What we can learn from the Kardashian’s

If you haven’t heard about the recent demise of Kris Humpheries and Kim Kardashian after just 72 days of marriage from a multi-million dollar wedding, I don’t know where you’ve been.

In the reality show, “Keeping Up with the Kardashian’s,” it was very obvious that Kris and Kim’s relationship was doomed from the start due to Kim being used to her own space and Kris being used to spending the majority of his time training in Minnesota, rather than galavanting around LA and New York. However, I would argue that the biggest issue they had came down to their backgrounds. Kris came from a modest background in Minnesota and found success in his basketball talent. Kim has always grown up filthy rich and never had to work for anything.

Because of Kris’ upbringing, he lives modestly despite his multi-million dollar NBA contract. Kim just wasn’t having it. In one episode, Kim made it clear that if she moved to New York with Kris, so that they could be closer to Kris’ hometown and family and Kim could keep up her modeling career, that she could not live a lesser lifestyle than she does in LA. In another episode, Kris playfully throws Kim in the ocean at Bora Bora, and she comes out cursing and crying because she lost her $75,000 diamond earrings. In that same episode, Kim throws a fit about the Presidential villa right in front of their private butler who put the room together.

Kris could not make sense of Kim’s obsession with expensive taste and her never ending complaining, even though she had everything she wanted. I believe that this is what really drove them apart. It tells us that even to the rich and the famous, it’s so important for couples to sit down and talk about finances. Ask your significant other questions about their beliefs. What should we focus on when spending money? What is most important to save for? Do you value money, or spend it frivolously? Do you think it’s important to donate money? Do you have a budget? Should we create a budget? Can we stick to a budget? Do you have financial goals? If you wanted a big ticket item, such as a $1,000 55” TV or a brand new car, would you just go buy it or would we discuss it first? It doesn’t matter if you make $30,000 per year or $30,000,000 per year, financial issues are going to be prominent in your relationship.

If you do end up having this conversation with your significant other and you can’t seem to agree on certain financial problems, that doesn’t necessarily mean that your relationship is doomed. At WolfBridge Financial, we can sit down with you and discuss the disagreements you are having. We will create a financial solution, customized specifically to your lifestyle and needs. No matter what your income level is, or what your financial goals are, we are here to help. It’s much more rewarding for us to be able to create a plan that will keep a couple together, rather than have to create plans for couples who are splitting because they were unaware that the services were available. Furthermore, your life will likely be more fulfilling if you can save your relationship rather than end up in turmoil. Now that’s a story for the newsstands.

Viviana’s Loan is Fully Funded

Viviana and her group have reached their goal of raising $1,600, of which we funded $25, so that they are able to purchase bean seeds, compost, and other farming supplies for their agricultural business. We hope that this credit will allow the group to increase productivity and sustain profits, so that their children will remain in school. The group will start paying back their loan in February, 2012, and we will receive payments each month for six months until our loan is paid back in full. Then, we will be able to re-loan the money to another entrepreneur in a developing country.

We have enough money in our Kiva account to make one more loan before we start receiving re-payments. I will make this loan in December. So far, we have contributed to groups of women in Pakistan, Senegal, and Ecuador. These small “microloans” can do so much for people who have no other way to obtain credit. Kiva gift cards are great gifts for family and friends this season! When you purchase a gift card for $25, you give someone the chance to lend the money to an individual or group that speaks to them the most. Then when the money is repaid to their account, they can re-lend the money, or cash it out. Of course, the idea is that they will re-lend the money and hopefully add to the account themselves. You can make gift card purchases online at www.kiva.org.

Our third Kiva Loan

Today we contributed $25 to a group of two women and two men (led by one of the women) in Ibarra, Ecuador. Viviana, the group leader, works with her husband and the other group members in the agricultural field, such as growing beans, corn, and other crops. She requested a $1,600 loan to help them buy seeds, compost, fungicides, and various supplies to sustain their farms. She has a nine-year-old son, and she hopes he will be able to attend school regularly throughout his life.

One aspect of this group that drew me in was that they were asking for compost instead of fertilizer. Compost is a compilation of nutritious plant feed that will not harm the soil or water source in this area. Although the fungicides are chemicals, the crops will likely fail without them. This is a needed chemical, unlike the need for fertilizer which causes unnecessary damage.

