Wise Bread (Personal Finance posts)

Surprise! 5 Reasons You Might Not Get Your Tax Refund

Jacoba Urist — Thu, 16 Feb 2012 11:36:30 +0000

The one big upside to filing your tax return that everybody can agree on is getting money back from the government. How good does it feel to see that positive amount on the bottom of your return? For some families their refund goes right into that college savings account, to pay off their credit card, to take that long-awaited vacation, or simply to make ends meet in these tougher economic times. (See also: 8 Smart Things to Do Wity Your Tax Refund)

But did you know, every year, there are tens of millions of dollars the IRS won't be refunding taxpayers — even if they might be expecting that nice chunk of change this spring?

Before you count on the check from Uncle Sam (and work the expected boost into your household budget), make sure you don't fall into one of these categories...or the IRS might be holding onto your refund or giving it to someone else after all.

1. There are errors on your return

Every spring, people make the same, relatively straightforward mistakes on their tax returns that prevent the IRS from processing their refund on time. Common errors include: putting down the wrong filing status, an incorrect social security number, or missing information that's required for certain credits and deductions.

Advice for all filers — double and triple check your return before you mail or submit it, paying particular attention to anywhere you have to fill in names, numbers or addresses. Try to give yourself as much time as possible. Doing your return at 2 a.m. the day it's due doesn't leave you much room to catch any mistakes.

If you're preparing your own return, without the help of a tax professional, be careful that you've done your math correctly and you actually are due money back. Too often, I see people who run out and spend a phantom refund, only to have the rug ripped out from under them when they find out their calculations were off, and they really shouldn't be getting anything from the government this year.

Better safe than sorry. Don't spend your tax refund until you can either physically hold the check in your hand or see the amount in your bank account.

2. You owe back taxes

Nobody likes to hear this one, but the IRS is like the friend who holds a grudge for a long time and never lets go. If you owe federal or state taxes from previous years, the government can just yank the amount you're expecting back this year and apply it as an "overpayment" towards the taxes you haven't paid yet. And it's bye-bye refunds until the entire debt is gone.

3. You haven't paid child support

While it might take a little while for the right federal and state agencies to catch up with the problem, the government can place a levy on your tax refund to pay any outstanding child support you owe — even after your kid is 18 (and no additional support is legally due).

4. You defaulted on your student loans

Recent data has shown that people are defaulting on their student loans in record numbers. And with the job market the way it is, it's no surprise more and more students are having trouble keeping up with their payments after school.

Be aware — the IRS can (and does) turn your refund over to the Department of Education to pay down loans you've defaulted on. The agencies do "talk" to one another, and while it may not happen right away, chances are they will catch up with you.

5. They just can't find you

By the same token, hard as it may be to believe in the world of Facebook, Google Maps, and Twitter, the IRS is holding onto $153 million dollars right now in refunds it just can't seem to deliver.

Why? Because they have an incorrect mailing address for you, and can't locate your residence to mail you a check. And currently, the IRS won't try to contact taxpayers by email or phone, so you might have no idea that they're holding on to your money in the first place.

Best thing to do? Always choose to have your refund deposited directly into your bank account if you can (and triple check those numbers to make sure they're right!), especially if you know you're moving soon. Also, if you suspect you fall into this category, check in with the IRS on their website or call their hotline to make sure there aren't any old refunds lurking around out there that you deserve.

Guest Post Blurb:

Jacoba Urist is a tax and estate attorney from New York. She is a regular contributor to The Huffington Post and is writing a book "The Happiest Parent" about preparing the best possible future for every child. Follow her on Twitter at @TheHappiestPare.

Written by Jacoba Urist and published on Wise Bread. Read more articles from Wise Bread.

How to Start Fighting Debt — Today

Matt Bell — Wed, 15 Feb 2012 11:36:21 +0000

Having once had $20,000 of credit card debt, I know what it feels like to face a Goliath-size stack of bills. Fortunately, I also know the joy of victory over the debt giant. Here’s how to wage a successful war against your debts. (See also: When to Use Savings to Pay Off Debt)

Face the Facts

If you’ve ever accidentally cut yourself with a kitchen knife, your first instinct may have been to avoid looking at how bad it was. You just held the cut hand tightly with your good hand, scared to take even a glance.

But if you’re going to stop the bleeding — to your hand or your wallet — you have to take a good, clear look.

Financially, that means adding up your debts. Make a list. Who do you owe? How much do you owe to each creditor? And what’s the interest rate (APR)?

Stop the Bleeding

Before any forward progress can be made, you need to stop moving backwards. That means committing today to going no further into debt. Two bold steps will help.

First, take your credit cards out of your wallet or purse. You don’t have to cut them up (or maybe you do). Just get them out of arm’s reach so that it’s difficult if not impossible to take on more debt.

Next, tell someone how much debt you have. Just thinking about taking this step might rearrange your bones. But it’ll be one of the most helpful steps you can take. There’s something very powerful about getting the news about your debts off of your shoulders alone.

Ask this trusted friend to be your encouragement and accountability partner. Invite them to ask you about your progress from time to time. It’ll go a long way toward helping you build and maintain momentum on your journey out of debt.

Fix Your Payments

One of the simplest steps toward accelerated debt repayment is to keep paying the same amount to your creditors each month. You see, if you go no further into debt, then each month your creditors will ask you for a little less.

That may seem awfully nice of them, but it isn’t kindness. It’s math.

Your minimum payment is based on a percentage of your balance, so if your balance is going down a little each month, so will your minimum due. Paying this declining minimum is one reason why getting out of debt takes so long.

For example, let’s say you have a $5,000 credit card balance, and your minimum due is 2% of the balance. This month’s required payment is $100. But next month it’ll be a little less, and the next month it’ll be even less.

If your card charges 18% interest and you pay the declining minimum due each month, it’ll take you 472 months to get out of debt. That’s over 39 years! Along the way, you’ll fork over nearly $13,400 in interest.

But if you keep paying $100 each month, you’ll be out of debt in “just” 94 months (less than eight years), and you’ll pay about $4,300 in interest.

Wow. That’s a big improvement for just continuing to pay what’s due this month every month.

Ask for a Lower Rate

A huge key to successful negotiating is simply working up the courage to ask for what you want. If you’ve been a good credit card customer, making your payments on time each month, call the company and ask for a lower interest rate.

Just say, “I believe I’ve been a good customer of yours, but I need a better rate. Can you help?” It will work to your advantage if you have a better offer in hand that you can mention. Maybe you received an offer in the mail or saw a better rate advertised online. If they balk, ask to speak to a supervisor.

Sure, they might say no. But if they say yes, lowering your rate from 18% to 14% in the above example will knock your payoff period down to 76 months and your interest payments down to about $2,500. A nice improvement for a 10-minute phone call.

Pay More Than the Fixed Minimum

Of course, if you can find some money to pay more than the fixed minimum each month, you’ll be out of debt even faster. Pay $110 a month instead of $100 in the example above, and you’ll shave another 10 months and about $350 in interest from your debt payoff plan.

By fixing your payments, asking for a lower interest rate, and paying an extra $10 a month, you’ve gone from a payoff period of 472 months and interest payments of nearly $13,400 all the way down to 66 months and less than $2,200 in interest.

