When it comes time to do your taxes, it is always beneficial to take as many tax deductions as you possibly can.  If you can legally make the deduction, it won’t be considered cheating on your taxes.  You just want to be sure that you are paying the least possible amount on your taxes.  Sometimes people miss deductions they have available and end up paying more taxes than they should.  That is never fun.

When figuring out your gross income, you have to include basically any money that comes in to you.  This includes your ordinary wages, extra income, interest, dividends, etc.  The only money coming in to you that is not included is cash that you get in the form of a loan.  If someone lends you ten thousand dollars, you don’t report that as income.  If someone owes you ten grand and pays you back in full without interest, you don’t have to include any of that income in your taxes.  However, if you have ten grand in your savings account and you accrue five hundred bucks worth of interest in the year, you do have to include that in your taxes.

Now what sort of interest payments can you deduct and use to offset your total tax bill?  Well the only sort of of interest a regular working individual may deduct is the interest on their home loan.  Your mortgage interest is deductible up to a million dollars worth of principle.  So for example, say that your mortgage is 500k and you end up paying 30k worth of interest in a given year.  You may deduct that 30k against your income.  However, if your mortgage balance is 2 Million and you end up paying 120k worth of interest that year, only half of it is deductible.  Also, it is only the interest portion of your payments that are deductible.  You are typically paying back some of the principle with each payment, and that part is not deductible.

So what other types of interest are deductible for an individual?  Well, pretty much none.  You can’t deduct the interest on your car loan, the interest on your credit cards or the interest you are paying on that loan for your new big screen TV.  However, if you owned a business and your business took out a loan to buy a car, your business could deduct the interest on that car loan against the profits for that year.

So what is the morale of the story?  Your home loan is probably the best debt you can have.  If you get the opportunity to roll your credit card debt, car loan, etc. into your home mortgage, do it!  Not only are you going to get a lower interest rate, but you are also going to be able to deduct the interest payments from your ordinary income!

As the economy slows down, everybody is looking for some extra ways to save a few bucks here and there.  Sometimes it seems like you are always trying to save but just need some extra ideas to help you keep that last buck in your pocket.  Here are 10 ways you can save money in a slowing economy:

1. Share a room - For most Americans, their number one expense (after taxes) is their housing cost.  If you are single and living in a two bedroom place, consider renting one of the rooms out or getting a roommate to help you split the costs.  Not only do you save on rent or get a subsidized mortgage, you also split utilities.
2. Share a car - If you and your wife or girlfriend or roommates can swing it, try getting rid of one of your cars.  You will save money on insurance, registration, and maintenance.  Plus, selling a car will put cash in your pocket.
3. Quit smoking - Although there are a million other reasons to quit smoking, maybe the cost will push you over the edge.  Quit smoking because it costs too much, not because you aren’t cool enough to smoke.
4. Don’t get tempted by all the sales - I have seen some pretty incredible discounts offered for some of the stores that are going under.  If you buy a new pair of shoes for $20 that were originally $80, how much are you saving?  You aren’t saving anything, you are spending!
5. Don’t get tempted by the financing offers - No payments for 2 years on this new HDTV!  How do you know if the economy will be back on track in two years?  You don’t, so avoid.
6. Turn your computer and TV off - Turn your computer off especially when you aren’t using it.  There is no reason to leave the darn thing on all the time.
7. Cancel your cable and internet - Let’s face it, you don’t need the TV or internet.  Why not go outside and enjoy the fresh air?  Cancel your cable and internet to save on the monthly subscription cost.  If you need to watch something on TV, go to a friends, go to a sports bar, go to the gym, or skip watching it.  See if you can get free wifi somewhere outside your house, or just use the internet at work.
8. Quit the gym - I don’t mean stop working out, but exercising shouldn’t cost you anything.  Go jogging for cardio.  Get some elastic bands for resistance training.
9. Compare alternatives - You might have a commute where you could drive, walk, ride your bike, take bus or train, and you don’t know which is cheapest.  Keep track of your gas bill or train fare, parking fees, and everything in a spreadsheet.  Eventually you will be able to see which form of commuting is the cheapest.  Put some variables and functions in your spreadsheet so you can see what happens if (when) gas prices go back up.
10. Keep track - Monitor your expenses closely so you can patch up any leaks.