This is the second time we have disbursed a loan to a group, instead of an individual. Remember that group loans work a little differently than individual loans. They ask for a large sum of money that is divided between them according to their business needs. The chair person of the group requests the loan, but each person is responsible for paying back their portion. Every now and then, the group gets together and discusses how their business situation is going. If one person is struggling to pay their loan back, the other members step up and cover it for them so they will be able to keep a high repayment rate and request more loans in the future.

Ibarra, Ecuador is located in the northern part of the country, near the border of Ecuador and Colombia in South America. The average annual income per capita is $4,776 USD. The microfinance institution administering the loan is charging 24.08% interest. Remember the interest is paid to the institution, not to the loaner. We only receive our principal amounts in small payments over a period of time (usually around $2 for 12-13 months).

So far, the loan is 32% funded. The group still needs $1,075 in order to reach their requested amount of $1,600. By the end of the day, the loan will likely be raised to the full amount.

We still have enough money in our account to make one more microloan of $25 to a group of women in a developing country. Our borrowers from Pakistan and Senegal are in the process of repaying their loans, and we will be able to redistribute the money to a new set of entrepreneurs in a few months.

By the way, WolfBridge Financial was recently featured in Boom! Magazine, a local retirement publication, for our Kiva loans. If you missed it, you can find an issue at one of these distribution centers. Click Here for Distribution List. We are located in the Chatter section on the inside front cover. Hurry to pick it up! The December issue will probably come out later this week.

Kiva loan is paid back

Remember the loan we made to Zareena in Pakistan? She wanted to buy a cow to start a milk selling business. This was a sustainable endeavor that would allow her to have a continuous supply of milk for the entire live of the cow and sell her milk for profit. Zareena had two sons and two daughters, one of which was in school while the other three were too young to attend. We hoped that this loan would allow her to become profitable enough to send all her children to school, so they would spend their time in a safe, stimulating institution and work towards having a job that will raise their standard of living for themselves and their family.

We are happy to announce that Zareena has become profitable enough to start repaying the loan even earlier than required! We received our first repayment of $2.29 this month, and will continue to receive payments through August, 2012 when the loan should be entirely repaid. Remember, we are only receiving our principal amount. This project is exclusively outreach-based. We are not receiving interest.

See what just $25 can do to enrich the lives of a family in a developing country? We will continue to make microloans to individuals and groups in areas where entrepreneurs have no access to credit. Check back soon and stay informed!

Steve Jobs – A true American

Our country has a great sense of nationalism, particularly when it comes to the military or sports.  As a former member of the armed forces, I take pride in our military and what it has done for our country.  As a spectator, I watch with pride how the freedom in the United States can breed Olympic athletes who dominate time and time again.

But we often lose sight of what else it means to be an American.

Steve Jobs was one such American.  His strength and passion:  Innovation.

I have friends who tease me about being an Apple follower.  Fortunately for me, there is no shame in it.  Their products changed my life, and helped launch my business.  Macs and their peripherals have also allowed that business to thrive.

When people call Steve Jobs a visionary, it is an understatement.  In one third of a century, he completely changed how America operates.  He was inventing even while he was dying of cancer.  To me, that is the wounded soldier on the battlefield who asks his buddies for ammunition and says, “I’ll hold them off” and fights until his last breath.

We see complaints of the unemployed, the underemployed, a wretched economic situation and I realize that not only has Steve Jobs died, but a piece of America is dying.  One of the most important parts.  The part that says, “I won’t be a victim.  I won’t wait for someone to come help me.  I will create my own life.  I will fashion my own destiny.  I will write my own story, and not someone else’s.  I will create, I will forge the path ahead, and I will innovate”.

This is what it means to be an American.  This is what Steve Jobs was to this country.

Your Flexible Spending Arrangement

Fall is in the air…or at least it should be by this weekend. That also means that open enrollment is just around the corner for most folks. If you are lucky enough to have a medical flexible spending arrangement as a workplace benefit, take note of the December 31st deadline. Since this is a use-or-lose program, you have just over 90 days to wipe out your FSA balance or forfeit the unspent money, although some companies do offer a grace period until March 15th.

Due to the Affordable Care Act, enacted this year, there were some changes effective January 1st. Unlike in 2010, over-the-counter (OTC) drugs no longer qualify as an expense for FSA purposes. If this change caused you to overestimate what your 2011 medical expenses would be and you don’t want to lose the money in your account, then it’s time to start spending!

