Last week the President proposed a new economic stimulus package. It would be similar to the checks that were sent to taxpayers in 2001 to stimulate the economy.
Details from CNN include:
- $600 for individuals and $1200 to joint filers who paid income tax.
- Cut in half if no income tax was paid but earned more than $3,000.
- Possible additional amounts of around $300 per child.
If that bill passed in the proposed form, it would likely mean $1,800 for our household. Unfortunately, I don’t see running out and spending any of it. A windfall like that would go straight to our investments. We finished 2007 just shy of our goals, so giving our dollar plan a little boost would be my primary goal.
The intent of these checks are to get people to spend more money. I wonder how many savers there are out there that wouldn’t be using the checks.
What would you spend your check on if the bill passes?
Print
Email
Posted January 25, 2008 in Savings by Madison | 9 Comments
Debt snowflaking is a successful technique to get out of debt. In addition to the fixed amount that you have planned each month, you apply all the extra money you find to paydown your debt faster. It’s an extension of the snowball method and snowball calculator.
Investment Snowflaking
I didn’t want the investing crowd to be left out in the cold, so I’ve turned the approach around to apply it to building investments, which is the cornerstone of our dollar plan. I’m going to try to add each extra dollar that comes into our house to our investments! These investment snowflakes will help build our investments quicker just as the debt snowflakes help paydown debts quicker.
Get Rich Slowly recently highlighted five of Jaimie’s golden rules for snowflaking. Let’s apply the same rules to investment snowflaking:
- Snowflake early and often. Starting early is one of the keys to successful investing. Normally I don’t determine our Roth contributions until after our taxes are complete. However, I’m going to start sending in additional contributions right away!
- No amount is too small to snowflake. I do have a minimum on our Vanguard Roth IRA’s but I’ll drop the small amounts into our savings account at ING. Each time I hit the minimum I’ll transfer the money to Vanguard.
- Anything can be a snowflake. The most likely source of my snowflakes will be money from my dollar-a-day challenge. I don’t make it a daily habit anymore, but I still operate in the same mentality to find extra money. Any extra money I get I’ll throw at the accounts, whether it’s the change jar, a check in the mail from a rebate, or money from eBay.
- Snowflake as immediately as possible. While I’m not fighting an interest rate, it is beneficial to get the money applied sooner. The more time an investment has to grow, the bigger it will grow!
- Keep track of your snowflakes to use as motivation. This will be easy because in April when the rest of our Roth contributions are due, I won’t have to pay the full amount! If that isn’t motivation, I don’t know what is. Of course I will take the extra and apply it to another investment, possibly increasing my contribution to my new Roth 401k!
Building Net Worth
It’s likely that many of the strategies used by people working on paying down debt and people building their investments would cross over in principle. After all, the goal in both scenarios is growing your net worth overall.
Action Plan
I enjoy saving and investing even more when I can apply a fun strategy to it. This seems like a great one because I’ll be able to invest even more than I planned for the year. It will also help since we finished 2007 just short of our planned goal. Now, off to start snowflaking!
Photography by: ViaMoi
Print
Email
Posted January 25, 2008 in Debt, Intermediate, Investing, Taxes by Madison | 7 Comments
I just got a message from the Wise Bread Forums that I won their contest on Tuesday! I’m the proud new owner of a $20 gift certificate from Amazon!
It was a pleasant surprise, as I had just recently stumbled on Wise Bread while I was finishing up the site rankings. I joined the forums oblivious to the giveaway.
Now I can buy the Patemm Pad I’ve been keeping my eye on for our son.
There’s still a week left to enter if you are interested. All you have to do is join the forum and post. Here’s the official rules:
Rules for the Current Contest
From 12/31/07 to 1/31/08 we’ll be holding daily drawings on this forum.
Each day we’re giving away:
- One $20 Amazon Gift Certificate
To enter, just make a post anywhere in our forums. Each post with over 3 sentences will be counted as one “raffle ticket” for this contest. You can have multiple entries everyday. The more you post the better your chances of winning.
Good luck! Now off to spend my winnings…
Print
Email
Posted January 24, 2008 in Uncategorized by Madison | Comments?
The tax clock is ticking! Congress straightened out the AMT and the VITA sites are open. Hopefully you are getting your paperwork organized and you’ve read about the free online efiling available to many people.
Of course it wouldn’t be tax time without questions! Here’s more answers to reader questions from our local IRS agent. If you didn’t get a chance, be sure to read the first set of questions in the interview with an IRS agent.
I am in the middle of an IRS audit. Does the IRS charge the taxpayer that is being audited a fee? If so what are the charges? - Submitted by Julia
We do not charge a fee for the audit. If we find that you owe additional taxes, we charge interest and sometimes penalties in addition to the taxes due. If you choose to pay those amounts by an installment agreement we have a fee for setting up an installment agreement.
I have an issue with an inheritance my husband and I received. My father-in-law had the money in an annuity that was transferred to my husband and his sister upon his death. We consulted an accountant before cashing it out, and he told us that we would only be responsible for paying taxes on the interest the annuity had earned since my father-in-law had put the money in. We got the tax form in the mail recently and it says the entire amount is taxable. Who’s right? The accountant or the form? - Submitted by Lynnae at Being Frugal
Normally in a tax deferred annuity only the earnings are taxable since the principal was after tax money that was invested. If it was an IRA that was put in and a deduction taken then everything is taxable. There is probably a communication problem here. First thing I would do is call the bank and get an explanation of what the payment was and the facts.
Feel free to contact me if you have more tax questions you can’t find the answers to. I’ll do my best to track down the answer for you!
Print
Email
Posted January 23, 2008 in Taxes by Madison | 1 Comment
To earn $25 Signup Bonus, you will need to open your account with $250. If you just want to open an account click here.
Each link will work only once. The link has already been used if you get the following message:
We’re sorry, but the referral link within the email you received has expired and is no longer valid. We recommend that you contact the sender and ask them to re-send the referral email. Or click ‘Continue’ to proceed with the application process without the account opening bonus.
If you’re seeing the message above on all of the unused links, please clear your browser’s cookies and try several of the good links again.
I’ll add new referrals as the links get used. If all of the referrals are used or expired, contact me and I’ll send you a new one directly.
Here’s a list of links:
$25 Signup Bonus GONE!$25 Signup Bonus GONE!$25 Signup Bonus GONE!$25 Signup Bonus GONE!$25 Signup Bonus GONE!$25 Signup Bonus GONE!$25 Signup Bonus GONE!$25 Signup Bonus GONE!$25 Signup Bonus GONE!$25 Signup Bonus GONE!$25 Signup Bonus GONE!$25 Signup Bonus GONE!$25 Signup Bonus GONE!- $25 Signup Bonus
- $25 Signup Bonus
- $25 Signup Bonus
I earn $10 for each referral. Once you open your account you can refer your friends and family and earn $10 too!
You can also simply open a high yield savings account without the the initial deposit but you will not earn the bonus.
Print
Email
Posted January 23, 2008 in Quick Money by Madison | 2 Comments
