Investing Made Easy

The rising cost of medical is a burden to nearly every budget. However, some medical expenses are deductible on your federal income tax.  Although it may be too late for your 2011 tax return (unless you’ve filed an extension, you can keep in mind these important ways to maximize your deductions for 2012.

You may deduct medical expenses that are more than 7.5 percent of your adjusted gross income. Don’t let the high percentage stop you, you may be able to attain the amount with a little tax tweaking here and there. Make sure you are including the medical (and dental) expenses of your spouse and all your legal dependents, not just yourself. Some medical expenses you paid for a parent, even if Mom or Dad isn’t considered your dependent for exemption purposes, may be allowable in certain circumstances. Also, medical bills for a deceased dependent can be deducted in the year they were paid, even if the bill was paid after the person died. Also, make sure you are not passing up these legitimate medical expense deductions:

Travel expenses to and from medical treatments. Mileage is deductible at the current cents-per-mile allowance, which can change year to year – even mid-year as it did this year to account for inflation. Until June 30, 2011the mile rate was 19 cents and after Jun 30 it bumped up to 23 cents.

Insurance payments from already-taxed income. This includes the cost of long-term care insurance, up to certain limits based on your age.

Medical treatments not covered by insurance. Items such as spare eyeglasses, orthotics, dentures, hearing aids and artificial limbs and other items needed for a medical reason may be deducted. If you are having laser vision surgery and it’s not covered, you can deduct that. Also, expenses pertaining to alcohol and drug rehab can be carried to the Schedule A.

Medically necessary costs as RX’d by physician. If your doctor says that you need things like a humidifier, a pool, special living modifications, you can deduct them if you have the proper documentation. Some health-related programs may also count. Some weight-loss programs and stop-smoking programs may be deductible if medically necessary and prescribed by your doctor.

Medical conference costs. You can deduct registration and transportation expenses to a medical conference if it concerns a chronic illness suffered by you, your spouse or a dependent. However, meals and lodging are on your own tab.

If you have thoughtful relatives and bosses, you may never end up with a gift card you don’t need. But, some of us aren’t so lucky and have come into a nice windfall that we can’t actually use – for example, now that my kids are teenagers, I don’t have a use for that ‘Baby Depot’ gift card a senile aunt sent nor can I use the gift card I won for an out-of-town gas station. But before you cut up these unneeded cards and toss them in the trash, wait! There are several good ideas on how to make the most out of a gift card you thought was of little value to you at first.

Trade or sell cards. Many people find it surprising to learn that unwanted gift cards can be sold online for cash or trade– to a person who will actually use it.  Even if you have a card from a regional or local retailer or have already spent some of the balance, you can still sell or trade. Do know, however, that you usually do not get face amount for the card, there will be a transaction fee and it may sell for below the balance as well. Check out sites like PlasticJungle.com or SwapaGift.com to get started.

Donate cards. If you’re feeling philanthropic, you can donate your unwanted gift card to a site like GiftCardGiver.com which, in turn, stockpiles cards from various donations then trades them in for higher value gift cards that be given to the less fortunate. Additionally, you can contact the charity of your choice directly to make a gift card donation. A great side benefit about donating cards, other than helping needy folks, is that you can also write off the gift as a charity expense.

Regift cards. This is the ultimate way to regift, because no one will be the wiser – unless you’ve forgotten that you’ve spent down the balance already (now that would be embarrassing). So if you have a coffee gift card, and hate the stuff, you can just pass that along for a co-worker’s birthday – perfect! If the card is outdated (like has a holiday graphic), most stores will allow you trade them in for a new one at no expense.

The number of students obligating themselves to loans to help pay for the expenses of higher education is increasing – and so is the amount that their borrowing as well. If you are a college student or have a child heading off to college in the near future, here are some important things you need to know about student loans.

Watch out for loan fees. The typical college packages at least $5,000 in federal student loans into their standard financial aid offers to potential students. Rates can vary, the Stafford loan has a standard rate of 6.8% and the federal Parent Plus loan has a 7.9% fixed rate. However, you need to be aware of the fees that many of these loans hit you with – 1% for the Stafford and a 4% upfront charge for the Parent Plus. This means that, upon review, your loan rate may not be as good as it sounds.