Go ahead and make those dental or vision appointments before the end of the year and before your calendar fills up (or your doctor’s). It might not be a bad idea to stock up on cold or flu treatments either. Of course there are still some items that don’t require a prescription, including hearing aid batteries, first aid supplies, contact lens solution, adult diapers, insulin and health monitors. For a complete list of eligible expenses, contact your plan administrator or refer to IRS Publication 969. Don’t forget to keep your documentation; according to the IRS you should be able to provide proof of purchase and proof of prescription, so make sure to save all of your receipts.

Aba Ndiaya’s Group Loan is Fully Funded

Over the weekend, the group of 15 women in Senegal fully raised their requested loan of $2,950. We contributed $25 to help the chair woman of the group, Mrs. Fatou, increase her inventory of palm oil and lemon juice. She is hoping to increase profits in order to improve the standard of living for her family, including nine children.

The Aba Ndiaya group will repay their loan fully in March, 2012. We will receive $25 in March to be able to re-lend to other Kiva borrowers around the world.

We still have $50 in our account, which we will lend to two Kiva borrowers. Keep up with our blog to stay informed!

Our Second Kiva Loan

Today we contributed $25 to a group of 15 women in Senegal, all of whom live together in a village and have their own trade businesses.

Group loans work a little differently than individual loans. They ask for a large sum of money that is divided between them according to their business needs. The chair person of the group requests the loan, but each person is responsible for paying back their portion. Every now and then, the group gets together and discusses how their business situation is going. If one person is struggling to pay their loan back, the other members step up and cover it for them so they will be able to keep a high repayment rate and request more loans in the future.

The “Aba Ndiaya” solidarity group formed over two years ago. They asked for $2,950, collectively. A portion of the loan will go to help the chairwoman, Mrs. Fatou (first name not given), to buy palm oil and lemon juice. Mrs. Fatou, 53, has sold these products for several years, but wants to increase her inventory to improve the standard of living for herself, her husband, her five children, and four other children she cares for.

Senegal is located on the northwest coast of Africa, along the same latitude as Nicaragua. The average annual income per capita is USD$1,759. The microfinance institution administrating the loan is charging 17.5% interest. Remember, the interest stays with the institution, and is not transferred back to the loaner.

So far, the loan is 52% funded. The group still needs $1,400 in order to reach their requested amount of $2,950. By the end of the day the loan should be raised to the full amount. I will keep you posted….

Zareena’s Loan is Fully Funded

Just an update to inform the WolfBridge community that our first Kiva loan to Zareena in Pakistan has now been fully funded. We contributed $25 out of the $925 she needed to buy a buffalo. Zareena will now add a milk-selling sector to her animal-raising business. We are hoping that she will become profitable enough to be able to keep her oldest child in school, and place her three younger children in school when they become of age.

Zareena will start paying back her loan in November, 2011. We will receive a little over $2 per month until the loan is repaid. Then, we will be able to re-lend this money to another entrepreneur.

We still have $75 in our account, which is enough to make three more loans. Stay tuned!

Our First Kiva Loan

Today we contributed $25 to Zareena, a woman in Pakistan who runs a livestock business. Her main responsibility is to buy baby goats from animal markets, raise them, then sell them for profit. She is asking for a loan of $925 to buy a buffalo, in hopes that she will be able to sell milk in her community.

Zareena has one school-age daughter, and three young children who are not old enough to attend school. We hope that this loan will enable her to earn enough money to provide for her children and have them all educated.

The average annual income per capita in Pakistan is USD$3,004. The Field Partner assisting Zareena with her loan is charging her 34.08% interest (keep in mind that interest goes to the institution, not the loaner). This seems high, but this rate is low compared to what some microcredit institutions charge. I think it defeats the purpose of helping these businesses to become profitable if they have to pay ridiculously high interest on their loan. Therefore, I only support Field Partners who charge their borrowers less than 35% interest.

So far, 8% of Zareena’s requested loan amount has been raised. Hopefully, the remainder of the funds she needs will be contributed by the end of the week. I will update you when this happens, and we will soon make our second loan!

WolfBridge Goes Global

I recently travelled on two different study abroad programs to France and Italy, my first trips outside the United States. I have never been to a developing country, but I am currently in the process of applying for an alternative spring break trip to Belize where I will be involved in building farm structures for cacao farmers. I have been to the big, bustling cities of Paris and Rome, but now I want to be involved in a program that is not about study or outside travel. Instead, this endeavor is about gaining a true global perspective of what it is like to make a living in a country without government assistance for small business owners.

