Friday, January 30, 2009

Free tax-refund help available this weekend

The Internal Revenue Service is opening its three Kansas City area walk-in tax offices, and about 170 others across the U.S. this weekend to help low income working tax payers claim some bigger refunds they may be missing.

The effort, which may put as much as a $4,800 bigger refund in the hands of qualifying households with incomes between $12,880 and $41,646, is part of an IRS drive to help taxpayers struggling with tough economic conditions, Commissioner Doug Shulman said in a telephone press conference.

"We are going the extra mile to make sure that every single taxpayer who qualifies can claim every cent coming to them," Shulman said.

Specifically, IRS is opening Kansas City and other walk-in offices between 9 a.m. and 2 p.m. this Saturday and on Feb. 7 and Feb. 21, to help low income taxpayers file their claims for what are known as Earned Income Tax Credits. ETICs, as they are known in tax lingo, are a specific kind of refund created three decades ago to help offset Social Security and other payroll taxes collected from low income working taxpayers who are least able to afford them.

IRS paid $48 billion in EITC refunds to 24 million taxpayers last year, but still probably missed 20 percent to 25 percent of potentially eligible recipients who didn't file for the money, Shulman said.

The refunds can be as large as $4,800, but more typically run about $1,900 or $2,000, IRS officials say. Who is eligible for them depends on their income level, family size and their filing status. Precise calculations can be tricky, which is one of the reasons why IRS is opening three Saturdays to help claimants who aren't able to leave work during the week.

The Kansas City area offices are in the Hillcrest Bank building at 5800 Bannister Road in Kansas City, 5799 Broadmoor in Mission, and 3730 South Elizabeth Avenue in Independence.

Similar free help is available at nearly 12,000 Volunteer Income Assistance, or VITA and Tax Counseling for the Elderly or TCE sites in libraries, community halls and other designated sites across Kansas City and the nation. More information is available on the IRS Web site, at the service's toll free number 1-800-829-1040, and from AARP at its Website or at 1-888-227-7669.

Monday, January 26, 2009

Another 62,000 jobs bite the dust

Welcome to the club. We're sorry you are here.

Losing a job is tough. I'm still dealing with the first few months of being downsized myself. I recently had lunch with a friend celebrating what he sardonically called his golden anniversary - 50 weeks of living on unemployment benefits and some rapidly dwindling savings. We ate cheap and used buy-one-get-one-free coupons. Deals like those become small triumphs in the days ahead.

You can get through this. It won't be pretty. My brother, a software engineer who has seen this movie several times, gave me some of the best general advice for dealing with what's next.

Breathe deeply, he said. And drive very carefully. Your mind will wander in some strange places as you adjust to new realities.

There are some specific things to do now too:

  • Cut spending now. Organize your budget like a financial fire drill. Postpone or cancel buying anything you don't absolutely need.
  • File for unemployment benefits immediately. Those will provide short term cash to tide you over as many as 26 weeks, longer if you qualify for extensions. Some states have exasperatingly picky instructions to follow before you get any money. Follow them.
  • Borrow money. But do it more carefully than ever before. Forget about new loans. Use existing credit to pay for big, one time critical emergency expenses if the alternative - paying cash - would deplete too much of the food, mortgage and other money you need to live on.
  • Use your savings strategically. Postpone tapping them for as long as you can, then take out as little as possible. Start with accounts that won't trigger penalties or interest if you pull money out. If you need to tap retirement savings, start with your Roth IRAs. You can withdraw your contributions - but not the money those contributions earned - without penalty even if you are not 59 1/2.
Finally, plan to budget your time too. One thing that many working unemployment pundits almost never mention is that everything you need to do next probably will take more time than you expect.

The day the music died ....and didn't leave a will

For all the other reasons we remember Buddy Holly's death 50 years ago next week, there's a personal finance lesson for us too. It's never too soon to put your affairs in order.

The airplane crash that killed Holly, Ritchie Valens and the Big Bopper, J.P, Richardson on Feb. 3, 1959 is still an especially big deal in north Iowa where I grew up. A local paper there, the Mason City Globe-Gazette is running video interviews with Jim Collison and Elwin Musser, the first news people on the scene, recalling what they saw.

