Teens and Money: Preparing to Move Out

You may feel emotionally ready to move out on your own, but are you financially prepared? Living independently means much more than not having to be home by curfew; it comes with a great deal of financial responsibilities. Before you take the leap, know how much the big move will cost you, now and in the future.

Moving out
There are many costs to prepare for just to walk in the door of your first home. You may need to save for at least a few of these big ticket items:

Moving expenses. If your friends won’t do it for the price of a couple of pizzas, you may be looking at hiring some help and renting a moving van.

Rent for the first and last month. Paying two months rent protects the landlord financially (in case you move out on a moment’s notice) but it can be quite a lot of money for a first-time renter to come up with.

Security deposit. Most landlords require a security deposit, which is held as protection against damages to the premises or unpaid rent.

Cleaning deposit. Yet another cash sum a landlord is likely to want is a cleaning deposit. This is held in the event the residence needs some extra scrubbing after you move out. If you have a pet, expect the cleaning deposit to be even higher.

Utilities and telephone deposit. Before you ever turn on the heat or make a phone call, you may have to put down some money to activate these necessities.

Furniture and appliances. Most rentals don’t come furnished. Depending on the room, you may have to buy a few key items to be somewhat comfortable:

Bedroom – bed, mattress, linens, pillows, dresser, rugs, lamps
Living room – sofa, chairs, coffee table, television, DVD player, stereo, lamps, rugs, pictures

Kitchen – table, utensils, dishes, cookware, microwave, cleaning supplies

Bathroom – hair dryer, shower curtain, bath mat
Of course if you will have roommates, you’ll be sharing at least some of these costs. But even with a quick estimation you can see that you may need to save quite a lot to leave home.

Monthly bills
Once you are in your own place, the costs continue. It is extremely important to pay all bills on time. If you don’t, you’ll probably be charged late payment fees, and if left unpaid, they will go into a collection agency. Dealing with collectors is not only highly unpleasant, but the negative effect on your credit report is severe. And if you default on some, such as telephone and other utilities, you may not be able to turn them on again until they’re paid (and even then it can be difficult).

If you are sharing your home with roommates, establish how the bills will be paid from the beginning. You may be able to split some and have each one send a check for their portion of the amount due. Another option is for one of you to act as the money manager and collect from the others. However you arrange it, if the accounts are in your name, know that you are responsible for sending the complete payment in on time.

Rent: If the rent is due by the first, don’t pay on the fifth or some other late date. Think ahead. It is highly unlikely that you will remain forever in the first place you get, so being a good tenant today will help you rent another place in the future. The last thing you want is to establish a bad relationship with your landlord, the very person you will turn to for a glowing rental history reference.
Utilities: Utilities include cable, Internet access, garbage, gas, electric, and water. You will soon understand why your parents were always telling you to turn the lights off when you leave the room.

Telephone: Whether you have a landline, cell phone, or both, know that all that chatting can cost you big money unless you have an unlimited plan. Be careful with your minutes!
Moving out and living independently for the first time can be a thrilling experience. You can make it even better by being financially prepared and responsible from the beginning.

BALANCE
Revised January 2016.

Flipping Houses — It’s Not Like TV

Flipping a house can seem like a walk in the park when it’s wrapped into a few montages during a half-hour TV segment. Find a run-down property. Buy it. Take out a few walls, paint, replace carpets, upgrade the kitchen and voilà – you could make tens of thousands of dollars in just a short time. Reality is seldom so straightforward. Flipping a home can be risky, and there’s no guarantee you’ll profit.

Finding and buying the right house at the right price point can be difficult. The shows often start with the submission of a winning offer on a home. You may not realize that it takes a lot of work to determine what a potentially good flip looks like and find a property to match.

Experienced flippers have learned how to estimate costs and work backward. A rule of thumb in the industry is to take 70 percent of the potential selling price (what’s known as the after-repair value, or ARV), subtract the renovation costs and use that as the maximum buying price.

You’ll need a lot of background information, including comparable selling prices of similar homes, to figure out the right numbers. The ability to be honest with yourself while estimating the cost of parts and labor is also important.

