Don’t Worry if the Timing is Not Right to Conquer the World

Ever feel frustrated that your business or your career isn’t going as well as it should? I’m sure that most people feel like this from time to time, but sometimes there are valid reasons for this. Not excuses, as the “success” coaches may call them, but as human beings we have many moving parts to our lives. Some reasons for not being able to conquer the world right now and what to do include the following:

Health Issues (Physical & Mental): They may come at any time and can be minor, permanent, or severe. Health issues can put you out of work for months or even years. The main objective should be to focus on getting your health back so that you can take care of yourself and your family. Next, you should look into how future health problems may be prevented, if possible. You may also find that you have to attend to family members that get sick, such as spouses, children, and aging parents. First things first.

Raising Children: Raising children is not an easy task and many parents feel the tug between working and taking care of their children, especially mothers. This is especially true when both parents work, which is the majority of parents nowadays. I’ve written about the trap when both parents work full-time as the financial benefit is not usually as great as it seems when factoring in taxes, additional expenses, etc. Some options to help juggle responsibilities are to change your work schedule, have a flexible schedule, or work part-time, especially during school hours.

Addictions: Addictions can be in the form of alcohol, drugs, pornography, and gambling to name the major ones. No one likes to talk about this because of the stigma of addictions, but these will have a devastating impact of your business or career, even if you are indirectly impacted by addictions, such as with a child or spouse. Healing and overcoming addictions needs to take place.

Family Issues: Divorce or separation is a common family issue and may go hand in hand with the other examples above. Marriage struggles, especially divorce, will not only impact you and your children emotionally and spiritually, they tend to destroy family finances. Who care if they are successful if their family is torn apart? Marriage therapy, family therapy, or spiritual guidance from a priest or minister can help to save your marriage. Also, all kidding aside, they are much less expensive then a divorce attorney.

We are not machines, but people that have problems, emotions, and are all fighting our own battles. Some battles are greater than others, but we must build a solid foundation before conquering the world.

Are Children Really That Expensive?

Virtually every financial article regarding children makes you think that you will go broke if you have children. Between childcare, housing, food, diapers, vacations, clothing, activities, and especially college, they make it seem that you can’t afford to even think about children. The truth is that raising children is as expensive as you make it. Let me dispel some myths . . .

Housing: If you have a three bedroom house and have three children then one of them will have to share a bedroom. The good news is that the two that share a bedroom will not be scarred for life, but they may actually enjoy the company of each other and learn to work together.

College: I am a very, very strong believer in education, especially higher education. However, as I have written before, college is only one route to [financial] success and is not for everyone. There are alternatives, such as attending a trade school, jobs that don’t require college, entrepreneurship, or you may actually want to be a stay at home parent. Just look around you and see for yourself that some of your friends, colleagues and family members have taken a different route and are doing well for themselves.

Vacations: Vacations don’t have to be expensive and Disney is not the only option. Strangely, if you have ever travelled by car for vacation and stopped at a hotel on the way it seems as though the children enjoy the hotel visit more then the vacation! A more expensive vacation does not equal more fun and relaxation.

Food: I’ve written how to reduce your food costs before so I won’t elaborate here. Food can be as expensive as you want it to be.

Everything Else: Expensive private schools or preschools, an abundance of activities, and unnecessary purchases will make raising children very expensive. Also, when both spouses work while the children are very young it usually skyrockets your expenses (see my November 2015 blog article titled, “Should Both Parents Work?”).

Don’t misunderstand me – it is good to have nice things, but not when the “need” for those nice things steers you in the wrong direction. Children are a blessing. All seven of mine.

If You Want More Success Then Know the Difference Between Important vs Urgent

Important vs. urgent. Many people confuse the two, but if you want to be more successful, then you need to be able to discern between them. Important items have great significance or value while urgent items require our attention immediately. Here are some examples:

Important:  These are items that you need to do, but do not have to be done today, such as projects and assignments, planning, exercising, learning/training, saving for the future, etc.

