Taxes Part 2
Posted by moonimus on Feb 7, 2008
I’ve nearly completed our taxes using Taxcut and we will receive a sizable refund from the IRS and NYS. Think low five digits. I didn’t realize the magnitude of having a baby and deducting a full year of interest would have on our taxes. I’m still waiting on a couple of 1099s which should have minimal effect. Every year, I want to file my returns as quickly as possible but it seems as if one lousy form takes forever to get to us.
I’ve also run into a glitch in the online Taxcut software. It will not deduct 529 contributions on our state return. This will definitely improve our NYS refund. When I asked the online technician how long this would take to resolve, I was told four business days! That’s way too long to get back to me about a problem with your software. I’m thinking about switching to TurboTax next year. Of course, I will try and leverage this inconvenience into some kind of compensation from Taxcut.
I’m trying to decide what to do with this unexpected windfall. Of course, I will pay off my personal debt and any credit card balances that are charging interest. I will earmark the 0% credit card balances and put that money into a savings account until the interest free period is over. After that, I should have more than half the refund left. My first instinct is to throw half of it into the Emergency Fund and the other half to be used for investment purposes. Or put it all into the Emergency Fund and save enough money until we can pay the Student Loan. But I’m still torn on this.
I read in a blog that I should probably just sit on the money for 6 months and then make a decision. That way, all the emotional rush from getting the money will have gone and I’ll be in a better mindset to make a rational decision. I’ll probably go this route but for sure, I’ll pay off my personal loans and high interest debts first.
Fed Rate Cut
Posted by moonimus on Jan 22, 2008
The Federal Reserve just cut the federal funds rate on overnight loans from 4.25% to 3.5%! I can’t remember the last time there’s been a 3/4 point rate reduction since I started understanding how the Fed affects the overall economy.
Overall, this was a response by the Fed to the declining domestic and international markets. I haven’t checked yet but I’m sure all my retirement accounts have taken a beating. I’m not that worried as I’ve got at least 35 - 40 years before I start to tap into that money. If my daughter’s 529 plan is any indication, the market has been tanking badly since last June. I wish I had a nice windfall of money right now as I’d most likely buy into this declining market across the board…
This rate cut will probably affect me in two ways. First, the interest for my online savings account is sure to decline. I’m not too happy about that because for the first time in my life, I actually have a $1,000 in a savings account accruing at a decent 5.3% APY. Second, I’m going to make some calls to a few banks and see if I can get a better rate on the mortgage for my apartment. A friend told me that refinancing shares are much easier and cheaper than refinancing a mortgage. If I can reduce my interest rate by even half a point, that would be a big difference. I’ll post in the future the results of my calls.
Saving Attempts
Posted by moonimus on Jan 12, 2008
So I tried to be clever about a few things and it ended up costing me (sort of). I guess I should back up first though. I’m a big supporter of the New York Public Library. Ever since someone had told me you could borrow books online and deliver them to the library of your choice, I’ve cut down significantly on buying books. I’m going to keep a tally of books that I borrow versus books that I buy and compute how much I’ve saved by borrowing the book. I usually buy my books from half.com so I’ll use those prices for the books that I borrow. Maybe I’ll even review the books that I read. I’m interested to see the results.
On to the semi-smart move. I recently used Amex points to get a $100 gift card to Home Depot. I was going to use the card to buy CFL bulbs to replace for most of our conventional bulbs and then buy a timer for our heating/AC unit. The bulbs are an obvious move as we need to cut down on our energy usage. We use a “green” provider and their rates are higher than conventional electricity providers. Most of the lights used 60W bulbs but I decided to switch to 100W equivalent CFLs. Four of the bulbs were used in the kitchen but when I tried to install them in the hallway fixtures, they didn’t fit. So I went back and I exchanged them for the 60W equivalent CFLs which are working great.
Also, on the second trip, I purchased a heavy duty on/off timer for our heating unit. I have gotten sick more frequently this year than any other year and it’s been mostly related to one thing. Our baby. My wife kicks on the heater when our baby goes to bed and it doesn’t shut down until one of us wakes up at around 5 or 6am. Normally this would be fine but I usually wake up at around 2am in a pool of my own sweat. I will go sleep in the living room to cool down and then wake up again at around 5 or 6am to go back into the room. Add any kind of abnormal night behavior from our baby and I think I have the perfect recipe to contract colds.
So the timer would function two fold 1) make sure that I stay in bed without needing a towel and 2) help us cut down on the heating bill. Unfortunately, instead of a normal grounded 3 prong plug, this heater uses a strange 3 prong that I have never seen before. Usually the top two prongs are parallel to each other but these are perpendicular to each other. I have never seen that before and my attempt at saving money is shot. I’ve already opened up the timer and highly doubt that I can return it.
Argh.