For example, if you estimate that you could sell your renovated home for $200,000, you’d start at $140,000 (70 percent of a $200,000). If you calculate that the renovation costs will be $40,000, you’ll arrive at the maximum buying price of $100,000. The 30 percent margin that remains if everything goes according to plan isn’t entirely profit; you may still have expenses like closing costs or reimbursing your investors.

You need a lot of working capital. While paying cash for a home can expedite the sale and increase profits, it might not be an option for beginner flippers. However, traditional lenders don’t necessarily offer financing for flips, especially if you’re trying to fix up a dilapidated home. Even when they do, you might not be able to borrow enough to cover all your expenses.

Instead, some flippers turn to hard-money lenders, private individuals or companies that issue short-term loans backed by real assets (such as the home you’re buying). With either traditional or hard-money lenders, expect the financing costs to be higher than what you’d pay for a mortgage if you’re buying a home to live in.

Keeping an eye on your total budget is essential. If you borrow enough money to make the purchase but don’t have cash on hand to pay for the renovations and unexpected contingencies, you’ll be stuck before you even start.

In addition to the purchase price, you’ll need money for renovations, upgrades, inspections and permits. Also, consider the cost of ownership between the purchase and sale. Carrying costs, including utilities, financing, insurance and property maintenance, can add up each month.

You want to move fast. One thing you pick up from TV is that time is of the essence. In competitive markets, you’ll need to move quickly to evaluate a home and put in an offer before someone else buys it.

Successful flippers may have a real estate license or work with a real estate agent to get access to the multiple listing service (MLS), a directory of homes that are for sale. Others look for homes that are for sale by owner (FSBO) or use direct mail campaigns to reach out to prospective sellers.

Once you buy the home, there’s another race against time to complete the work and make a sale. Working with a trusted contractor and real estate attorney could expedite the project. Once you’ve developed a strong working relationship, you may even want to invite others to join your team and contribute their work in exchange for a cut of the profits.

Bottom line: Flipping homes can be profitable, particularly for those who have professional real estate experience, but don’t expect it to be easy money. Months of hard work can go into a flip without any guarantee of success.

by Nathaniel Sillin

Smart Giving: How to Make the Most of Your Charitable Donation

If a cause or charity is inspiring you to give, know how to make the most of your generosity first. The federal government rewards those who make charitable contributions with significant tax breaks, as long as a few rules are met.

To be sure you are donating to a worthy and above-board organization, request a copy of its financial report. It summarizes the organization’s tax status, programs, and how the funds are used. With the exception of places of worship, all charities must file such a report with the IRS. You may also contact your state’s attorney general’s office or the Better Business Bureau for further investigation.

Sadly, whenever money is involved, fraud is also prevalent. Be particularly cautious when solicited by a charity. Warning signs of scams include:

-High-pressure sales pitches

-Requiring you to make an immediate donation

-Only being able to offer a “tax ID number,” which is no more than an employer identification number and does not guarantee non-profit status

A wonderful aspect of giving is the ability to deduct at least some of your donation from your income taxes. In order for the contribution to be tax deductible, it must be made to a qualified organization that meets IRS guidelines. To know if it does, you may ask the organization. But to be sure, check the IRS’s “Publication 78” online at www.irs.gov for the most up-to-date list of qualified charities, or call the IRS at 800-829-1040.

How to Donate Money
When donating money, for tax purposes and safety reasons, never pay with cash. Either write a check, made payable to the organization (never the individual collecting the donation), or use a credit or debit card. Avoid giving your account information over the telephone.

Another way to give money while minimizing your tax liability even further is to donate appreciated assets. By giving stock that you’ve held for more than a year directly to a qualified charity, you can claim a deduction for the full price of the asset – thus escaping a potentially hefty capital gains bill.

How to Donate Property
If you are considering donating such property as a vehicle or boat to a charity, be aware that the tax deduction rules have changed in response to past abuse of the system. Now, if you donate real property with a claimed value of over $500, your deduction depends on what the charity does with it.

If the organization uses your property (or makes a significant improvement to it), you may deduct its full fair market value from your income taxes. If, however, they simply sell the property, your deduction will be the gross price the charity receives from the sale.