Of course, the more you can put toward your debts, the faster you’ll be out of debt. Run some what-if scenarios with different monthly payment amounts using this Accelerated Debt Payoff Calculator.

If you’ve been there and done that with debt, what other steps did you find helpful in getting out of debt?

Written by Matt Bell and published on Wise Bread. Read more articles from Wise Bread.

Financial Tricks to Master for a Happier Life

David Ning — Mon, 13 Feb 2012 11:24:25 +0000

Chances are very good that it's not the money we are after, but to be happy. Yet, many of us mistakenly chase the elusive idea of "having more money" and we end up working endlessly while we sacrifice our happiness to reach this goal.

If you want a good motto to live by, it should be this: The journey IS the reward. Here are five things you can do this year to increase your happiness. (See also: Big List of Things to be Happy About)

Make Only One Goal

The start of the year also marks the favorite time to make new goals, but we often make so many that we end up not reaching any. There's no shame in making just one goal and meeting it. The satisfaction of a job well done is so fulfilling.

Aim to Improve a Tiny Bit

Many high earners will tell you that they aren't happy with their income. This is because they are already used to the amount of money that they are making. Everything is all relative. In order to feel happy, make improvements. And it doesn't even have to be related to making money, either.

Weight loss, family ties, time management, starting a budget, and many other goals will all make you happy as long as you are making progress. The bonus is that if you are always aiming to improve a tiny bit, it will help you start a routine faster because you will feel less overwhelmed by a completely new project.

Shrink Your To Do List

No one likes to have things piling up. Try to stop thinking and worrying about what you have to do and just do it. You will be much happier with fewer tasks on your to do list and more accomplishments under your belt..

Swap TV Time for Activities Out of Your Home

The average person spends about four hours in front of the TV daily. That's time you could be using to improve all facets of your life, time you could be exercising, and time you could be spending with your family. The No. 1 complaint most adults have is probably not having enough time, so why spend any time in front of the TV, gaining weight while you bleed your life away?

Indulge Often!

No matter how much you love seeing your net worth grow, frequent indulgences make us happier than socking money away and seeing a bigger account balance. The obvious problem is that we don't have unlimited funds, so why not trade some of your bigger expenditures for small indulgences?

Instead of a big car payment, why don't you go out for dinners more often? Instead of an expensive annual vacation, why don't you go on a mini-road trip every month? By spending frequently but with smaller amounts, you will find that you get much more satisfaction out of every dollar that you spend.

Written by David Ning and published on Wise Bread. Read more articles from Wise Bread.

SaveUp Giving Away $1000 to Wise Bread Readers

Ashley Jacobs — Fri, 10 Feb 2012 11:36:36 +0000

Most rewards programs try to get you to spend money. Wouldn’t it be great if a program actually rewards you for saving money instead?

That’s the innovative idea behind SaveUp, a free program that rewards consumers with SaveUp credits when they do something good, like adding money to their savings accounts or paying off their debt. The credits can be used to win a ton of cool prizes, like a new Prius, a Hawaii vacation, or a life-changing $2 million jackpot.

At Wise Bread, we’re all about giving you the best financial tips to live large on a small budget. So now, why not get rewarded for all your hard work and have a little fun at the same time?

That’s why Wise Bread and SaveUp have teamed up to help you stay motivated with your 2012 financial goals. SaveUp is giving away $1,000 exclusively to Wise Bread readers and 200 free bonus credits to anyone who join SaveUp via Wise Bread.

How to Enter:

We have three different prizes ($500, $400, $100) for three different contests. You can enter all three to increase your chances of winning.

1. Exclusive Wise Bread Prize on SaveUp: $500

SaveUp wants to keep you motivated and reward you for your good financial actions with a special $500 prize — exclusive to Wise Bread readers only. To enter:

Join SaveUp via this link (this is 100% free), and
Go to SaveUp's homepage, click on the “Wise Bread Prize” and then on the “Play Now” button. You’re all set!

As a bonus, anyone who signs up using our link during the contest period will also get 200 free game credits. 200 credits will give you 20 different chances to win a ton of cool prizes.

2. Leave a Comment: $400 Prize

To enter the comment contest, leave a comment below answering this question: What motivates you to save? (Or if you’re not saving, why not?)

Your comment must be at least two sentences long to qualify. You can enter one comment per day.

3. Twitter Entry: $100 Prize

To enter the Twitter contest, simply:

Follow @WiseBread and @playSaveUp, and
Tweet this message: RT this for chance to win $100 from @WiseBread & @playSaveUp http://bit.ly/saveupwin #SaveUpWin

You may tweet once per day.

Contest Details:

Contest ends Monday, March 12 at 11:59 pm Pacific. Winners are randomly selected. Winners will be announced after March 19th on the original post. Winners will also be contacted via email. Winners have 3 business days to respond. If you do not respond within 3 days we reserve the right to select new winners.
You must be 18 and US resident to enter. Void where prohibited. No purchase necessary. Prizes may be distributed as Amazon, Visa, or MasterCard gift cards.
You can enter all three contests to increase your chances of winning. But you can only win one prize.

How to Spend Your 200 Free Credits

SaveUp prizes are mostly lottery-style instant scratcher games. Each prize costs 10 credits to play. So with 200 free credits you can play 20 times! Personally I like to go for the prizes with the highest values. For example, these are my favorite:

SaveUp has some other great prizes that can fulfill awesome fantasies:

Join SaveUp.com via this link and get your free 200 credits today.

About SaveUp

Here’s a message from our contest sponsor:

Unlike traditional rewards programs that focus on driving consumer spending, SaveUp rewards users for performing positive financial actions, such as contributing to their savings or retirement accounts; paying down their credit cards, mortgages or other loans; and engaging with SaveUp’s financial education content on the site. Americans who bank at more than 18,000 US financial institutions nationwide can register their financial accounts on SaveUp and immediately begin earning SaveUp credits every time they save money or pay down their debts. The credits users earn can be redeemed for chances to win instant prizes and entries into weekly and monthly drawings.

SaveUp’s prizes range from the exciting (retail gift cards, consumer electronics) to aspirational (luxury vacations, home or wardrobe make-overs) to life-changing (a new car, money for college tuition, debt pay-off, or a $2 million jackpot).

In addition to making SaveUp fun and rewarding, we employ bank-level encryption to make sure our program is safe and secure for our users.

Ready to win some prizes? Remember you have 3 ways to enter!

Leave a comment below answering the question: What motivates you to save? (Or if you’re not saving, why not?)

Follow @WiseBread and @playSaveUp, and tweet: "RT this for chance to win $100 from @WiseBread & @playSaveUp http://bit.ly/saveupwin #SaveUpWin"

Good luck!

To enter simply tell us what motivates you to save.

Written by Ashley Jacobs and published on Wise Bread. Read more articles from Wise Bread.

Best Money Tips: Stop Wasting Money on Your Car

Ashley Jacobs — Fri, 10 Feb 2012 11:00:33 +0000

Welcome to Wise Bread's Best Money Tips Roundup! Today we found some great articles on not wasting money on your car, tax season do nots, and insurance policies you don't need.

News & Events

Money Crashers Tweetchat (#MCchat) — Don't miss Money Crashers weekly #MCchat at 1pm PST! They will be giving away prizes!