I was inspired to research the Belize program from a class I am currently taking called World Population and Food Prospects. No, it is not a culinary class. Our focus is on world hunger issues, and the effects of low soil quality in areas of the world that are dry, and lacking the nutrients needed to grow nutritious crops. In a developing economy where you must grow your own food and use it as part of trade for other goods, it is impossible for every citizen to have enough food and water to live on. Since the economy cannot grow without trade, the government has no capital to invest in small business ventures.

Having no access to credit and no market to provide for are only two out of a long list of reasons why developing countries cannot rapidly industrialize. Lack of education and technology, along with cultural beliefs against women empowerment, also stand in the way. However, citizens of these countries still try to make a living despite all the odds against them.

So, what does this have to do with WolfBridge Financial’s outreach to the global community?

Our interest in globalization and worldly perspectives, along with a passion for reaching out to others, inspired me to pitch a proposal to Mike that involved loaning small sums of money to small business owners in developing countries. We are able to do this through the website, www.kiva.org, strongly supported and often publicized by former president Bill Clinton.

Kiva acts as a middleman between loaners (individuals and groups contributing small loans) and Field Partners, microcredit institutions in developing countries that help small farmers, storeowners, or service providers develop a business plan and fund their needs. Field Partners provide pictures of the owner and their families, their personal and business background, statistics about their home country, and information regarding their institution to Kiva loaners. As the borrowers begin earning revenue, they start repaying the loans, which distribute back to the loaners. The minimum loan amount a Kiva member can provide to a single borrower is $25.

It is important to note that Kiva loaners do not receive interest upon repayment. This is not in any way a profitable endeavor, but rather a global outreach project. The microcredit system has proved extremely effective, in that 98% of loans have been paid back in full. If another credit system exists with anywhere near this high repayment success rate, please share.

So, I pitched a proposal to Mike, asking if we could start a Kiva account with $100, make small loans to global businesses, and blog about it. I wanted to blog about these loans so that our present and prospective clients would be proud to be a part of an organization that recognizes areas of the world where opportunities are not as bountiful; where support for proprietorships is not as accessible; where women are not as highly regarded as entrepreneurs. From our office in Apex, NC, WolfBridge Financial is going to make a difference in numerous lives and families around the world. We are going to focus on loaning to groups of women who run agricultural businesses. We want to enable women’s empowerment in developing countries so that they can provide food and water for their children and encourage them to stay in school. This will help alleviate poverty-induced marriages, pregnancies, HIV/AIDS contractions, and human trafficking, sadly often seen among young girls who are forced to work instead of receive an education in a safe institution.

Please follow us through this blog and spread the word to others in your neighborhood. We are proud to be a member of the Kiva community and hope you will recognize and praise our passion to support small businesses all over the world.

War Of The Roses....


Many of you may remember this comedy from the late 80’s, starring Michael Douglas and Kathleen Turner.  It is an all-too-familiar story of young lovebirds who ultimately find themselves facing divorce after years of marriage, kids and career.  While the story line may be a little over the top, which makes it so funny in the first place, the premise of the story may be very recognizable to folks going through their own bitter divorce.  Of course at the end of the movie, as is often true in reality, there are no winners and much of the life the two of them built together has been destroyed in the divorce process. 

Fast forward 20 years and there has been a slight paradigm shift, at least for some folks, in the way that divorce is handled.  Many attorneys, now trained in the area of collaborative divorce, choose to give their divorce clients an opportunity to achieve their legitimate post-divorce goals without trying to sabotage the other spouse in the process.  Both spouses must be committed to the collaborative process in order to make it successful.  Many couples may choose this process because they believe it is best for the welfare of the children and will make it easier to co-parent them in the future.  However, there are many other advantages to a collaborative divorce.

Collaborative divorce offers the opportunity for resolving the legal issues in a dignified and respectful manner.  It can eliminate the fear some couples may have, a fear that their divorce will be lengthy, costly and end up fostering more bitterness between the two of them, not to mention the harm it will do to their children.  It highlights the goals of each spouse and the best interests of the children.  Collaborative divorce attorneys will act as guardians of the divorce process, giving their clients the opportunity to decide their long-term goals and the issues that are important to them, even if their choices would not likely be in line with a litigated outcome. 