How to Donate Goods
Yet another way of giving to a cause is to donate goods – including clothes, computers, and other personal and household items – to a charity.

Before boxing them up and delivering them to your local shelter, first determine their fair market value so you can receive the appropriate tax deduction. Fair market value is considered the price at which property would change hands between a willing buyer and a willing seller.

Also for tax purposes, be sure to keep a detailed record of your donations. You should have evidence of the condition and number of items you donated, the date you purchased the items and what their original price was, and signed and dated receipts from the organization that received them.

How to Donate Time
Have more time than money and possessions, or want to share your particular strength with those in need? Volunteer. Tax breaks are available to those who give in this special way. While there is no deduction for the value of services you provide, you may deduct a number of out-of-pocket costs associated with volunteerism, including:

-Reasonable and substantiated travel expenses
-Gas and oil expenses of 14¢ per charitable-use mile
-The cost of entertaining others on behalf of a charity (but not your own entertainment costs)
-Purchased equipment for volunteer duties (as long as you don’t maintain ownership)
-The cost of maintaining your own equipment used for volunteer duties
-Uniforms required for the volunteer service you perform
-Never before has giving—whether it’s money, property, or time—been more necessary and valued. And by doing it right, your generosity can go a very long way.

BALANCE
Revised January 2016.

What Does Retirement Look Like If You Haven’t Saved?

The picture of retirement that many of us have is a post-work period filled with travel and plenty of relaxation. It’s a time when you can finally take up a new hobby, sink into the pile of books and enjoy more time with family and friends.

The reality is that many haven’t been able to save enough money to enjoy this idealized retirement. What might their retirement look like?

You may be working for longer than you expected. Many people undergo a period of “phased retirement” and either reduce their hours or start a new part-time job after retiring from a full-time schedule. Even those who don’t have a financial need may find that they value the activity and connections work brings to their lives. Without savings, continuing to work might not be a choice, but you can still look for fulfilling opportunities.

Continuing within the same profession part-time or taking on related consulting work could be the most financially rewarding route, if it’s an option. Alternatives such as customer service positions with a retailer are popular among some retirees. There are also Internet-based jobs that allow you to work from home.

Social Security could be your sole source of income. Retirees who don’t have a pension or savings and stop working may find that Social Security is their only income.

Your Social Security benefit depends on when you were born, how much you’ve paid into the program, when you start to take benefits and whether or not you’re eligible for a government pension.

Once you start receiving benefits, you’ll lock in your monthly amount, although it will adjust to account for inflation. Therefore, deciding when to start taking Social Security benefits is important, as it can impact your income for the rest of your life.

Claiming benefits once you reach your full or normal retirement age, 65 to 67 depending on when you were born, is when you’ll receive 100 percent of your monthly Social Security benefit. Taking benefits early can lock in a lower rate, while waiting can increase the monthly benefit.

In 2017, if you’re eligible for the maximum benefit and start claiming at 62, you’ll receive about $2,153 per month. If you waited until you were 70 this year, you’ll receive about $3,538 per month.

You can use the SSA’s Retirement Age Calculator to see how taking Social Security early, or waiting, can affect your benefit.

You might have to downsize and make lifestyle changes. Moving to an area that has a significantly lower cost of living could mean the difference between living with financial challenges and having a comfortable retirement. Some people look for less expensive areas close to family members or even an expat community in a different country.

If you decide to stay in the same area, a smaller home can lower your property taxes and maintenance costs. You can also take any profits from the sale of a larger home and pay off debts or build an investment portfolio.

Housing aside, there are many ways to downsize your lifestyle, such as selling a vehicle, shopping at secondhand stores and cutting back on monthly entertainment expenses.

One helpful part of aging is you’ll be eligible for all sorts of new discounts and benefits. Look online for lists of stores or organizations that offer senior discounts. You can use the National Council on Aging BenefitsCheckUp to see which benefits you might be eligible for based on your ZIP code and personal information.