Urgent: These usually have to do with grabbing your attention immediately, such as text messages, social media, doing dishes (our spouses may disagree with this one), interruptions, emails, most telephone calls, etc.

The problem arises when the urgent items seem to be important because they are pulling at us, and then we ignore all of the important items that we should have done. This is probably why many people say that they didn’t get anything done because their attention was diverted to urgent items. Even worse is when we procrastinate and make the important items both important and urgent.

What are some solutions? If an item is important, then you should set aside time either daily, weekly, or monthly to take care of it and actually put it on your calendar. Once an important item is scheduled there is a high probability it will get done. As for the urgent items, you can schedule these as well to take care of them at specified times or on a specific day. If you want to be bold then try this experiment for one week or even one month: shut off all of your alerts, emails, etc. while you are working, and designate a time to check them, say twice a day. Then, see if your productivity improves, and let me know what happens.

Is it Better if I File Separately from My Spouse and Other Common Tax Questions Answered

We receive a lot of questions pertaining to tax and financial matters. Here is a sample of commonly asked questions:

Q: Is it better if I file separately from my spouse?

A: Usually the answer is no, and the only way to know for certain is to perform an analysis when preparing the tax return to split income and deductions between spouses to see if there is a benefit. However, you may want to file separately from your spouse if there are tax or legal issues.

Q: Is social security taxable?

A: That depends. If you are only receiving social security and do not have other income, then the answer will probably be no. A quick way of checking is to add one half of your social security plus your other income to see if it is greater than your base amount, which varies based upon your filing status (currently it is $32,000 for married filers).

Q: Does my son or daughter need to file a tax return?

A: Generally, if your dependent child has more than $6,300 of earned income or $1,050 of unearned income, such as from dividends, then they need to file a return.

Q: If I file an extension, will it extend the amount of time that I have to pay my taxes.

A: No, the extension only grants you additional time to file your return and all payments must be made by the original due date, otherwise additional interest and penalties may be incurred.

Q: Can the IRS levy my IRA?

A: Yes, the IRS has the power to levy almost all of your income and assets, with few exceptions, such as workers’ compensation.

Q: Are legal fees for a divorce deductible?

A: Many of the legal fees for a divorce are not tax-deductible, except for the portion relating to taxable income.

Don’t Take “No” for an Answer!

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What does not taking “no” for an answer have to do with financial matters? Plenty! Very often when we ask for something the response is “no” or is not what we wanted. This can happen when dealing with business or personal matters and it can cost you significantly.

When applying for a loan, it is not uncommon to get denied or receive unfavorable terms. But should you accept this or keep moving along? Unfortunately, we tend to take rejection very personally, but we have to be objective, see what we can do differently, and ask another lender. If getting a loan for your business or a mortgage is crucial to your livelihood then it is important to seek another lender.

What about asking a customer service rep for a lower rate on your credit card? Nowadays, the credit card companies are very hard to negotiate with, but that doesn’t mean that you should stop trying.  When you don’t get the rate you are looking for, then ask to speak to a manager, or maybe even try to call back at another time.

Has anyone ever told you that you should not start a new business venture or switch jobs? Don’t take “no” for an answer. If your plan is well thought-out and it really makes sense then do not let anybody tell you not to do it.

We only have one lifetime so make sure that when you look back at your life you were not afraid to move forward. Don’t let anybody tell you “no” when you believe the answer should be “yes.”

Children and Tax Benefits

With the upcoming birth of our son or daughter, I thought it would be appropriate to write about the tax benefits of raising children. The rules can get tricky, and your children must meet certain criteria to become your qualifying children for tax purposes. Here are a few highlights:

Dependency Exemption: For each qualifying dependent child, you can exempt from your income $4,000.

Child Tax Credit: For each qualifying child under 17 years of age you can receive a credit of up to $1,000 per child. The credit phases-out after your modified adjusted gross income is greater than $110,000 for filing jointly and $75,000 for filing as single or head of household.