But decades later, I see another facet of the story that I didn't think of as a 12-year-old fan.
None of the three entertainers apparently had a will in place when they died. That soon caused a tangle of complications that probably no one imagined until they started unfolding.

Nationally, our preparations for loved ones we're going to leave behind are a mess. Estate planning attorneys tell me maybe only three people in 10 have made a will or other plan and that many of those may be outdated by a decade or more.

You need some kind of plan, even if you don't have a lot of money to leave someone. If you die, or become too injured or ill to make decisions on your own, you'll want to leave instructions for someone to do what you would want. You'll want to pick someone to take the kids if your partner can't. Those instructions are what makes a plan.

Creating a will is easy, once you get past some creepiness you might feel before you start. Creating a trust is more complicated, but still manageable. And, if you get your affairs in order now, it may reduce the chance that your kids end up selling caskets on e-Bay.

Friday, January 23, 2009

Holy cow, Grandma is beating Warren Buffett

You know the markets are in turmoil when stodgy old U.S. Savings Bonds are outperforming Wall Street.

Good old Series EE Savings Bonds are earning 1.3 percent now, which beats the pants off however many points the markets plunged today. Grandma's favorite alternative to spoiling the kids is even paying higher returns than Warren Buffett's Berkshire Hathaway, which is down to about $87,000 a share from the $140,000 neighborhood a year ago.

But the most rewarding Savings Bond to own right now is the Series I bond, which currently is paying 5.64 percent interest.

Series I bonds are the inflation-adjusted offerings that the Treasury launched just more than 10 years ago. Their rates, which are changed each May and November, are based heavily on what the Consumer Price Index did in the six months previously.

Right now those rates are about twice higher than many banks or credit unions pay because that $4 gas we bought last summer is cranked into the equation. That will change, of course. But cautious investors still might want to keep them in mind.

Savings Bonds pay interest for as long as 30 years, but can be cashed in sooner. There is a penalty - you lose three months' interest - if you redeem them within five years. You can pay taxes on the interest annually or defer it until either you cash them in or the 30 years is up. Uncle Sam sells them online or you can pick them up for as little as $25 and $50 at most banks and credit unions. Visit for more details.

Thursday, January 22, 2009

Who's using your credit card?

Oops is not a word you want to hear from the nation's sixth largest credit card processor.

But Heartland Payment Systems this week disclosed that hackers may have pulled off the nation's largest credit card numbers ripoff, from plastic that we swiped in restaurants and elsewhere. Heartland has set up a special Web site at if you suspect you have a problem.

As authorities continue to sort out what's at risk, there are a few things we can do to protect our own wallets.

Check your credit history at the Big 3 credit reporting services, of course. Equifax, TransUnion and Experian each offer one free report each year. You can even go onto a joint Web site,, for a report from each of them. If you want to check more often, ask for a free report from just one of the companies now and the others in four and eight months later. Repeat that rotation a year from now to continue keeping an eye on things.

You also can take further steps, for free, if you suspect that your identity has been compromised, say the editors at Consumer Reports.

Asking for a credit freeze is one of the most effective. It will stop anyone from opening a new credit line without your knowledge. You also can ask the three services to alert you if it appears someone is trying to fraudulently borrow in your name.

Here's where things get tricky. Credit companies, including the Big 3 reporting services, also will do these things for you and more. But they also may charge you anywhere from several dozen to a few hundred dollars for the service.

So read the details, compare the costs and think through which services you really need or not. Ask, for example, if you really need pricey i.d. theft protection if a free credit freeze will do the trick. And be careful out there.

Wednesday, January 21, 2009

Write your own stimulus package...

There's no way of knowing yet if you can write yourself a better economic stimulus package than President Obama and Congress will put together, but you can write yourself a faster one.

Start now to nail down your IRS refund sooner. Last year's average refund topped $2,400, which is better than a proposed $1,000 per couple stimulus Washington was talking about before. Besides, it's your money, so it won't show up in all the red ink the leaders are worried about.

