Tuesday, April 15, 2008

Tax Time is Upon Us Again: Monetary Suggestions

Today, a large number of people are only beginning to fill out their tax forms. Some won't start until tonight, necessitating that drive by the TV cameras at the Post Office. Others will file on line, cursing the burden on the servers that delays their work. The phone lines will buzz with calls to tax help services and relatives with financial experience.

Everyone who can file should, since it will make them eligible for the tax 'rebate' that has been promised us. This election-year giveaway isn't going to help the government get out of the hole it's in, but it may provide some needed cash for folks out there.

Tax refunds and 'rebates' are often a nice little chunk of money that gets wasted. Do not piss this money away. The Bushites want you to spend it on frivolous things that will 'help the economy'. Do something really useful instead.

Some Pagans are smart with their money and/or well-heeled, but I've met a larger number who, just like most people out there, don't have a lot of money and don't have any idea of what to do with a windfall (even a small one). Many Pagans feel that they shouldn't concern themselves with money, but I think they should still spend what they have wisely!

Some suggestions:

* If you've been putting off dental work for yourself or your child, do it now.
* Have that physical or well child checkup.
* Get that eye/hearing checkup for yourself or your child.
* Fix those brakes and/or replace those bald tires.
* Buy that damned auto insurance! I entered traffic accidents for about seven years, and too many people out there are driving uninsured. If you can afford more than liability insurance, it's worth it. I say this as one who knows.

Don't have those needs?

* Pay down (or off) one of your credit cards. Don't divide it among your credit cards, kill one outright.
* If you don't have an emergency savings account, get one. This works better if it's at a different bank than the one for your checking account. The temptation to nickel-and-dime a savings account to nothing is pretty high, so don't make it easy to shift money over to the account you use for daily expenses. I would suggest paying the credit card(s) off first, though, because a credit card can get you through an emergency when a tiny savings account won't.
* File a will. This is especially important if you have children or are half of a gay couple. Don't trust the court to leave your property or award your kids to the person of your choice.
* Get that house/property repair you desperately need. Last time we got a rebate, a damaged tree in our yard was threatening to fall over. We paid some local people to come take it out. This helped stimulate the economy and ensure our house's safety.

Got more money left over, or don't have those needs?

* Open an IRA. Those of you who got rebates before will remember that, the following year, you had to count them as income. An IRA will reduce your tax liability next year and, in the long run, help replace the Social Security you may not be getting. Your bank may tell you that you need $500 - $1000 to open an IRA, but some online services will let you begin one with a much smaller amount of money. I opened one on Sharebuilder (owned by ING) with $200 and could probably have opened it with $25.
* Give to a worthy charity. It can be a tax benefit, and it'll help someone else. If you feel political, give to a group like Americans United for the Separation of Church and State. There are also some Pagan charities doing good work. If you want the tax deduction, verify that they qualify for it before you give them the money. Of course, the good karma of giving to a charitable group doesn't depend on its IRS classification.

If you're getting a large return:

* Buy a CD. You have to get a bigger check to do this, but it lets you save money at a higher rate and is not as easily broken into as a savings account. If you're getting a big refund and don't need the money immediately, it's not a bad idea.
* Buy a bond. Ask your bank or credit union about this. I have some bond stocks in my retirement account, but I'm no expert on this. Bonds are a nice hedge when the economy sucks.

Got some better ideas? Feel free to comment.


Frank said...

I'd add that people should keep a list in priority order of the items you mentioned, updated it frequently, and pay off the top priorities if you get a windfall or a pay raise.

Speaking of raises, I practiced getting a larger deduction than the amount each time so I'd have a more hefty return with which to make the decisions.

Sarah G said...

Good point. Gwen and I do have a list of sorts, but our top items just got knocked off of it. We’re going to have to set up new goals for future bucks, outside of the biggies like paying off loans and the house mortgage (long-term efforts).