Some collaborative divorces utilize a full-team model which includes divorce coaches for each spouse, a child specialist if there are children, and a neutral financial person to help resolve the financial issues of divorce.  Whether you are interested in learning more about collaborative divorce or you would like to consult with a professional in a specific practice area, there are many collaborative practice groups established throughout the country.  You can visit http://www.collaborativepractice.com/ to find a practice group near you, or professionals located near you.  If you are in the Triangle area, you can also visit http://www.ncacdp.com/about.html

S&P Downgrades U.S. Debt – How credible are they though?

In my previous post, I discussed the fact that the United States losing it’s AAA rating could have far reaching an in-depth effects.  What I didn’t talk about was what would happen if there was a split decision.  Looks like we have a 2-1 in favor of AAA rating so far.  S&P downgraded the U.S. to AA+ on Friday after the markets closed, which is probably for the best.  An announcement like that during the trading day could have had some disastrous effects.

That aside, how important is this?

At this point, I think it’s unclear.  Add to the fact that the S&P analysis was flawed (they were off by $2 TRILLION – yes, you read that right) because of an overestimate in the U.S. deficit.  S&P admitted the mistake but did not change their opinion.

Do I NEED to go into the credibility issues of this?  Maybe not, but I will.

Remember how our last recession started?  AAA rated package loans.  Clearly their analysis was flawed then.  When something that calamitous happens, you HAVE to get something like the United States debt correct.  If you don’t, your credibility takes even more damage.

My opinion – Don’t listen to anything the ratings agencies say.  I am hoping at some point, they just abolish them.

The Real Reason to be Concerned about U.S. Credit

The arguments are in, and as of this writing it looks like a deal will get done to raise the debt ceiling.  The cynical in me still believe the reason it has taken so long is that Congress is allowed to trade on inside information.  I would give anything to look at the trades these folks have made in the last few weeks.  Apparently they needed it to come down to the wire so that they could actually take advantage of the worst week for the stock market in a year.

But I digress.  The biggest issue here has been the credit rating.  But not for the reasons people keep talking about.  Yes, there are some issues with rising interest rates and free flow of credit.

However, our biggest worry should be the fact that not only is the U.S. dollar the world’s reserve currency, the 10-year Treasury is the global risk-free rate.  What happens when the risk-free rate is no longer risk-free?  With nearly 20 other countries possessing a AAA credit rating, if the United States gets downgraded, will we still be the risk-free rate?

Why does it matter?  All of our pricing models, all of our GLOBAL pricing models are predicated on a risk-free rate that is tied to the U.S. Treasury.  What happens to those models when the risk-free rate goes out of the window?

It would create enormous inefficiency in capital markets.  Other countries might start using their own rates.  Even companies within countries might use different rates and come up with different pricing models.  While this could create opportunities for savvy hedge fund managers (who thrive on exploiting inefficiencies in capital markets), it will leave average investors blowing in the wind and subject to the whims of a crazy global market.

While potentially there could be huge gains, the resulting chaos could result in large declines in the market.

I fully believe that it won’t come to this, as I believe the ratings’ agencies are afraid of this exact outcome (along with the rest of us).  After all, we should have had our credit downgraded 20 years ago.

Who Should Get The Dependency Exemptions?

When getting a divorce, there are a multitude of tax issues that need be taken into consideration before making any long-term or permanent


decisions.   If a couple has young children, their college education may be a distant thought when they are simply trying to plow through the current issues of determining alimony and how to divide up the marital assets.  But when deciding who gets the dependency exemption for the children, don’t forget that the deduction for certain tax credits is linked to who gets the dependency exemption.  This means that the dependency exemption may be worth a lot more than a $3700 deduction per child.

The Child Tax Credit can only be claimed by the parent who claims the dependent.   If you have a child under the age of 17 at the end of the tax year, you may be entitled to up to $1000 per child (the credit is phased out at higher income levels).  In order to claim the Lifetime Learning Credit or the Hope Scholarship Credit, you also must claim the child as your dependent.  This credit could be worth thousands of dollars.  Even if you are the parent who is paying the tuition or other qualified expenses, you will not be able to claim the credit for higher education expenses unless you claim the child as your dependent.  The Dependent Care Credit, however, may be claimed by either parent that pays work-related childcare costs, regardless of who gets the dependency exemption.