Keep your expenses low and maximize your savings account, and you should be able to whether the storm.

It is a lot easier to buy things when there are very manageable monthly payments involved rather than one lump sum payment.  You can justify a few extra bucks a month a lot easier than you can justify dropping a few hundred or even a few thousand on something before you even take it home with you.  Unfortunately, a lot of people fall victim to this flawed thinking.

Racking up some debt is OK for some instances, mainly when the cost of not having something is greater than the cost of having that desired item.  For example, if you could get a much higher paying job by financing a new car, it would be considered a good investment.  Yes, you would have to me making the monthly payments on your new car, but at the same time, you will be making a lot more money at your new job.  In the end, you will benefit financially by taking on the additional responsibility of the additional monthly payments.

Also, it would make sense to take out a mortgage to buy a house.  You are going to have to make monthly rent payments anyway, so why not be paying down a mortgage on a property that is hopefully increasing in value while you live there?  Makes total sense to buy unless you absolutely cannot afford it.

However, does it make sense to buy that new big-screen plasma HDTV with the surround sound that you always wanted?  You would have to have two thousand in cash to buy it outright at the store today, or you can select the financing option and not pay a dime for 6 months!  After that six-month period ends, you will be paying double for the set through your monthly payments.  How is having the nice TV going to pay off financially?  Unless you were planning on charging people to watch it, this investment won’t be paying off financially.

This is what we call a luxury item.  It is not purchased as an investment in hopes of making extra money.  It is not an living essential that we will need to survive and stay healthy.  It is a toy; it is an unnecessary item that we could live without.  It is a want rather than a need.

So what happens if you rack up a little too much debt and you cannot make your monthly payments?  Well after you get a bunch of nasty letters in the mail, someone is going to come to your house and take your nice new TV away.  Even after they take your TV back, you will probably still owe a considerable amount on the loan.  Don’t think that just because they have the TV that you are off the hook.  They will still come after you for the bad debt.  They might even pass you off to a collection agency who will continue to pester you with letters and nasty phone calls.

If you still don’t make the monthly payments, they will report it on your credit and lower your credit score.  The next time you want to finance a TV, it might be a little more difficult.  Even if you want to use financing to make a good investment (a house), you are still going to look bad for that defaulted TV loan.  What a bummer!

Some people think that taking advantage of every single last tax deduction that is available to you is considered cheating on your taxes.  It obviously isn’t considered cheating on your taxes if you are simply following the rules of the IRS.  As long as you are doing everything by the book, there is no limit to how much you can save on your taxes before it becomes illegal.  Just because you have a lot of stuff to write off or tax credits to take advantage of, does not mean that you are cheating on your taxes!

It is in your best interest to get a qualified accountant to sit down with you and help you prepare your taxes so that you can reduce your final tax bill at the end.  Obviously, the more you deduct, the more you save on your taxes.  But the great thing about finding deductions is that they come off the top of your income.  The savings are going to be at the highest tax rate that you would pay.  Let’s use an example:

Say that you made $100k this year, and, just as an example to make things simple, lets pretend that the tax rate on your first $80k is a flat 15%, and 40% on everything above 80k.  So at the end of the year, you owe:

$80k * 15% = $12k

$20k * 40% = $8k

So you owe a total of 20k, and 40% of your total tax bill is on that last 20k that you made this year.  So what if you investigate all your opportunities and you find out that you can deduct a total of 10k, or 10% of your total income for the year.  You want to see what impact this is going to have on your tax bill, so you redo the calculation after you adjusted your income down by 10%.

$80k * 15% = $12k

$10k * 40% = $4k

So now you only owe 16k instead of 20k.  You have reduced your gross taxable income by 10%, but you have reduced your total tax bill by 20%!

You can see the amazing benefit of tax deductions right there.  Your deductions are coming off the top of your income, which is what you are paying the most taxes on.  So it makes sense for you to max out any of your tax deferred accounts like retirement accounts, health savings accounts, etc.  This savings will really help keep your money in your pocket.

Remember to run everything you are doing by a professional accountant.  It is typically not worth doing all your taxes on your own.  There is a lot of deductions you might miss, and a lot of stuff you might try to do that you aren’t supposed to.  It is always good to save money on taxes, but it is never worth it if you are doing something illegal.  Saying “I didn’t know I couldn’t do that” will not get you out of trouble.

