article to discuss with older kids."

• BankIt.com, a new website launched by Capital One, offers financial tips for parents and kids grades six through 12. "Generation Money," sponsored by FINRA and America Saves, airs on Channel One News, the national TV news site for teens, www.channelone.com. It's loaded with teen topics, such as college costs and credit cards.

• A bill to create a California financial literacy fund cleared an Assembly committee last week. Under Assembly Bill 2437 by Assemblywoman Mary Salas, D-Chula Vista, the state controller's office would accept private donations from financial institutions and nonprofits to be used for statewide financial literacy programs.

Similar bills on this and other financial literacy topics have passed the Legislature in recent years, but most have been vetoed by the governor.

Assemblyman Lieu, who authored many of those bills, said, "If more consumers were educated about financial literacy, the scale of this recession would have been mitigated."

Currently, only three states – Missouri, Tennessee and Utah – specifically require a one-semester course in personal finance for high schoolers, according to the nonprofit Jumpstart Coalition. California requires a semester of economics but doesn't mandate that personal finance be included.

Economics teachers such as Brian F. Shank at Ponderosa High School in Shingle Springs believe that personal finances should be included with – but not replace – instruction in basic economics.

Shank, who is president of the California Association of School Economics Teachers, said, "Most of us include a great deal about personal finances" in the required semester, covering such topics as retirement accounts, interest rates, investing/savings and the cost of credit.

And the recession has vividly shown students why it matters.

In Shank's classes, "They all know somebody whose house has been foreclosed on, they all know someone who's lost their job." Those hardships are "a great teaching moment for personal financial management," he said, "like the difference between an adjustable and a fixed-rate mortgage."

Allen Ostrofe, president of Ostrofe Financial Consultants Inc. in Grass Valley, is a proponent of starting that education while students are young.

"We are graduating students who don't know how to balance a checkbook, don't know how to budget and have a strong belief … that credit cards are a good way to go," said Ostrofe, who writes about financial literacy issues. Taking ownership of your personal finances, he notes, isn't just about "me and my money." It also should encourage kids to consider charitable giving, no matter how small the amount.

Educators and financial experts say it's up to us to take advantage of the many free money-management resources and websites available for all ages.

Among them:

• The Sacramento Public Library's "Take Charge California" and "MoneySmart @ Your Library," www.saclibrary.org, offer free monthly consumer talks, plus money-saving articles, books and links online.

• The State Department of Education lists more than two dozen K-12 financial literacy resources for parents, teachers and students. Search under "Financial Literacy" at www.cde.ca .gov. Similar resources are available at the California Jumpstart Coalition, www.cajumpstart.org.

• The "Talking to Kids" section at SchwabMoneyWise.com covers how to discuss finances with your children, from toddlers to 20-somethings.

• MyMoney.gov, the federal financial literacy site, has an online quiz with links to information on everything from predatory lending to identity theft to credit scores.

It's also where Obama urged citizens to go for financial information. They can also call (888) MyMoney (696-6639).

© Copyright The Sacramento Bee. All rights reserved.

Have a personal finance question? Contact The Bee's Claudia Buck at (916) 321-1968.

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Anya Kamenetz Generation Debt - Yahoo Finance

Posted: 25 Apr 2010 11:49 AM PDT

According to economics professor Laurence J. Kotlikoff, Generation Debt offers "a truly gripping account of how young Americans are being ground down by low wages, high taxes, huge student loans, sky-high housing prices, not to mention the impending retirement of their baby boomer parents." Generation Debt will inspire you to take charge of your financial future.

Read more from Anya Kamenetz here and here.

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