Max out federal student loans first. If you want a ‘deal,’ federal student loans are the best way to go. For example, the Stafford, even with arguably high rate and fees, guarantees a freshman $5,500 regardless of how much income the family has. Plus, federal loans also tend to have flexible repayment terms – after graduation, the Stafford caps how much has to be repaid per month based on the

Whole life insurance. If you have this asset, the balance can be borrowed against for college bills. The policy investment will keep growing, so if you are earning 4% and the college loan amount is 6%, in essence you are getting a 2% loan.  Your 401(k) or a home equity loan can also give you a net rate below 5%, but seriously consider if it is worth tapping into your retirement nest egg.

Shop around. You may be surprised to find a good loan dean for your student. Some charities and non-profits offer great loans, for example, the Military Officers’ Association of America give interest-free loans to children of soldiers or veterans who maintain a specified GPA.

With the endless statements and junk mail that stuffs your mail box, you may have always taken a pass when it comes to reading various CEO’s letter to shareholders. But dig those letters out of from under the stack in your in box (or pull it out of the trash) and give ‘em a read, the information you glean can help you feel confident in your future financial decisions with the investments.

The goal intent of an annual shareholder letter is to present the company’s financial statements in an open, trustworthy format. You’ll also get a feel for the overall corporate culture, a permeating vibe that influences all major decisions in a company – including financial ones. Experts in the field have found a strong correlation between corporate candor – telling it like it is – and the positive performance of a stock.

Plucking all this information out of the shareholder letter does take a lot of skill in reading in between the lines. But, do keep your eyes open for the mentioning of ‘cash,’ eg. cash conversion, cash flow, cash from operations, and so on – this is all straightforward information that tells you specifics about the state of the business. On the other hand, a letter filled with clichés and industry buzz-words tells you very little – expect that the CEO is not disclosing information in an open, trustworthy manner.

In terms of top benchmark in shareholder communications, many financial experts point to the shareholder letters of Warren Buffet of Berkshire Hathaway. His letters are written in a way that the reader can tell he authored them; they are not filled with public relations spin. Buffet’s letters are specific with details about profits and losses, problems are not glossed over.

So take the time to read those shareholder letters to get a feeling for the company where you’ve invested a good chunk of your money. If the letter creates uncertainty or raises too many red flags, trust your gut and start doing some research that can help you make an informed decision for the future.

In most financial circles, the March jobs report was views as resounding disappointment; however, there was one area that did show improvement – the ‘underemployment’ rate. The underemployment rate tallies the number of out-of-work people who are looking for a job, part-time employees desiring full-time work, and disenfranchised job seekers. In March 2012, the underemployment rate fell to 14.5%, a three year low.

Experts insist that this improvement over February (14.9%) is a sure sign that the economy is getting back on track to its old self. The record high for the underemployment rate was 17.2% back in November of 2009 and improvements have been unevenly slow until fall of 2011. Obviously it’s better for everyone, the lower the rate.

Much of the improvement can be attributed to those part-time employees wanting full-time hours finally finding the full-time jobs they needed. Examples of this include part-timers stuck working hourly at coffee shops or home improvement stores finally landing a full-time job. The numbers for discouraged workers, those who want a job but have basically given up the search, has also improved.

Staying on top of your financial goals requires a level of organization that doesn’t come naturally to many people. If you keep your paperwork in disarray, it is most likely too easy to avoid tracking your progress and setting goals – where does one start in a mountain of paper?

However, just because it is essential to get organized with your finances, doesn’t mean you have to be a total neat freak. You can still have your ‘piles,’ as long as they are manageable and you know the types of data each pile contains! Here are some good tips to tame the wild paper habitat on your desk.

1. Deal with the mail as soon as it comes in. Immediately discard junk maid into the recycle bin and then put bills into your ‘pay’ pile and statements into your ‘file’ pile. Don’t let these piles build up more than one or two weeks.
2. If you are really ahead of the game you may get a lot of records for your finances over the internet. Make folders on your computer desktop for each investment and drag and drop your monthly statement in as soon as it comes in. Make sure that all your bills are scheduled on your calendar with a ‘reoccurring’ note so that you do not have to enter the reminder to pay every month.
3. Create files or binders for special things like insurance, stock trades, mortgage materials and so on.  Create another file to store warranties on the products you purchase. Remember to staple the receipt to the back.
4. At the beginning of each year, keep an expandable file where you can drop in tax deductible receipts easily into different categories – charitable contributions, business expenses, child care expenses and so on. This will make collecting and sorting less of a chore come tax time.
5. Also, keep a list of life and financial goals in a visible place where you will see it every day or at least every week. On a bulletin board by your computer is the ideal place.

When you feel more organized about your financial records, it frees you up to spend the time actually researching new investments and working towards your dreams of independence rather that frantically rummaging around trying to find the proverbial ‘needle in the haystack.’