A lot of the time, we are given a couple variables and we want to calculate the payments on a loan.  For example, you are trying to finance a $10,000 car at a 12% interest rate for 5 years.  All you want to find out is how much your monthly payment is going to be and whether or not you can afford that payment.  Just a heads up - you will need a calculator to figure out these payments.  Since you are probably on a computer right now, you can use the calculator on your computer, or you can use excel.

Lets use the example above and try to calculate out your monthly payment.  First, lets set some terms.  PV (Present Value) of the loan is going to be $10,000.  Your interest rate per year is going to be .12.  However, since we are trying to calculate out MONTHLY payments, we are going to want to turn this 12% per year into a monthly rate.  This is as simple as dividing .12 by 12 which gives you .01 or 1%.  Finally, we are going to want to define our number of payments, n.  We know that it will be 5 years, but we need to convert that into months.  Simple as multiplying 5 by 12 which gives you 60 months.

Ok, so here are our variables:

Total number of payments: n=60

Interest: i=0.01

Present Value: pv=10000

The easiest way to calculate payments is to use a spreadsheet on your computer like excel.  Open up the program, select a cell and type in the following exactly (without the quotes): “=PMT(0.01,60,10000)”.  Hit enter.  This will automatically calculate out your monthly payment of “-$222.44″.  This is what your monthly payment on your car loan should be, given those exact variables.  I am sure that the loan you are trying to calculate payments on has different variables, so here is the equation using variables instead of values: “=PMT(i,n,pv)”.  To calculate payments on your loan, just replace the i with interest, n with number of payments and pv with the total loan amount.

Using excel to figure this out is by far the easiest way.  Just plug your variables in and hit enter and you are finished.  If you are deathly afraid of excel, you can use the old-fashioned formula.  Take a look at it and maybe you might want to give excel a shot first:

Monthly Payment = (pv) * (i/(1-(1+i)^(-n)))

Ok, lets solve this using our example:

Monthly Payment = (10000) * (.01/(1-(1.01)^(-60)))

Monthly Payment = (10000) * (.01/(1-0.55045))

Monthly Payment = (10000) * (.01/.44955)

Monthly Payment = (10000) * (0.022244)

Monthly Payment = $222.44

So we get the same answer of your monthly payment being $222.44.  Piece of cake!

What do we learn from this?  You are buying a car for $10k and you only have to make monthly payments of $222.44 for five years to pay the thing off.  Doesn’t sound that unreasonable?  Well if we add up all the monthly payments, we find that you ended up paying a total of $13,346 for a $10,000 car.  And what is your car worth now?  $3,000?  So by the time you pay the car off, you are out a total of over ten grand!

What would have happened if the financing option had not been available to you?  You might have bought something a little more economical, say a car worth $2500.  Even if your car is now worth $500 now, you are still only out two grand instead of being out over ten grand!

Keep this in mind next time you calculate payments on your loan!

If you are thinking of borrowing money, the first thing you want to do is have a look at your own credit.  This is a good idea because the lender will always run your credit before they hand you over a sum of money.  It helps to know your own credit score and history before appling for a loan so that there are no surprises.  But what happens if you have less-than-stellar credit or simply a terrible string of unfortunate events that led to a miserable credit report?

You do have some options available to you.  One option that a lot of people will opt for is signing up to some sort of credit repair service.  They claim that they can help you get your bad credit back on track by removing poor histories and adding on more positive events.  Unfortunally this is typically impossible to perform legally.  The best way you can help your credit is by doing it yourself.

There are a few things you can do that will help skyrocket your credit score, but it always takes some time and never happens over night.  The first thing you are going to want to do is start paying off any overdue payments or bills.  Save up some money to get all your finances back to a stable place.  Once your personal finances have stabled off, take some time to look at what credit you currently have.  If you don’t have much that is building credit, consider applying for some credit cards.  Just be sure that you can control yourself when you get the extra spending power.  Be sure to keep your balances low and aim to pay your cards off each month.

Sorting out your current situation and starting to build positive credit history is going to help you raise your credit score over time, but what about removing negative events from the past?  I’m no credit expert, but take the time to look at all the bad items on your credit history.  Make sure that they are all legitamite claims.  Sometimes something that is not supposed to be there will be on there.  Assuming everything on there is your fault, check to see how long items like that are to be left on your credit report.  A foreclosure from 15 years ago shouldn’t be on there.  Odds are that you can’t do much but wait around for negative things to come off your report, while trying to build positive history.