Be sure to check out our News & Events Calendar to see all the awesome upcoming events in the personal finance world!

Written by Ashley Jacobs and published on Wise Bread. Read more articles from Wise Bread.

3 Tax Deductions You Can Never Take

Jacoba Urist — Thu, 09 Feb 2012 11:36:37 +0000

I spent a fair share of my mid-twenties lugging around a two-volume set of the Internal Revenue Code to class every day (picture a small woman with two encyclopedia-sized bricks on the subway), so I know first hand just how overwhelming our tax laws can seem. Every tax season, people ask me about the same mythical deductions — stuff they feel they ought to be able to deduct on their tax returns, even though the government doesn't exactly see eye-to-eye with them. While it may be freezing in some parts of the country, tax season is right around the corner, and it pays to take a look at these three common points of confusion before filing this spring.

1. Can I deduct my personal credit card interest?

Nope, unfortunately not. When you make personal charges on your plastic — like going out to eat, trips to the grocery store or Disneyland, really any of the expenses you associate with your daily life — the interest is never deductible.

Here's the source of the misunderstanding. You used to be able to deduct credit card interest. But you can thank President Reagan and Congress (Democrats and Republicans alike) for eliminating the interest deduction for consumer loans, which includes your Mastercard or VISA. They believed that consumer interest deductions generally encouraged folks to overspend and over-borrow, so they changed the law.

People may also be confused because you often can deduct the interest that you pay on the business expenses you put on your credit card.

A note of caution: If you are self-employed or run your own shop, I always recommend having a separate credit card for business purposes (or else it's nearly impossible to calculate which portion of the interest is deductible).

2. Can I deduct my new interview suit or work clothes?

Here's another one I get all the time, especially in the current job market when so many people are out there pounding the pavement, and the cost of getting your foot in the door adds up pretty quickly.

The tax laws are a little tricky here. You can't deduct your new interview outfit (on the theory that you could also wear it for personal use, like to a cocktail party, wedding, date or any other event where you want to look pulled together). And you can't deduct the cost of your ordinary, run-of-the-mill work clothes, either. Think: no deduction for things I could otherwise wear out in public anyway — normal pants, dresses, skirts, shirt — even if you work at a clothing store that asks you to dress nicely while you're on the clock.

But there are some good news. While your fancy interview suit is off limits, you may be able to deduct some of the expenses you rack up looking for a job, like the amount you pay to an employment service, and the cost of preparing and sending out all those resumes under certain circumstances. And there is a clothing deduction exception if you wear a specialized uniform to work and it's not suitable for everyday life. (How many UPS guys are going to whip out their uniforms to wear around town on their day off?)

3. Can I deduct my commuting costs?

Again, this one is a no-go for the IRS. You can't deduct the cost of commuting from your house to your job, on the theory that you choose where you want to live in relation to your workplace and the time in your car or on the train is personal.

But of course, because it's the tax code, there is an exception. People who are self-employed with a home office may be able to write off some of the costs of traveling between their residence and another location where they have work-related business. You may also be able to deduct the costs of going from your job (wherever you work) to other work-related meetings and outings. My advice? Sit down with an accountant or tax professional if you plan on deducting these kinds of costs on your return this April, so you can make sure you're calculating everything properly.

Guest Post Blurb:

Written by Jacoba Urist and published on Wise Bread. Read more articles from Wise Bread.

How to Find the Right Accountant for You

Thursday Bram — Tue, 07 Feb 2012 11:00:34 +0000

Finding the right accountant can make a world of difference when it comes to managing your money, but it can be easier said than done. There are a few ways that you can make the process go much easier, though.

Why Do You Need an Accountant?

The first question you need to think about when looking for an accountant is why do you need help with your finances — and what sort of help do you need? Not every individual really needs an accountant. There are a number of services out there that can help you with your taxes, if that's your only concern. An accountant usually works with individuals or organizations with slightly more complicated finances, ranging from managing a business' finances to helping an individual keep investments straight. (See also: 6 Mistakes to Avoid With a Financial Adviser)

You could just start calling accountants based on who is closest to you, but most accountants have specialties. You're not going to get exactly the help you need from just any accountant.

When we talk about accountants, we can actually be referring to one of several different kinds of financial expert. There are quite a few different designations for accountants, from the common "certified public accountant" to a certified management accountant or an accredited business accountant. It's most likely that you're looking for a CPA if you're generally looking for an accountant in the U.S. (other designations are used in other countries). A CPA will help set up the books for a new business, prepare tax returns, and handle a wide variety of other accounting tasks — unless you have a sizable business and need specialized help with your accounting, a CPA is usually the place to start.

It's still important to narrow the field down even further, though. Many CPAs work with specific types of clients. For instance, the CPA who helps me with my business focuses on small businesses that don't need much in the way of payroll but do need advice on business operations from time to time. He works with a lot of freelancers and small business owners, though he does take on other clients. Ask right off the bat about whether an accountant you're considering working with handles your type of situation — most are very clear about what types of clients they want to work with. You should also ask about specifics like price and who will actually do any work, like preparing a tax return.

Make a note of what sort of help you need. The price you'll pay for an accountant's help can definitely depend on exactly what you need done. Most CPAs work on an hourly basis, often starting at a price of $150 and going up from there. But for common situations, like needing a tax return prepared, you can expect prices to start closer to $90 — provided you are employed and don't have particularly complicated finances.

It's All About the Referral

Because an accountant may wind up knowing every last thing about your financial situation, it's important to find someone you're personally comfortable working with. Starting with a referral is often the best way to do so. Ask around to find out whom your peers use and whether they recommend their current accountants. If you're having a hard time getting a recommendation, many review-based sites, such as Yelp, do list accountants and other financial professionals. However, you'll want to dig a little deeper than just a review online — while it's fine for choosing a restaurant for dinner, you'll want more information when you're putting all your financial information in someone's hands.

If you operate a business, it may be worth going to your professional associations (such as the local Chamber of Commerce, if you are a member) and getting referrals there. You can get good leads on reliable accountants quickly.

Of course, you'll do the necessary due diligence to make sure that you're working with a reliable accountant. But because of that "certified" part of the job title, it's relatively easy to make sure that anyone you choose to work with has the necessary credentials to handle any accounting quandary you may face. Individual state boards are responsible for issuing certifications, and most will now allow you to verify an accountant's credentials online. A quick online search can also confirm that you've chosen the right person to work with. Many CPAs (including the one I work with) now have websites, Twitter accounts, and even blogs to help you make the right decisions.

An Ongoing Relationship

Even if you only visit your accountant for a yearly tax planning session, it's important to have an ongoing relationship. The best accountants will go out of their way to update you on new legislation, as well as anything else that might impact your finances. You may not anticipate needing help, but already having a great working relationship with your accountant can put you ahead of the game in the event of an audit or other financial situation.

Depending on how you expect your finances to change in the future, you may want to ask about some of the options that an accountant might offer before making your final decision. If you know you need to start planning for retirement or a child's education, you should ask about what sort of financial consulting or planning services a particular CPA offers.

Written by Thursday Bram and published on Wise Bread. Read more articles from Wise Bread.