The IRS rule is that the parent with primary custody gets the dependency exemption for the child.  If the parents have shared custody with an equal number of overnights, the dependency exemption is given to the parent with the higher AGI.  However, if both parties agree, they can specify in their consent order how the dependency exemptions will be claimed.  Couples can split the number of children, alternate years for claiming the child(ren) or divide the exemptions in any manner that makes the most sense for them from a tax and financial standpoint.  It would be wise to have your CPA or financial advisor do some tax planning that can show these tax implications before deciding on the final wording of your consent order.  If future tax issues are not taken into consideration now, there may be thousands of dollars sacrificed down the road.

Debt Ceiling and Politicians? Why It’s Good to Be in Congress

While the White House and Congress go back and forth over whether or not to raise the debt ceiling, I have to wonder if it’s all just a money-making ploy.  I have often heard that people make money so that they can have power.  But what do people in power want?  More power?  Possibly, but I don’t think that gets to heart of what is bothering me about the political brinksmanship that is going on now.

Congress has a pretty good deal.  Decent salary, good health care, lobbyists paying for lunch and dinner and drinks and maybe even breakfast.  Staffers paid by the government to do their bidding.  There is a lot of power there.  But as I’ve talked about before, Congress has one thing that the rest of us can never get:  carte blanche to trade on inside information.  Not to mention that their policies have the ability (and often do) to control how the capital markets perform.

So my question is this:  How can we allow this to happen?  The President of the United States is required to put his assets in a blind trust.  For very good reason.  When the President speaks, markets can move.  As members of Congress, and in the age of twenty-four hour news television, what they say can have tremendous influence upon the markets.

It’s a good bet that most of these members of Congress know what they are doing.  Are they buying on these dips after “A DEAL CANNOT BE REACHED” is put out in the press because of posturing by either side?  Maybe they know they will pass it.  I think that’s likely.  Unfortunately, I find it very difficult to trust what our leaders say (Democrat or Republican) and so have a hard time reconciling anything they say now.  They could know they are going to pass a resolution to raise the debt ceiling (or not) and make a fortune either buying as the market drops, or shorting it entirely.

Financial regulation reform left their pocketbooks largely untouched.  The rest of us, as usual will be the ones who pay the price.

Time for an annual checkup…

I’m not talking about going to the doctor, but that wouldn’t be a bad idea either.  I’m talking about analyzing your tax situation to see if anything needs to be changed before you get started on the second half of 2011.  We are almost halfway through the year so it’s a good time to analyze your withholdings, estimated tax payments and any changes to your life or employment that will affect your tax situation for the year.  Life changes that can affect your tax liability are marriage, divorce, birth or adoption of a child, retirement, change in income, home purchase….just to name a few.  You may need to adjust your withholdings, either up or down, to account for some of these changes. 

If you’re self-employed or expect to have any 1099 income, you may be required to make quarterly estimated tax payments.  And don’t forget the dreaded self-employment tax which is often overlooked by folks when doing their tax planning.  When you are paid W-2 income, your employer pays half of your Social Security & Medicare tax, but when you are self-employed you are responsible for the entire 15.3%.  Fortunately for 2011, the 2010 Tax Relief Act reduced the self-employment tax by 2% so the total is only 13.3%.  Also you can deduct half of your self-employment tax in figuring your adjusted gross income.

Tax planning isn’t only to ensure you have paid enough in taxes and don’t owe too much at the end of the year.  It can be used as a tool to make sure you haven’t paid too much in taxes as well.  Some folks prefer to get a large tax refund at the end of the year but that is not really ideal.  You are simply lending money to the government free of interest.  By increasing your allowances on your W-4 (and NC-4, for folks in North Carolina) you can have less tax withheld from your paycheck and you can use that money for something now, rather than later.  The ideal situation would be to break even on your end-of-year tax bill.

It’s a lot less stressful preparing for tax season when you know you’ve been on top of your taxes all year long.  Tax laws and provisions are always changing and your tax professional can help you keep abreast of how those changes may affect your situation.  Don’t wait until the end of the year when it’s too late to make any changes and don’t let yourself be surprised when you’re ready to file.  You may end up with a not-so-pleasant surprise in the form of a large tax bill.  Even worse is if you could have avoided some of that tax with proper tax planning.

Should you use a credit monitoring service?

Fortunately I’ve never been a victim of credit card fraud or identity theft so I always figured that using a credit monitoring service would be an unnecessary expense for me.  I never even take advantage of the free annual credit report offered by Experian, Equifax and TransUnion.  However, I was recently presented with my credit score when doing some refinancing and much to my surprise, there was a blemish on my report for a charge that I have since disputed.