Eventually, your credit will be back to where it was, saving you thousands in interest for car loans, mortgages, etc.  Just make sure to maintain a quality credit report and not slip back to old habits.

We all know that one of the most difficult parts of getting insurance is trying to figure out what kind of insurance deductibles that you need.  It would be nice to not have to pay much out of pocket if something were to happen, but on the other hand you want a low premium, so you would rather raise your deductible to save.

It really comes down to figuring out exactly how much you can afford and what your chances are of having to hit that deductible for any given amount of time.  Lets use an example:

I recently became self-employed and needed to get my own health insurance.  The plans that I was looking at ranged anywhere from $50 a month to $500 a month.  For starters, $500 a month was just too high for me.  I really don’t need that comprehensive of coverage.  After all, I am a single, young healthy male.  I only really go see the doctor if something is terribly wrong.  I looked at the cheaper plans, and noticed that my deductible would be $4k per year.  This means I would pay the first four thousand dollars of my medical expenses in any given year.  This doesn’t sound great, but you must remember how fast medical expenses can pile up.  I recently had to have knee surgery, and the total bill after doctor visits, physical therapy, surgery, etc. came to be around $20k.  I was out the $4k, but I saved a total of $16k just by having insurance.

My reasoning went like this:  I can afford to be out $4k per year.  That is the absolute worst-case scenario.  If something terrible happened and my hospital bill was a million dollars, my liability would be limited to $4k no matter what.  So I went with the 4k deductible plan.  I saved up $4k in my Health Savings Account, and just let it sit there, earning interest each month.  I have a very low monthly premium for my insurance ($67 for medical and dental), and I am covered in any worst-case scenario since I have the $4k ready to spend on my deductible.

Now, lets say I knew I would be going to the doctor a whole lot (chronic illness, planned pregnancy, etc.).  If I knew I would hit that deductible every year, it might make sense to pay a higher premium and get the lower insurance deductible.  It would make sense to see how much extra you are paying on your premium per year to have a lower deductible.  If you are paying $1k per year more to have a $1k lower deductible, it wouldn’t really make any sense…

Finally, you want to look at how much deductible you can afford.  I made the decision that I would always have $4k in my health savings as a just-in-case fund.  Worst case, I lose all the money in that account.  However, if you are scraping by, living paycheck to paycheck, you might not even be able to foot a $4k bill.  In this case, you might want to pay the extra couple bucks to give yourself a deductible that you can afford.  It doesn’t make any sense to have insurance if you are going to have to file for bankruptcy either way.

Choosing the right insurance deductibles may not be easy, but make sure you look at all the options and make an educated decision.

If you are looking for a personal, no credit check, loan, you are probably in the market for some sort of payday loan or cash advance.  Unless you want the banker to go through your credit profile and take a look at your credit report, you are going to want to stick to some sort of cash advance.  The only problem with a cash advance is that they are usually very short term.  You are expected to pay the entire balance plus fees back by the time you get your next paycheck.  Of course, you can pay it back in full by taking out another paycheck advance if you want - you just have to pay the fees out of your own pocket.

So, if you are in the market for a personal loan that requires no credit check, you are probably not going to get exactly what you want.  Here are a few options if you need some sort of loan but you don’t have the best credit, or you have flat out bad credit:

1. Start getting your finances straight and find the root of your problem.  If you need to borrow money to pay the bills, buy groceries, make the rent, etc. then there is something not right with your finances.  Spend the 10 or 15 bucks that it takes to buy Personal Finance for Dummies and invest the few hours to read it.  People often make excuses about their financial troubles (my boss is a jerk and won’t give me a raise, my wife spends too much, the landlord keeps raising rent, etc.) but only you have the power to fix your financial issues.
2. Your poor credit is preventing you from borrowing money, or it is making you borrow money at an interest rate that is more than you can afford.  Try contacting a few different credit repair companies and seeing what ideas they have about getting your credit back on track.
3. If you have available credit card balances, see if you can get some credit card checks to hold you over until you have your finances back on track.  If you don’t have any available credit on your credit cards, consider signing up for another card to get at some more credit.  I only recommend doing this as a temporary means to get out of a tight situation.  Once you get through this financial crisis, you should be taking steps to eliminate some of the debt that has accumulated.
4. Use peer-to-peer lending to secure a personal loan.  If you have poor credit, you still run the risk of having an inflated interest rate or not having your loan funded at all.  At least spend the time to check out some different sources online.  It is worth a shot and can get you out of a stick situation.
5. Sell stuff.  If you have items that are of high value, such as baseball cards, a car, nice TV or stereo, you might consider liquidating some of your nicer stuff to pay off immediate expenses.  Who knows, these expensive items might be the things that got you into your financial mess in the first place.