10 Smart Things to Do With $25

Paul Michael — Mon, 06 Feb 2012 11:36:26 +0000

So, you’ve got $25 burning a hole in your pocket. Or, you just found it in an old pair of jeans. Maybe it represents the contents of your piggy bank, or a check you got from an aunt in another state for your birthday. However you came by this $25, you’re trying to figure out how to spend it without blowing it.

Here then are 10 ideas, some fun, some serious, that will help you make the most of your 25 buckaroos. (See also: 15 Fun Things to Buy for Under $5)

1. Go on a Goodwill Shopping Spree

The bargains I find at Goodwill never cease to amaze me. I recently purchased a mint-condition, sealed Sopranos jigsaw puzzle for $2. I sold it for $10 just a few days later. OK, not a lot in the grand scheme of things, but if you could do that with $25 worth of Goodwill stuff, you turn it unto $125. Rummage through the collectibles and glassware, and check out all the pictures, CDs, and garments. Every Goodwill store holds gems, you just have to know where to look. And remember, the money you spend in there goes to a very good cause. It’s win-win.

2. Adopt an Animal That Needs a Good Home

We recently adopted two kittens from our local animal shelter. We were shocked at how cheap it was to do this. They had so many cats, dogs, and other animals to care for that they were almost giving them away. It was sad to see a sign like “buy a kitten, get a grown up cat free,” but I guess tough times call for new ideas. The price for the adoption of the two kittens, plus inoculations and spaying/neutering, came in at less than $25. We gave the shelter double that because we know how much they rely on donations. But, if you want to do some good with your $25 and make a friend, spending it on a new pet could be just for you. As always, don’t do it on a whim, and don’t buy a pet as a gift for someone else (unless they come with you). Animals need loving homes. If you can provide one, get down to your local shelter.

3. Buy Previously Viewed Movies and Games

DVD rental stores have hit on hard times. It doesn’t bother me too much, because I remember being charged ridiculous prices for new releases and having to pay horrendous late fees. The rental stores had to adapt, and they also had to find a way to make extra money. By selling off previously viewed DVDs and pre-played games, they’re recouping some of their losses; and you get yourself some sweet bargains. I picked up movies including A Serious Man and A Nightmare on Elm Street for just 99 cents. I also recently bought Blu Ray copies of Inception, Horrible Bosses, Machete, and Predators for around $7 a piece. That’s way below the price of a new copy, and they play just as well. Some discs look untouched. These stores have dozens of copies of the popular movies, so many of the discs are played just a few times. And they all come with at least a seven-day guarantee. Bring it back if it’s scratched or doesn’t play, they’ll replace it for you. Now that’s smart.

4. Start a College Savings Plan

With $25? Well, it’s $25 dollars more than if you don’t have a plan right now. And if you have young children, the price of college by the time they reach 18 will demand every penny you can amass. By investing $25 a month for 18 years with a 7% rate of return, you’ll have over $11,000 in that account. True, it’s probably not going to cover a lot by then, but it’s better than nothing at all.

5. Hit the Sales at the Grocery Stores

If you want to grab yourself some real bargains, go and buy the food that is “going off” in the stores. It’s often heavily discounted because it has reached its sell-by date. But that’s an arbitrary date set to protect stores from lawsuits and ensure you get the freshest food. So much of that food is still very good, and you can get it really cheap just before it hits the dumpster. Your $25 could easily get you $75-$100 worth of food. Pop whatever you can in your freezer, and bring it out when you need it.

6. Loan It to a Farmer or Entrepreneur in a Third-World Country

One of the best non-profit ideas I’ve seen in a while is Kiva.org. It’s based on the principles of “microfinancing,” which basically means you can donate a sum as small as $25 to the fund. The borrower will make a request for funds, and if successful, he or she will get a loan funded by the more than 500,000 lenders around the world. The borrower then makes repayments, so if you put your money in, you will get it back at a later date. But in the process, you have helped someone realize a dream who normally wouldn’t have a chance to.

7. Hop the Farmers Markets

An article I wrote in the past warned of things to avoid at farmers markets, and that resulted in a lot of angry letters and comments wondering why I was against them. That, I am happy to tell you, is not true at all. I love farmer’s markets; I simply wanted to point out a few pitfalls. But when it comes to fresh fruit and vegetables, these markets can’t be beat. So take your $25 to a local farmers market, get some good quality food for less than supermarket prices, and support a local farmer.

8. Buy Some Original Art

You may think $25 will not buy you much of a work of art, but you’d be mistaken. Yes, granted, if you’re looking for a 6 ft. canvas by a well-known painter, you’ll be out of luck. But if you are willing to look around local art shows, search on Craigslist, or even peruse the walls of local eateries and record shops, you will find amazing prices on original works. These are from artists who want to be discovered and also want to cover the costs of materials. Who knows, in the future that piece you buy for $25 could be worth six figures.

9. Get a Free Massage or Haircut, and Tip $25

Students who are enrolled in massage or haircutting courses will often give away their services for free (or very cheap) to practice. You’ll find ads for free massages or haircuts on Craigslist and in newspaper classified ads. But while they are free, or very cheap, these people do deserve a tip. So, for the complete price of $25, you help a student with their studies and get a service for at least half of what you’d regularly pay.

10. Take a Music Lesson

So many of us have guitars, old pianos, or other instruments just lying around. Maybe we bought them decades ago and gave up on them, or they were gifts. They could be hand-me-downs. Either way, why not see if it’s really something you want to do. Playing an instrument is a great way to release stress, and it’s a wonderful hobby. For $25, you can usually get a 30-minute to 1-hour lesson for a variety of instruments. Some charge as little as $10 for a 30-minute lesson.

Written by Paul Michael and published on Wise Bread. Read more articles from Wise Bread.

5 Best Credit Cards for People With Excellent Credit

Jason Steele — Fri, 03 Feb 2012 11:36:19 +0000

If you have excellent credit, the chances are you already know it. You always pay your bills on time, and you are very unlikely to carry a balance on your credit cards. In return for your responsible nature, you are deluged with offers for more credit cards. Overwhelmed and disillusioned with all of these choices, many of you are content to remain loyal to whichever card you had been using for years. It’s easy, comfortable, and hassle free to use the same card in perpetuity. But by doing so, are you betraying the sound principals of financial management that earned you your excellent credit score? (See also: Surprising Things That Can Kill Your Credit)

Snap Out of It!

Those with excellent credit are likely to be using their cards simply as a method of payment, and they may be earning some additional rewards. Nevertheless, this practice is akin to storing money in a bank for safekeeping, without concern to the returns being accrued on your investment. The reality is that like savings, credit card spending should also produce a competitive return. Although saving is always a preferable activity to spending, those with excellent credit are leaving money on the table by not attempting to maximize the returns on their credit cards.

The Ways to Earn High Returns on Spending

The best way to compare credit card rewards is through the percentage of value earned per dollar spent. For example, 1% cash back is the bare minimum that you should expect from any reward card. If you are earning that amount or less, it is as unwise as closing on a mortgage with a higher APR that what is available. The two most common ways to earn credit card rewards are in the form of cash back or loyalty points such as frequent flier miles. If you are earning points or miles, you should assign a value to them in order to assure you are receiving the returns you deserve. The more value you earn per dollar spent, the better you are doing. Finally, there are a few cardholders who do have excellent credit, but may carry a balance from time to time. These people should always carry a credit card with the lowest APR on the market.