Keeping a clean credit report is imperative these days.  Credit monitoring services typically cost around $10-$15 a month and provide customers with unlimited access to their credit report and score as well as notification should any significant changes occur.  Some folks will argue that credit monitoring does not prevent fraud, it only makes you aware of it after the fact.  I tend to believe that knowledge is power, and if one doesn’t know they’ve been a victim of a fraud or an error, then they won’t have the power to do anything about it.  Another argument against these services is that self-monitoring is free.  Personally, I know that my life gets too busy sometimes so I don’t trust myself to consistently self-monitor my credit.  The blemish on my report had been there for a year before it came to my attention so I worry the disputed charge will be harder to prove (my dispute is still pending).

Among other things, the information in your credit report affects whether you can get a loan or insurance – and how much you will have to pay for it.  Potential employers may check your credit report as well.  A credit monitoring service is not for everyone, but if you want to keep a close eye on your credit and don’t have the time to do it yourself, there are some great service providers out there.  If you think you can stay on top of this task yourself, check out the Federal Trade Commission’s useful and empowering website that can help you do the job:   http://www.ftc.gov/bcp/menus/consumer/credit.shtm .

I sure miss my Honda Civic…

Just like everyone else, I’m feeling the pain at the gas pump these days.  Every time I fill up the tank of my SUV I start to reminisce about my old Honda Civic and I wonder how much it would cost to fill up its tank with today’s soaring prices.  I’m sure it would be a lot less than the $75 I spend filling up the SUV.  The Civic was my first car out of college and I drove it for 12 years and 206,000 miles.  The only reason I traded it in was because I had a third child on the way and I just didn’t think it would be roomy enough anymore.  But the kids are older now and one can sit in the front seat, which has me thinking maybe it’s time to downsize.

Lots of folks are ditching their SUVs these days in an attempt to lower their gas bills.  Families are minimizing their summer travels and scheduling vacations closer to home.  I’ve read that some hotels are now offering prepaid fuel cards, some up to $100, in an attempt to entice travelers.  Other than our annual beach vacation on the NC coast, most of my miles are driven to and from work, or taking the kids to soccer practice all over the Triangle.  I figure there’s not much I can do in the way of cutting back my mileage, but I can make a wiser choice when purchasing my next car.  The SUV will be paid off in a year and with a little luck and good maintenance I’ll hang onto it until my oldest can drive in a few years.  I didn’t give much consideration to the MPG when I bought the SUV, it was more of an impulse buy.  I’ll definitely do a little more research next time around.  One useful website I’ve found is the Department of Energy’s http://www.fueleconomy.gov/ .  If you’re in the market for a new or used car, you may want to check out the site for some ratings, comparisons and other money-saving tips.

Notice from the IRS?….don’t panic just yet….

For most of us, if we open our mailbox and find a letter from the IRS, we immediately become alarmed. Don’t sweat it just yet. As part of its plans to increase audit coverage, the IRS is doing more correspondence exams. They will initiate a correspondence exam by mailing a notice (for individuals, this is usually a CP2000) which contains proposed adjustments to your income tax return. This is not a bill – it is simply an adjustment notice, based on a comparison of the information reported on your tax return with documents provided to the IRS by third parties such as employers, banks, businesses, and other payers. Correspondence exams can be as simple as asking you to verify tax return data discrepancies or requesting a missing form.

Responding to an IRS notice can be relatively painless although may take some time on your part. Each notice will give specific instructions on what needs to be done to satisfy the inquiry. Don’t automatically assume that the IRS is right, take the time to review the correspondence and compare it with the information on your return. If you agree with the correction, usually no reply is necessary unless a payment is due. If you do not agree with the IRS correction, it is important that you respond as requested. Write to the IRS to explain why you disagree. Include any documents and information you wish the IRS to consider, along with the bottom tear-off portion of the notice. Mail the information to the IRS address shown in the upper left-hand corner of the notice. Allow at least 30 days for a response.

If you owe, failure to respond by the deadline will result in a second notice, and if there is no reply to that notice, the IRS will issue a statutory notice of deficiency or a 90-day letter. Penalties and interest will be added on to the deficiency. If you are not sure whether the notice is correct, don’t pay any proposed adjustments without contacting your CPA or tax advisor. Your CPA can study the IRS notice along with your tax return and supporting documents and advise you as to whether you should sign the agreement sent with the letter and pay the deficiency.