If you have a high-deductible health insurance plan, you should be eligible for a tax deductible health savings account.  What this means is that you can set up a savings account (yes, you get paid interest) to deposit money into each year.  Since I am single, I can deposit up to $2,800 per year before tax.  (If you have a family, I believe this limit is raised to $5,600 per year).  This means that I can put $2,800 into my health savings account and write that off.  I don’t even need to itemize for that year if I want to take the deduction.  The money sits in the account and earns interest tax-free until you need to use it for related medical expenses.

Here is an example of how this works.  I start my high deductible health insurance and tax deductible health savings account on January first, 2008.  I start the year off by depositing the maximum $2800 into the account.  Throughout the year, I end up incurring $2000 worth of medical expenses which I use my tax deductible health savings account to pay for.  At the end of the year, I have $850 left in the account (I made a few extra bucks because of the interest).  When it comes time to file my taxes, let’s pretend I made $30,000 in wages that year.  Well, since I made that $2800 contribution to my tax deductible health savings account, the government is only going to tax me on $27,200 rather than the full $30,000.

Ok, so I saved a bunch of money on my 2008 taxes, and I have also made a few bucks in interest for my tax deductible health savings account along the way.  Now it is January 1st, 2009, and I still have this $850 left in my account.  Any remaining balance rolls over.  This is just like a regular savings account; its not like a “Flexible Health Spending Account” where the unused balance at the end of the year is lost.  So I have this $850 still in my account on January 1.  So I decide that I want to make the maximum tax-deductible contribution again, and put another $2800 into the account.  Again, I get to write that $2800 off when I do my taxes, and now I have a whole $3650 in my Health Savings account that is just sitting around earning interest.

Remember that you don’t have to choose to throw in a whole $2800 all at once.  You can make as many deposits as you want into your account.  At the end of the year you total them all up, and you can write off the sum of them as long as it is not over the legal limit (for 2008, the limit is $2800 for single people and $5600 for families).

You can use the money in your tax deductible health savings account for a wide range of health purchases.  Not only can you use it to cover any medical bills that are not covered by your insurance (your deductible), you can use it to buy over-the-counter medicine, even diapers!

If you don’t have medical insurance, start looking online for something today.  My plan is only $50 a month and has already saved me well over ten thousand dollars in medical bills, not to mention having the tax benefits of the tax deductible health savings account.

I can’t stress this point enough.  This is really how people end up in debt.  They never intend to end up overwhelmed with debt; it just happens.  It is very easy to get suckered into purchasing something that you cannot afford when the monthly installments seem so manageable.

What if you could finance a meal?  You want to get a good sandwich for lunch, but you only have 5 bucks.  You don’t want a subway footlong, you want that fancy deli sandwich thats ten bucks.  What if the deli said “Ok, you can get our fancy sandwich for nothing down, but 19 cents per month for the next five years.  That doesn’t sound like a bad deal at all.  So you end up paying $11.80 over 5 years for a $10 sandwich.  It seems like you are only paying an extra buck-eighty to get that sandwich upgrade.

Wrong!  Had you not had the financing option available in the first place, you would have had to settle for the $5 footlong, thus the fancy sandwich is costing you $6.80 more.  So not only are you getting dinged with the financing premium, you are buying more expensive stuff than you can afford!

Most people can see extra they are paying for the financing, but they don’t realize it is the fact that they are buying stuff that they can’t afford.  They scapegoat the super high interest rates and blame the credit card companies when they themselves are to blame for their dangerous spending.

So if you are in debt, the best way to get out of debt is to stop spending more than you can afford!  Change your spending habbits - delayed gratification - and your finances will fall right into place.