The Best Cards for People With Excellent Credit

Each of the cards on this list are only offered to those with excellent credit, but they offer very high rates of cash back or points. The exception here is the Simmons First card, which as the card with the lowest interest rate on the market, is the best choice for those who carry a balance. There is no one card that is perfect for everyone, but each has its unique advantages that appeal to different types of cardholders.

Fidelity Investment Rewards American Express Card

At the top end of cash back rewards cards are those rare products that earn 2% cash back on all purchases, all the time. Fidelity offers several versions of its American Express card that do just that. In this case, the cash back is returned to the Fidelity account of your choice, such as a Fidelity IRA, Fidelity-Managed 529 Account, Brokerage Account, or Cash Management Account. There is no annual fee for this card and only a 1% foreign transaction fee.

Click here to apply now

Capital One Venture Rewards

Capital One offers this card only to applicants with the best credit scores. By using this card, customers can earn two of their “miles” for each dollar spent. Fortunately, their miles are not like those of any airline; they can be redeemed for one cent each towards a statement credit against any travel related expense. The end result is that this card consistently returns 2% cash back as statement credits so long as the cardholder can claim at least that amount in hotels, car rentals, or airfare. There is a $59 annual fee for this card that is waived the first year, and like all of their cards, there are never any foreign transaction fees.

Click here to apply now

Sapphire Preferred From Chase

Chase has been making an all-out effort to court those with excellent credit histories, and the Sapphire Preferred has quickly become their flagship product. Chase offers a single Ultimate Rewards point per dollar spent on most purchase, with double points for spending on travel and restaurants. Triple points are earned for spending on travel through their Ultimate Rewards site, and all points earned are eligible for a 7% bonus at year’s end. Once earned, points can be redeemed at a rate of 1.25 cents each towards travel, or one cent each towards other experience and merchandise awards. Finally, Ultimate Rewards points can be instantly transferred to points or miles in the program's several different airlines and hotels. In fact, you can even transfer points to other people’s accounts, a feat impossible with most other programs. There is a $95 annual fee for this card that is waived the first year, but there are never any foreign transaction fees. Finally, this card is made of some type of plastic and metal sandwich giving it a heavy, solid feel that always draws comments when I use it.

Click here to apply now

Simmons First Visa Platinum

Not everyone with great credit is in a position to pay all of their credit card balances in full each month. Cardholders with near-perfect credit who occasionally carry a balance should do so on the card with the lowest standard interest rate on the market. The Simmons First Visa Platinum offers an APR equal to the Prime Rate plus 4%, the lowest rate that I am aware of. There is no annual fee for this card, but there is a foreign transaction fee of 2%.

Click here to apply now

Starwood Preferred Guest Card From American Express

Here is the card for those who understand and appreciate the value of hotel points and airline miles. The Starpoints earned by this card can be redeemed for any available standard room at any Starwood Hotel, including Sheratons and Westins. These points are extremely valuable because there are no blackout dates or capacity restrictions in the program. Alternatively, your Starpoints can be exchanged for miles in the programs of thirty different carriers around the world. Since each of those carriers can have dozens of partners, the award options are nearly limitless. Redeem your points for miles, and use those miles for premium class international travel, and it is easy to see returns of 5% or higher on each dollar spent. There is a $65 annual fee for this card, and American Express does charge a 2.7% foreign transaction fee.

Click here to apply now

If you have excellent credit and you are not getting at least 2 cents in value for each dollar spent, or the lowest interest rate on the market, you need take a serious look at the cards on this list. As a smart consumer with excellent credit, you should always be receiving the highest return on not just your savings, but on your spending as well.

Note: Some links contain affiliate codes.

Written by Jason Steele and published on Wise Bread. Read more articles from Wise Bread.

Surprising Things That Can Kill Your Credit

Kate Luther — Thu, 02 Feb 2012 11:36:28 +0000

When it comes to credit scores, we're all very familiar with the damage a late payment can do to your credit "worthiness." We also know that having too much debt is bad as is having no credit references at all.

But surely that can't be all that affects your credit score, right?

The truth is, there are several things that can tank your credit, some of which just might surprise you. (See also: 6 Credit Card Services You Don't (Usually) Need)

Sneaky Inquiries

When you apply for a new credit card, you expect an inquiry to show up on your report. This is known as a "hard" inquiry, and too many of these within a 12 month period will lower your score.

But filling out that Visa application isn't the only way to generate a hard inquiry. If you use a debit card when you rent a car for example, many rental agencies will check your credit before approving the transaction, and since few of us read all the fine print, you may not realize it's happened until it's too late.

Likewise, opening a new checking account will also typically generate a hard inquiry (even though you're not applying for credit) as will applying for new phone service and — surprise! — requesting an increase on an existing account. Unfortunately, many consumers assume that credit card companies simply look at their own payment history to determine approval for increases, but the fact is that your existing creditors are monitoring your credit score on a regular basis.

Now, only the hard inquiries generated by a request for an increase will ding your score — those periodic "checkups" are considered soft inquiries and don't cause a penalty. But that doesn't mean that they can't still hurt your credit, bringing us to the next item on this list...

Changing Your Ratio

When a creditor approves an application for credit, they will continue to monitor your score to ensure that your credit worthiness doesn't change. And again, these soft inquiries don't count against you. But should the creditor decide that you no longer meet their requirements, they can lower your credit limit or worse, close your account. By the time you realize it, the damage has already been done.

Your credit score depends greatly on the ratio between how much credit you've used and how much you have available. So, if you have an account with a $2,000 balance for example, and you've charged $400, then you've used 20% of your available credit, and anything up to 30% is considered to be responsible credit management.

But let's say that the credit card company decides that you no longer meet their standards and as a result, they lower your limit to $250 (yes, they can do that — I speak from experience). Now, instead of having a credit ratio of 20%, you're suddenly maxed out as far as your credit report is concerned, and your score will drop considerably as a result.

If they decide to close the account instead (yes, they can do that too), you not only suffer the ding for a high credit utilization ratio, but you also lose the benefit of that available credit once you've paid the balance off. Remember, your utilization ratio is based upon your total credit available, so when an account is closed, it reduces the amount of credit you have access to. And the less available credit you have, the higher your utilization ratio will be.

This is also the reason that financial experts discourage balance transfers. Debt-conscious consumers will often transfer their credit card balances to a new card with a lower rate, thinking that they're making a smart move, but this can actually have an adverse effect on your credit.

Not only do you suffer the ding for a hard inquiry to secure that new, lower-rate account, but you'll also skew your utilization ratio if — like many consumers do — you close those higher-rate accounts after the balance transfer is complete.

Let's say for example, that you have two cards, each with a $1,500 limit and a $200 balance. That gives you a utilization ratio of about 13% ($400 used / $3,000 total available). Then let's say that you get a new, lower-rate credit card with an additional $1,000 limit, and you shift your $400 outstanding balance to that new card. You now have a credit utilization ratio of just 10% ($400 used / $4,000 total available), but the minute you close those two older accounts with the higher interest rates, your ratio goes down the tubes.