You'll have the tools you need when the last of your W-2s and other tax documents hit your mailbox by the end of next week or so. The big things to do before then are to start pulling your tax records together, check your mail, and apply for last year's stimulus rebate if you still have some of that money coming, reports the Tax Mama, Eva Rosenberg, who is one of my favorite tax mavens.

Even though experts calculate that maybe six in 10 of us wouldn't pass even a simple tax quiz, there is still time to catch up on enough of the basics to know what to look for.

First, check out a flurry of tax changes late last year to see which might help you. Let your tax pro sweat the details, but check out online resources H&R Block, Jackson Hewitt and Liberty Tax Service to learn the broad outlines.

Next, check out what free tax help you can find to sort out the details. Your best places to start looking are at the IRS website or the service's toll free number 1-800-829-1040.

And what if you owe money instead? It's still okay to file now but hold off sending the check until April.

Monday, January 19, 2009

Smarter personal finance experts than me....

Smarter personal finance experts than me will be on the phone next week to answer just about any question you want to ask them.

A Friday, Jan. 30, free financial call-in staged by the National Association of Personal Financial Advisors, the national fee-only financial planners group known as NAPFA, and Kiplinger Inc., the financial news letter publisher, will not include all the experts who are smarter than me. Some days that crowd could rival the numbers in Washington for the inauguration.

But there will be some pretty good people on the line at 1-888-919-2345 from 8 a.m. to 5 p.m. Central time that Friday to help you through your knottiest tangles.

If you aren't able to call just then, or you worry about the boss finding you tieing up company phones while you try to keep your own personal recession from becoming a depression, there are some good Web sites to check out later.

Along with the NAPFA and Kiplinger sites, a partial list of some I check includes The Motley Fool, which covers dismal without being devastated; MSN Money, which can be a spectacular portfolio tracker;, which packs a wide variety of useable personal finance news among the banking stuff, and, which usually has more readable analyses than many other places I see.

So, who've I missed?

Friday, January 16, 2009

Refinance at your own risk.

You may not want to pull money out of your house when times are tough. But what if you have to?

Dropping 30-year, fixed-rate mortgages below 5 percent -the lowest levels since the early 1970s - makes refinancing attractive right now. And if you have a decent payment history and enough equity in your home, you may even be able to pull out some extra cash to help you get through a tough patch if you are changing jobs or moving into a lower paying career.

But refinancing can be risky too. You need to know what you are getting into, what's in the fine print, and what the deal potentially will cost if things don't work out. You need to know who are dealing with too. Mortgage rates have fallen, but the opportunities for mortgage ripoffs haven't, says the Federal Trade Commission.

Some of the lenders offering refinancing deals now are the same ones who were lending aggressively when the market was hot. They are preaching probity now and, in some cases, offering counseling to help us with especially knotty problems.

The best way to be sure you are dealing with legitimate counselors is to work only with those who are certified by the U.S. Department of Housing and Urban Development, says Jana Castanon, Kansas City outreach director for the Consumer Credit Counseling Service of the Midwest.

Wednesday, January 14, 2009

Your tax refund race starts Friday

The Internal Revenue Service is opening its free electronic tax filing sites Jan. 16, even to taxpayers who made too much money to use the service before.

IRS basically hopes it will beat last year's record nearly 60 percent participation in government and commercial electronic filing choices. IRS free filing is available only through the service's official Web site, David Williams, IRS' electronic tax administration director, said in a telephone press conference.

Two levels of free service are available. Taxpayers whose adjustable gross incomes were $56,000 or lower, are eligible to use the traditional Free File Alliance service, which includes a user-friendly question and answer format to guide filers through the forms and identify all the tax breaks for which they qualify, Williams said.

There have been a raft of new tax changes this year, some passed as recently as October. IRS especially hopes free filing will help people who need cash now to get refunds faster. E-filing can get you a refund in as few as eight days. Filing an old-fashioned paper return can delay the check for as long as 12 weeks.

Taxpayers who don't qualify for that help still can use the new Free File Fillable Forms that will be added to the site this year. Those basically are electronic versions of the same paper forms that have always been available. Starting Friday, though, you can fill them out and file them on line instead of downloading, filling and mailing.

Free fillable forms will check your math, but don't offer the Q&A navigational help. IRS doesn't know how many people will feel tax savvy enough to use the new forms.