Bottom line: Many aging Americans don’t have enough savings to fund their lifestyle through retirement. Deciding when to take Social Security benefits and where to live are two of the most pressing questions on the horizon. No matter what you choose, you may need to supplement your income with part-time work and look for ways to significantly lower your cost of living to enjoy retirement.

by Nathaniel Sillin

Hackers Breach Third Party Site to Tweet Political Messages

Hundreds, or possibly thousands of Twitter accounts were hacked and used to send political messages. Accounts of organizations and individuals around the world such as Forbes, the U.K. Department of Health, Starbucks in Argentina, the European Parliament, Amnesty International, Justin Bieber, and many others were victims in this attack that appears to support the Turkish president Recep Tayyip Erdogan.

Being blamed is two-time offender Twitter Counter. This is a tool that users can connect to their Twitter accounts to retrieve analytics such as responses to tweets, number of retweets, etc. Analysts believe that the hackers breached this site, which then gave them direct access to the victims’ accounts where they could tweet away without intervention. To its credit, Twitter Counter is taking some responsibility and investigating.

The risk of using social media accounts to connect to third party apps, or to log into third party apps is clearly demonstrated with this story. If the third party is breached, whomever did it (or sells the information) can also get to the social media account(s) connected to it. If there is an option, and there usually is, to create new and different login credentials for a site you want to use, take them up on it.

Also, always use unique, and strong, passwords for each site you log into.

Yes, these two pieces of advice might be a little cumbersome to follow, but just a few extra seconds can prevent your accounts from being used to promote someone else’s agenda.

Also, while there is no evidence this is what happened here, hackers have been successful at getting into accounts by requesting a password reset. Often in order to reset a password, challenge questions are presented. These are the ones that are set up when an account is first created. Many times, the choices of the questions have corresponding answers that are easily found on social media.

For example, if you have a Facebook account, there is a lot of information about you in the “About” section, such as where you are from. If you show this on your profile page, it isn’t so difficult for a cybercriminal to look that up and answer that “City where you were raised” question that often comes up as a choice so often in these lists.

In these cases, choose questions and answers that cannot easily be guessed or learned by perusing your social media profiles. Consider what you do share with others too; in your profiles and in your posts, tweets, stories, and shares. The more you share, the more others can find out about you and use it against you.

The other time Twitter Counter was breached was in November of 2016. At that time, it was advertising that was tweeted. Then, the CEO of the company promised that the hackers would not be able to do it again and that he was 95% sure that the issue had been resolved.

Twitter has blocked access from Twitter Counter and as of writing, that site was completely taken down. A message appears stating, “It seems there has been an internal server error with the page you requested. Send if the problem persists!”

© Copyright 2017 Stickley on Security

Don’t File the Wrong Tax Form

Tax time is time of making decisions, so why make life more complicated than it has to be? Use the appropriate federal income tax form for your situation.

The options most individuals may choose from are forms 1040EZ, 1040A, and 1040. You may download the form you want directly from the IRS website (www.irs.gov) or call 800-TAX-FORM (800-829-3676) to have it mailed to you.

Form 1040EZ

Form 1040EZ is by far the simplest to complete. However, the conditions to use it are strict, and you may neither itemize deductions nor receive a student loan interest deduction and education credit.

You may use Form 1040EZ if all of the following are true:

-Your taxable income is less than $100,000
-Your filing status is “single” or “married filing jointly”
-You claim no dependents
-You (and your spouse, if filing a joint return) were under 65 and not blind
-You have $1,500 or less of taxable interest income

Form1040A

The next easiest to fill out is Form1040A. While you still cannot itemize deductions, you can adjust your income to include IRA contributions, student loan interest deductions, unreimbursed educator expenses, and higher education tuition and fees. You may also claim a whole slew of credits.

You may use Form 1040A if:

-Your taxable income is below $100,000
-You have capital gain distributions
-You claim certain tax credits
-You claim adjustments to income for IRA contributions and student loan interest

Form 1040

Your final option is Form1040. Because you may itemize deductions and claim the most tax credits and adjustments to income, it is more time-consuming to complete than the two others.

Use Form 1040 if:

-Your taxable income is $100,000 or more
-You claim itemized deductions
-You are reporting self-employment income
-You are reporting income from sale of property
-Using the correct form will not only save you money, it will save you time, making life a lot less taxing

BALANCE
Revised January 2016