Instead of having $4,000 in available credit, you now only have $1,000. Your ratio goes from an impressive 10% to a whopping 40%, and that's bad, bad, bad.

Applying for the Wrong Type of Credit

Many consumers think that any kind of credit is good, and for those trying to rebuild their credit scores, getting approval on in-house financing plans might seem like a step in the right direction.

Unfortunately, that's not the case.

These "local" finance plans — like those you see advertised by furniture stores and car dealerships — are considered to be "second class" credit...that is, credit for those who can't get it anywhere else, and this makes you look like a high risk to potential creditors.

In addition, because these in-house programs don't issue you a revolving limit, your available credit is typically the amount of your purchase. So, when you finance $1,000, it appears as a maxed-out account on your credit report and affects that all-important utilization ratio we were talking about before.

Skipping Out

When it comes to late payments, it's not just your credit cards that you have to worry about. Those old library fines, parking tickets, and unpaid balances on your book club can also hurt you if the company decides to use a collection agency to resolve the account.

And once the collection hits your credit report, you and your score are stuck with it for seven years.

Swearing Off Credit

After having a few bouts of credit card debt in my early twenties, I swore I would only pay cash for my stuff and never use a credit card again. But knowing the importance of having credit, I kept a few accounts open and just locked the cards away. I thought I was being smart... I thought wrong.

When you don't use your credit — as in, ever — there's no payment history for potential creditors to evaluate and after an extended period of time, your creditors may close your account because of inactivity, both of which can make it harder for you to secure credit when you need it.

In addition, if you do ever decide to use one of those cards, you may find that your purchase is declined because it's outside of your "usual" spending habits. Of course, this can be resolved, but not without some embarrassment as you step out of the checkout line to call your credit card company.

The Moral of This Story?

Managing and protecting your credit score is most certainly a pain, but it's a necessary one. Use your credit, but use it wisely, and always ask about credit checks before securing new services...even (and especially) when those services seemingly would have nothing to do with your credit.

But most importantly, monitor your score. The only way to know what's being reported is to check it yourself and then dispute any information that's incorrect.

Written by Kate Luther and published on Wise Bread. Read more articles from Wise Bread.

Proof That IRS Agents Are Human

Will Chen — Wed, 01 Feb 2012 22:35:28 +0000

The good folks at the IRS might be as human as the rest of us.

Need evidence?

Check out this IRS agent's response to a couple of very tired parents from San Francisco:

We have reviewed your correspondence regarding the penalties that were charged based on your explanation that the 'adult brain turns to jello those first few months raising a baby', we have decided to remove all penalty charges. A total of $2,522.00 in penalty charges has been removed.

(story continues below the image)

This letter was originally posted on Erica Firment's Facebook wall on January 31, 2012. Erica has since provided additional background on Facebook:

What proceeded their response was my a very formal letter explaining the mistake and asking to forgive the penalties. However formal the rest of the letter was, I added an asterisk and this bit at the bottom:

"* I am not above groveling and mentioning our only child was six months old when we made our extension mistake. If you have children, you understand the adult brain turns to jello those first few months raising a baby." (Source: ThatGuyChuck via Reddit)

Erica, the founder of the popular librarian blog Librarian Avengers, was very pleased with the outcome.

"The IRS really surprised us with great customer service," said Erica on Twitter. "A human even picked up the phone immediately!"

"Our IRS letter just hit the top of Reddit. I think people are hungry for a human voice from government institutions."

Many people on Reddit are chiming in with their own positive experiences with the IRS. One Redditor claiming to be a taxpayer advocate from the IRS pointed out that it never hurts to challenge a tax penalty:

I actually work for the Taxpayer Advocate's Office, (which is part of the IRS) and I have to say that this is pretty awesome!! We get cases for all kinds of hardship reasons, and we fight for all taxpayer's, not just the ones who ask for our assistance. It makes me glad to see other employee's are doing what they can as well! I will share this info with the other Advocate's in my office, as I know they will get a kick out of this too.

Also a tidbit for penalties-you can always ask for them to be removed. The worst they will say is no. The first time you get penalties, you can get them removed just because you have a good history and you asked. And if you ever need Taxpayer Advocate's assistance, call 877-ASKTAS1, or look at our website for your Local Taxpayer Advocate Office and maybe see some of the services we provide or check out our annual report to congress. (Emphasis added. Source: Mostlywrong via Reddit.)

Personally I've had pretty good experiences dealing with the IRS. When we first started Wise Bread, I had a lot of tax questions regarding the tax implications of setting up various legal entities. I called the toll-free hotlines at IRS and their representatives were extremely knowledgeable and courteous.

If you have general questions, here's a list of IRS numbers you can call (following info provided by IRS website):

Telephone Assistance
When calling, you may ask questions to help you prepare your tax return, or ask about a notice you have received. Please be aware that when you conclude your discussion, our system will not permit you to return to your original responder.

Telephone Assistance for Individuals:
Toll-Free, 1-800-829-1040
Hours of Operation: Monday – Friday, 7:00 a.m. – 7:00 p.m. your local time (Alaska & Hawaii follow Pacific Time).

Telephone Assistance for Businesses:
Toll-Free, 1-800-829-4933
Hours of Operation: Monday – Friday, 7:00 a.m. – 7:00 p.m. your local time (Alaska & Hawaii follow Pacific Time).

Telephone Assistance for Exempt Organizations, Retirement Plan Administrators, and Government Entities:
Toll-Free, 1-877-829-5500
Hours of Operation: Monday – Friday, 8:00 a.m. to 5:00 p.m. Local Time.

Telephone Assistance for people with hearing impairments:
Toll-Free 1-800-829-4059 (TDD)
Hours of Operation: Monday – Friday, 7:00 a.m. – 7:00 p.m. your local time (Alaska & Hawaii follow Pacific Time).
For further information, see Tax Topic 102.

Telephone Assistance for Individuals who believe they may be a victim of Identity Theft: No Tax Administration Impact - Did not receive a notice from the IRS. Toll-Free 1-800-908-4490 (Automated and live assistance)
Hours of Operation: Monday – Friday, 7:00 a.m. – 7:00 p.m. your local time (Alaska & Hawaii follow Pacific Time). For additional information, refer to our Identity Theft and Your Tax Records page.

Telephone Assistance for people who live outside the United States
Hours of availability vary by location. Please see our International Services page.

Face-to-Face Assistance
In certain areas, IRS also has local offices you may visit to receive assistance

What kind of experiences have you had with the IRS? Please share them in the comments!

Thank you to Redditor Missstar for helping with this story.

Written by Will Chen and published on Wise Bread. Read more articles from Wise Bread.

How to Not Be a Debt Slave

Philip Brewer — Wed, 01 Feb 2012 11:24:26 +0000

It's best not to get in debt at all, of course, but it's easy to accumulate debt without even really thinking about it. Your parents and guidance counselors tell you that a first-rate college education is worth it "no matter the cost," so you sign the loan papers to borrow whatever the financial aid office says you need to borrow. (See also: Student Loans: How to Make Post-College Decisions)

Even if you have second thoughts before the end of the first semester, you're already on a path that's pretty hard to get off of. Because, after all, what are your choices? Aside from the option of being a deadbeat, which is pretty unappealing, you really only have one — proceed to get an education, get a job, and put in as many years as it takes to pay off that debt.