Child Care Credit: If you pay for daycare, after-care or preschool so that you can work, you may be eligible for a credit of 20% to 35% of the cost, up to a maximum of $3,000 of qualified expenses for one child and $6,000 for two or more. Your children must be under age 13 to qualify.

Education Credits: There are several credits and deductions available for education expenses:

– The American Opportunity Credit provides a credit of up to $2,500 per eligible student for the first four years of college (100% of the first $2,000 of expenses and 25% of the next $2,000).

– The Lifetime Learning Credit provides a credit of up to $2,000 for an unlimited number of years (20% of the first $10,000 of expenses).

– The tuition and fees deduction provides a deduction of up to $4,000 as an adjustment to income (this means that you do not have to itemize).

– Student loan interest deduction allows for a deduction of up to $2,500 as an adjustment to income.

There are income limitations for each credit and deduction which vary widely based upon your modified adjusted gross income and filing status.

Income Shifting: If you are self-employed, you may be able to hire your minor children, pay them wages, and not have to pay income taxes or payroll taxes. Even if you do not own a business you may still be able to shift investment income to your children to minimize taxes. It takes a lot of planning, but strategizing can save a lot of taxes.

These are just some of the tax benefits to having children. Hopefully this will help to offset some of the cost of raising a family.

The Smartest Money You Ever Spent

Spend, spend, and then spend some more. We all spend money, but what if we looked at spending money in specific ways to earn more money and improve our lives at the same time? Although not usually considered investments, there are ways to spend money to earn more.

College Education: The cost of college has steadily increased over the years, but it is still a good investment. Typically, people with college degrees earn more money and have lower rates of unemployment then those without a college degree. The same is true for advanced degrees. Even if you have to take out student loans, you usually are able to pay them off over a very long period of time, which provides you the opportunity to pay off the balance in small increments, while increasing your earnings at the same time. Beware that you must carefully choose a major, the appropriate school to attend, and make the right career moves.

Training & Education: While this may not entail going back to college, you always need to update your skillset and knowledge. It can be training seminars, classes, courses, and even self-study materials and books. This will make you more valuable to your employer, or to your customers if you are self-employed.

Business Spending/Investments: As a business owner, if you wisely spend money on productive employees, equipment, and marketing, then this will increase your chances of higher profits. Consider this: if you hire a salesman and pay him/her $50,000, and they increase sales by $350,000, then that is a seven-fold return on sales. If your profit margin is 20% before the cost of the salesman, then your return on your investment is 40%. Try to achieve a return like that in the stock market!

It’s easy to get wrapped up into spending your money on the wrong things, while spending money on the right things will greatly help you out financially and otherwise.

The College Alternative

There is a big push from parents and society to have their children attend four years of college. College is not for everyone, which is probably why only 56% of college students complete four-year degrees within six years, according to a Harvard Graduate School of Education study. There are alternatives to the traditional four-year college route such as:

Trade/Technical School: This can include training to become a plumber, electrician, HVAC tech, welder, auto tech, web developer, hygienist, hair stylist, and many more. Many of these jobs are in high demand and offer good salaries.

Community College: Community college is extremely cost-effective when compared to four-year colleges. A good strategy is to attend community college for two years and then transfer to a four-year college. Many schools, especially state schools, will accept either most or all of your credits.

Entrepreneur: Starting your own business can be very challenging, but very rewarding. Not everyone has the mindset and discipline to be a successful business owner, which is why you need to plan ahead. Although, if you give it a chance while you are 18 years old, you most likely have less obligations, such as family and a mortgage, which takes away a large chunk of risk. If you have experience in your trade, you can also start your own business and perhaps become more successful than if you were to remain an employee.

Sales Career: Selling can be a very lucrative career if you are selling the right products and services. There are sales people for cars, home improvement, software, real estate, and just about everything else. A good sales person can do very well for themselves and most likely does not need a college degree.

These are just a few alternatives to a traditional four-year college degree. With the high cost of college these options should be discussed with your children.