"There is a huge amount of information you need to know," Williams said.

IRS free filing accomodates only federal returns. You will need to check with your state department of revenue or neighborhood tax professional to find how best to handle your state income tax return.

Tuesday, January 13, 2009

Slashing prices in the razor aisle...

Best Choice razor blades, $3.89 for a package of five. The Gillettes I used to buy? $7.62.

That math is a no brainer for anyone trying to stretch personal finances as far as possible in times like these. But might it change our longer run buying habits too?

Growing numbers of us are discovering that a lot of bargain-priced store brand stuff is just as good as the brand names we traditionally buy.

A.C. Nielsen, the television ratings people who in fact measure the relative popularity of just about everything sold in the U.S., report that nearly three out of four of us consider store-brand products to be just as good as higher priced brand names.

Trade groups say sales of private label grocery and drug store products are growing faster than the brand names they compete with. And the Private Label Manufacturers Association, which naturally seems happy with this turn of events, is warning members not to blow their new good fortune as they did in the early 1980s.

Low prices draw consumers to unknown brands, the association says, but it will take matching name brand quality to keep them.

Maybe, maybe not. Kellogg's this week is running cereal specials that match prices on some of the store brands. But while they duke it out, I'm going to check out Aldi's again.

Monday, January 12, 2009

Cheap car keys ...a personal finance puzzler

It seems goofy, but if you are in the market for a new vehicle anytime soon, think about buying before the government's promised economic stimulus packages kick in.

Car dealers are offering some astonishing deals right now. You can get nearly $8,000 below sticker price and $8,000 back on an Escalade right now if you are shopping upmarket or $3,700 below sticker and $3,700 back on a Saturn Vue, if that's more in line with your budget.
Not being fussy about fuel economy will get you the best deal, but thriftier selections are out there too.

Up to now many of us have been thinking that when the automakers claim that this once in a lifetime deal ends, it just means another better one may be coming up. That might be ending, writes Hannah Elliot at GM and Chrysler in particular will feel less pressure to cut prices when their federal bailout money arrives.

Waiting for our own household stimulus money arrives seems like a non-starter too. We don't yet know when it's coming or even how, but the $1,000 maximum being talked about isn't nearly as good as what Detroit is offering now.

But check out all the costs of a potential new car before you buy. After you pencil in financing costs, potentially higher licensing costs, higher property taxes you pay and your auto insurance, hanging on to your current car a little while longer may be more attractive

New-car-scent air fresheners run about $2.50 each at AutoZone.

Thursday, January 8, 2009

Maxing out the national plastic

Got credit card problems? Then you may know more about global economics than you think.

There's been a lot of posting on Get Rich Slowly and other personal finance blogs lately about a growing tendency among credit card issuers to clamp down on dormant credit lines. Those include the cards they previously mailed to us but that we haven't used much or are saving for emergencies.

Cutting off unused credit is good for the card companies because it protects them from having to make potentially shaky loans if we tap our emergency lines. But it's rougher on the rest of us because if we do borrow, we may end up paying higher rates to use more of the smaller lines we have left. Drop just one notch on your credit score and you may end up paying as much as maybe $20 to $40 or more a month on a house or car payment, according to

The U.S. appears to be headed into a similar jam, suggests a business story in The New York Times. Briefly, the U.S. will need to borrow some unknown number of trillions of dollars in the next several months to help restart the flow of credit in the U.S. But China, which loaned the most by buying Treasury bonds to bail us out of our recent jams in the past, is sounding stingier this time around. The Chinese have economic problems too and are thinking about an economic stimulus package of their own.

Our current national debt currently runs to between 40 percent and 45 percent of our total economic output and Congressional Budget Office researchers look for it to top 50 percent
when the federal fiscal year ends in September.

Around the kitchen table, racking up a debt to income ratio of more than 38 percent can kill your chances for getting a mortgage or some car loans. So what do you suppose credit scores are on a trillion dollar loan application?

Tuesday, January 6, 2009

If your turnip is bleeding...

The Internal Revenue Service said Tuesday it understands if you are strapped for cash during the filing season beginning later this month.