The deadbeat path is a poor choice, especially for student loans (which generally can't be discharged in bankruptcy, although there is a new program for eventually escaping student loan debt).

This is because your creditors have serious powers to extract money from you:

They can seize any collateral that you pledged for your loan (although usually they'll only go to the trouble for the big stuff — your house, your car, your business).
They can seize any amount that you have in bank accounts (although your retirement accounts and anything you have coming to you from Social Security are supposed to be protected).
They can force your employer to give a big chunk of every paycheck to them — even if it's less than your minimum payment, meaning that your debt is still growing every month.

They can't technically have the police throw you into jail for not paying your debts — but they can have the police throw you into jail for failing to respond correctly to each and every item of paperwork when they sue you. And, since you can't afford a lawyer, that amounts to pretty much the same thing.

Does this amount to slavery? I think so. On the scale of historical forms of slavery, the level of violence is pretty low, but your freedom is severely constrained — you either do whatever it takes to make each and every debt payment, or your creditors will ruin your life.

There's only one good way to escape debt slavery, which is to buy your way out. If you earn a lot of money (or life cheaply enough), you can pay your debt down at an accelerated rate. This particular path makes a great story, because it's just an extreme version of the sort of "right living" that our culture supports.

The path is easy to describe, even if it's not so easy to do:

Boost your income and cut your expenses, to generate a surplus.
Make the minimum payments on all your debts (to do otherwise would be to rack up serious fees and penalties).
Pick one debt to pay off first, and apply all your remaining surplus to that one debt.
As each debt is paid off, roll the minimum payment for that debt into the surplus and repeat the process with the next debt. (This is called the "snowball method," for the way the surplus builds as each debt is paid off and its minimum payment can be rolled in.)

Better to avoid debt altogether, if you can.

Written by Philip Brewer and published on Wise Bread. Read more articles from Wise Bread.

Best Money Tips: How to Retire on the Cheap

Ashley Jacobs — Wed, 01 Feb 2012 11:00:26 +0000

Welcome to Wise Bread's Best Money Tips Roundup! Today we found some awesome articles on how to retire on the cheap, ideas to increase your income, and dangers of leasing a car.

News & Events

Get Rich Slowly #moolah Tweetchat — Don't miss Get Rich Slowly's bi-weekly #moolah tweetchat at 4pm PST!

Be sure to check out our News & Events Calendar to see all the awesome upcoming events in the personal finance world!

Written by Ashley Jacobs and published on Wise Bread. Read more articles from Wise Bread.

Extreme Mileage Hacking: Creative Ways to Earn Flier Miles

Jason Steele — Mon, 30 Jan 2012 11:36:32 +0000

Most people have a frequent flier account of some sort, even if they haven’t given it much thought lately. Others have made collecting points and miles not just their hobby, but their passion. While the rest of us sit in awe of extreme couponers when they save a few hundred dollars off of their groceries, these extreme mileage hackers regularly earn tens of thousands of dollars worth of travel. They fly around the world in first and business class, stay in suites at luxury resorts, and barely pay a fraction of what these services would normally cost.

I recently attended a weekend seminar where many of the top mileage collectors in the world gathered to tell their stories and share their techniques. Of all the travel award enthusiasts that I met, three people told stories of extreme mileage earning that were so mind-boggling, they held this well-traveled crowd at the edge of their seats. (See also: How to Maximize the Value of Your Frequent Flier Miles)

The Pudding Guy

Have you ever done anything so cool that a Hollywood director decided to include it as part a movie? That is what happened to a Californian named David Phillips. In 1999, Phillips learned that the Healthy Choice company was offering a few hundred frequent flier miles for the purchase of each of their food products. He realized that by buying pudding, their least expensive item, the miles he earned would be worth more than the product itself. He ended up purchasing $3,380 worth of pudding from distributors across the state. As he ordered the pudding by the truckload, some distributors would ask what he needed it for. Slyly, would just mumble something about Y2K. Upon receipt of the pudding, he donated it to the Salvation Army, which in turn provided volunteers to help him process the paperwork. He thoroughly documented everything he did, making copies of his entire submission.

Although the people at Healthy Choice initially claimed not to have received his voluminous submission, they quickly relented in the face of his evidence, and even enlisted him in a publicity campaign. In the end Phillips earned over 1,250,000 miles from airlines such as American, Northwest, Delta, and United Airlines, as well as a tax deduction for his charitable contribution. This is enough for ten first class trips to Europe. If this story sounds familiar, then you have probably seen the movie Punch Drunk Love, where the character played by Adam Sandler does this exact same thing.

Mr. Pickles

Another amazing speaker at this convention prefers to remain anonymous, but goes by his online pseudonym Mr. Pickles. In 2009, he achieved some measure of notoriety when an acquaintance of his spoke to a reporter and disclosed his obsession with ordering coins from the United States Mint. Although most people would find coin collecting is a perfectly normal past time, Mr. Pickles is no average collector. He enjoyed ordering the new commemorative one dollar coins which are only worth their face value. He used his credit card to place the order under their Direct Ship program, which offered free shipping in order to encourage the circulation of these unpopular coins. Upon receipt, he would immediately deposit the coins at a local bank and use those funds to quickly pay off his credit card balance. Doing so earned him frequent flier miles at no cost to himself.

So far, this story is not very remarkable. Many people, myself included, ordered a few thousand of these coins from the Mint to use around town while earning a few miles on our credit cards. On the other hand, Mr. Pickles ordered well over one million coins during the life of the program. To find banks that would accept deposits of thousands of coins a day, he mapped out every branch location within 50 miles of his home. He would then tell the managers what he was doing and be extra nice to the bank’s tellers. Although the coins were delivered and deposited in rolls, each bank would eventually grow tired of regularly receiving hundreds of pounds in coins. Often, he would bring the staff pizza, donuts, or coffee in order to put off the inevitable day when they told him to take his business elsewhere.

Once his story and those of others like him was leaked to the mainstream media, the United States Mint decided it would no longer accept credit cards for the purchase of coins at face value. Before that happened in mid 2011, Mr. Pickles earned over 1.2 million miles, enough to travel around the world in business class four times.

Steve Belkin

It was appropriate that Steve Belkin gave a closing address to the conference, as he was one of the most engaging and enthusiastic speakers there. For him, earning a mere million miles is just child’s play. Belkin, who goes by the name BeauBeau on various travel forums, treats frequent flier miles like a Wall Street investment banker treats stocks. He has figured out exactly how much each company’s points and miles are worth, and he will heavily invest his money in any scheme that allows him to acquire them at rates that are below his pre-determined values. When an airline offers bonus miles for traveling on a certain route, he doesn’t just buy himself a ticket, he pays for other people to fly as long as they agree to let him use their miles. He told stories of paying Asian farmers to fly around Thailand and American students to travel through Europe, so he collects bonus miles being offered on particular routes.

Like the Pudding Guy, Belkin is constantly looking for opportunities to make purchases that earn more miles than the item is worth. In late 2009, he and I both purchased large quantities of the TrackItBack Lost & Found Recover Service, when we learned that US Airways was temporarily awarding 140 miles per dollar spent on this product during a holiday promotion. According to their website:

TrackItBack provides its customers with uniquely coded ID labels that come in various sizes, shapes, and languages. Customers affix the ID labels to their personal items and register them online at TrackItBack's website or by phone. When an item is lost, the ID label instructs the finder to "Return for Reward" and TrackItBack facilitates the return of the lost device at no charge to its customer. The finder is rewarded with a pack of TrackItBack product and any optional cash reward that the owner of the item has chosen to provide.

After thoroughly reading the terms and conditions of the offer and consulting with others online, my wife and I eventually decided to purchase $3,000 worth of this product. We carefully considered the possibility that US Airways would not honor the terms of the deal, but we were reassured when the company responded to customer’s concerns in public online forums. Although we eventually received a 475,000 US Airways miles, Belkin earned millions of miles to be used by his family and friends, potentially worth tens of thousands of dollars more than he paid.

Although less tasty than pudding, I love the TrackItBack system. Better yet, I was also able to realize a tax deduction by donating my surplus product to a non-profit organization. Most of it went to the NTEN, the Nonprofit Technology Network, which was able to distribute it to other worthy charities that needed such a tracking system. After our tax deduction was taken into account, we essentially purchased miles for approximately one half of a cent each. We later redeemed 360,000 of these miles for our family to fly in business class to Italy and Israel this fall. I donated the remainder of the miles to my parents who traveled to visit family in a Williamsport, Pennsylvania, a town whose airport only has service from US Airways.

What We Can Learn

I have been earning miles my whole life, but really started spending time researching award travel within the last four years. Although I was previously aware of some of these stories, I was still thrilled to meet these people hear their experiences first hand. But I also tried to learn something from each of them. For example, the Pudding Guy only received his million miles because he kept meticulous records of his compliance with the terms of Healthy Choice’s offer. This is a great habit no matter how many miles are at stake. Likewise, you should always save your boarding pass in case your mileage is not credited. In addition, Steve Belkin’s experiences show how you can always find creative ways to earn miles without ever leaving the ground. Finally, Mr. Pickles proves that just being extra nice to the people you meet will encourage them to go out of their way to help you out. If there is one lesson that I learned from everyone I met at this conference, it is that the only limit to the amount of points and miles that can be earned is that your own determination and creativity. There is no doubt that these opportunities continue to present themselves, and I will do my best to share them with you as soon as I learn about them.

Written by Jason Steele and published on Wise Bread. Read more articles from Wise Bread.

The Process for Purchasing a House With Cash

Xin Lu — Mon, 30 Jan 2012 10:48:22 +0000

Several years ago I wrote an article about the pros and cons of paying cash for a house. Some readers asked me how this can be done and what the procedures are. Last year my husband and I actually did purchase a property with cash, and here is our experience. (See also: How to Live a (Nearly) Cash-Only Life)

The property we bought was listed on the public multiple listing service. It was bank owned, so I called the listing agent and asked for an appointment. The listing agent immediately told us that the bank could only accept cash offers at this point because the property already has another cash offer on it. After seeing it and finding that it was in great condition, I made a pretty fair offer that was about 95% of the listing price. I also had to submit evidence of my funds along with my offer. The bank gladly accepted, and I sent in an earnest deposit check for $5,000. This check was then put into escrow towards the purchase of the house.

Next, we hired an inspector to look at the property to see if there are any defects. Unfortunately, the air conditioning system was broken, but the bank refused to pay for it, and we agreed to fix it out of pocket. The bank did agree to pay for title insurance, half of the escrow fee, and clear all liens from the property. So I made sure that all the unpaid bills and taxes on the property were paid before closing.

Meanwhile, I was gathering my funds all into one account so that I could send it into escrow before closing. We were able to choose our closing date to be the end of June, since we didn't have to deal with a loan. This was advantageous to us, since the bank had to pay all the property taxes for the first half year. I asked for the HUD closing statement about three days before closing and made sure that everything looked correct.

On the day before closing, I made sure all the funds were in my account and then sent the money to escrow. Everything went fairly smoothly, and the whole process took about three weeks from looking at the property to getting the keys. The closing costs were less than 1% of the price of the property because we didn't have to deal with a loan.

We were able to fix the air conditioner for a very fair price, and we rented the property out after several weeks of open houses. Now that we've owned the property for more than six months, we are actually eligible to take money out via a cash out refinance, but we don't need the money right now. The point is that if we didn't make a cash offer, then we would not have been able to procure this property at all. Basically, the process to buying a house with a cash on the open market is pretty much the same as buying a house with a loan, but you have more flexibility on the closing date, and that is a competitive advantage over offers with a loan contingency. You don't have to sign as many papers, but you still have to do your due diligence and make sure that you have a bit of cash buffer left over after the purchase for possible repairs and improvements.

What do you think? Are you thinking of buying a house with cash?

Written by Xin Lu and published on Wise Bread. Read more articles from Wise Bread.

Wise Bread (Personal Finance posts)

Surprise! 5 Reasons You Might Not Get Your Tax Refund

1. There are errors on your return

2. You owe back taxes

3. You haven't paid child support

4. You defaulted on your student loans

5. They just can't find you

How to Start Fighting Debt — Today

Face the Facts

Stop the Bleeding

Fix Your Payments

Ask for a Lower Rate

Pay More Than the Fixed Minimum

Financial Tricks to Master for a Happier Life

Make Only One Goal

Aim to Improve a Tiny Bit

Shrink Your To Do List

Swap TV Time for Activities Out of Your Home

Indulge Often!

SaveUp Giving Away $1000 to Wise Bread Readers

How to Enter:

How to Spend Your 200 Free Credits

About SaveUp

Best Money Tips: Stop Wasting Money on Your Car

Top 5 Articles

Other Essential Reading

News & Events

3 Tax Deductions You Can Never Take

1. Can I deduct my personal credit card interest?

2. Can I deduct my new interview suit or work clothes?

3. Can I deduct my commuting costs?

How to Find the Right Accountant for You

Why Do You Need an Accountant?

It's All About the Referral

An Ongoing Relationship

10 Smart Things to Do With $25

1. Go on a Goodwill Shopping Spree

2. Adopt an Animal That Needs a Good Home

3. Buy Previously Viewed Movies and Games

4. Start a College Savings Plan

5. Hit the Sales at the Grocery Stores

6. Loan It to a Farmer or Entrepreneur in a Third-World Country

7. Hop the Farmers Markets

8. Buy Some Original Art

9. Get a Free Massage or Haircut, and Tip $25

10. Take a Music Lesson

5 Best Credit Cards for People With Excellent Credit

Snap Out of It!

The Ways to Earn High Returns on Spending

The Best Cards for People With Excellent Credit

Surprising Things That Can Kill Your Credit

Sneaky Inquiries

Changing Your Ratio

Applying for the Wrong Type of Credit

Skipping Out

Swearing Off Credit

The Moral of This Story?

Proof That IRS Agents Are Human

How to Not Be a Debt Slave

Best Money Tips: How to Retire on the Cheap

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Extreme Mileage Hacking: Creative Ways to Earn Flier Miles

The Pudding Guy

Mr. Pickles

Steve Belkin

What We Can Learn

The Process for Purchasing a House With Cash