Make no mistake, IRS wants its money, but it will try to be more flexible about getting it, Commissioner Doug Shulman said in a telephone press conference. If, in tax preparer lingo you are "previously compliant," and always avoided tax problems before, IRS will do what it can to accomodate you, Shulman said.

Further details about change - along with a reminder of some the latest changes in deductions, exemptions and other important minutiae that income tax wonks revel in - were posted to the IRS Web site this afternoon. Highlights are in the top center of the first page you come to.

But here are the five biggest changes Shulman outlined to help taxpayers who've been beaten up by the recession.

First, IRS employees have been told to suspend collection actions in cases where a taxpayer simply cannot pay his or her taxes because of a job loss or similar economic calamity.

Second, if you are already paying old tax bills on an installment plan, IRS won't automatically scotch the agreement and demand all its remaining money if, for reasons beyond your control, you miss a payment. Third, if you are paying your taxes through what's known as an offer in compromise - basically settling for less than 100 cents on the dollar - IRS won't scrap that agreement either if you miss a payment.

Fourth, if you seek an offer in compromise, but are rejected because you have enough equity left in your home to pay your tax bill, you can ask for a special IRS unit to review that rejection. It will check out home prices in your area to see if the decision can be changed.

And finally, if the IRS has put a levy on any of your property or assets to collect back taxes, once those are paid, the service will speed up the paperwork needed to give you full access to what's left.

But remember, you need to ask for this help if you need it. And to do that, you need to file a return, call the IRS toll free number 1-800-829-1040 or go to a nearby walk-in taxpayer assistance office.

Monday, January 5, 2009

If I were king

If I were king, this whole recession thing would be a lot more fun. Personally, that is.

I figured that out just after I learned today that my COBRA premiums are going up another $17.64 a month. I can probably figure out some way to tweak our household budget to accomodate the change. But I've also been following Paul Krugman and other economists who've been writing about the unknown billions in red ink they think the government needs to spend to get the economy moving again.

That's when I decided it would be more fun to be a king - the government - and spend my way out of the hole than it is being a mere consumer and skimping my way out. Fat chance.

So, reality. Household budget tweaking hasn't fundamentally changed in the years we've been doing it. The trick remains find some way to spend less than you bring in. A blogger on I Paid for This Twice Already vows to whack food and clothing costs using coupons, thrift store shopping and other choices.

There also are more worksheets and other resources online these days. One that I found from a provider in Utah covers so many questions, it makes me think of a Magic 8-Ball I had when I was a kid. Another is an online version of the old fashioned envelope budgeting system some of our parents used.

Meantime, the Freakonomic guys are suggesting that a lot of this may be a waste of time. As soon as the economy looks shinier again, it will be tempting to abandon the discipline we are forced to practice now.

Friday, January 2, 2009

Your financial lifelines...paper or plastic?

Worrying about no bailouts for the little guy is so 2008. Worry about givebacks instead.

New Year's forecasters talk a lot about credit clampdowns this year. What analyst Meredith Whitney and Oppenheimer & Co. gently describes as"expanded forced consumer deleveraging" could soon whack $2 trillion off our collective credit lines, she wrote recently.

That's obviously bad news for the owners of 221,000 retail stores forecast to close in the foreseeable future. But it's potentially just as tough on unknown numbers of cash-strapped households counting on emergency-use-only credit cards to help pull them through a job loss or some other calamity. Cautious lenders presumably will be shortening those lines too.

Lowering credit card limits hits borrowers two ways. First, emergency cushions suddenly become smaller than first planned. Second, if you do have to borrow, the reduction hurts your potential credit score too. If you borrow $5,000 on a card with a $10,000 limit, you are using half or less of your available credit, which helps your score. But if the lender cuts that $10,000 limit in half, suddenly you have borrowed to the hilt and are considered a poor risk, even though nothing else is changed.

One solution obviously is to save as much cash as possible for emergencies instead of counting on a credit card. But don't shun plastic entirely. There are occasions, such as having car trouble out of town, when having a card with a useable $2,000 or more credit line will be a lot more manageable than packing cash.

So watch your mail, open those credit card company letters even if you dread what you might see, and adjust your financial emergency kit accordingly