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What is Considered a Middle Class Income?

by Miranda Marquit on May 17, 2013

what is middle class income Many of us identify as middle class. It provides us with an identity that is respectable, and implies that we are “normal.”

After all, if you are middle class, you aren’t stuck with some of the stigmas that can come with being poor, and you are painted with the elitist brush for being rich. Middle class is a comfortable place to be for many of us.

It also helps, too, that middle class identity is probably deeply ingrained in your psyche. Many of the children of Baby Boomers (I’m one) grew up in the middle class, espousing “middle class values.” My experience was one of being poor until I was about 12, since my parents got married relatively young and started having kids.

Then, once my dad finished school and began making more money, we moved into a middle class neighborhood, able to afford the necessities of life, and some of the luxuries. The middle class mentality, for many in my generation, is based on similar experiences: Remembering the poor life as our parents initially struggled, but enjoying greater comfort as they began earning more.

But middle class is more than just your own mindset. It also includes numbers. Many of those who have a middle class mentality might not actually be considered middle class when it gets right down to income. [click to continue…]

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Couples Finances: What to Do if You Don’t Agree

by Shannon McNay on May 16, 2013

couple money argument
If you’re married or in a serious relationship, then you’ve probably already heard all the advice about how to manage your finances together: communicate, create goals together, don’t hide information from each other. This advice all sounds easy to do – and it’s certainly easy to give! But people aren’t perfect and neither are relationships. So what do you do if you simply can’t see eye to eye with your partner on your finances?

Defeat Defeatism

It can be a scary moment when you and your partner first realize that you don’t see eye to eye on your finances. You might see him or her in a whole different light. How could your seemingly logical fiance really believe that she should go shopping every month? How can your normally frugal husband think it’s okay to purchase lunch out every day? See what I mean?

First, try to suspend judgement. We all have something in life that we like to do that isn’t logical. I, for example, refuse to buy lunch out every day. But if a long day calls for an afternoon mocha from the local coffee shop…I’m probably not going to say no. So rather than think that this disagreement is a foreboding sign for your relationship, remember that we all have little splurges that don’t always make sense. It doesn’t make us bad people – it just makes us people.
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Changes to the Child Tax Credit for 2013

by Jeff Rose on May 15, 2013

child tax creditIf you’re like me, you like to get every tax credit that you can. Why not, right? It’s like buying something that you know you are going to have to buy and having a coupon for it. It would be silly not to use it.

The only problem with tax credits is that it’s hard to keep track of them all. One such credit is the Child Tax Credit. Here are the rules behind the tax credit of 2013 to see if you qualify.

Who Can Claim the Child Tax Credit?

Families who earn under $130,000 a year and have one or more dependent children under the age of 17 may take advantage of the Child Care Tax Credit on their tax return.

Do You Qualify for this Credit?

There are, of course, several further conditions that must be examined in order to be certain that you qualify for all or some of the Child Tax Credit. They are as follows: [click to continue…]

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Dollars and Cents: How to Start Saving as a Young Couple

by Jeff Rose on May 14, 2013

It’s time for another edition of Dollar and Cents. This is where I answer one of your questions.

If you have a question, either use the contact form on the blog or use my Facebook Fanpage.

Today’s question comes from Allison:

My fiance and I are getting married in August, we just bought a house (no furniture yet). But I am graduating from college in May and he has been working for a year. What can we do to afford all of the expenses that we have and save up money for our future. Just looking at numbers doesn’t really mean anything, but its hard to figure out how much we should save and towards what.

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Risky Business: What You Need to Know About High Risk Life Insurance

by Jeff Rose on May 13, 2013

Life Insurance Agent:  Do you participate in any high risk activities?

Person seeking life insurance:  I’m getting ready to base jump of a 10,000 foot mountain this weekend.  Does that count?

Life Insurance Agent:  <Silence>

high risk life insurance - base jumping
When you’re trying to get cheap life insurance, participating in “high risk” activities is not going to do any favors to your checking account.

High risk, as viewed by a life insurance company, doesn’t just look at base jumpers, sky divers, or deep water scuba divers.   Being high risk can also mean you have high blood pressure, diabetes, sleep apnea, and a host of other medical conditions.

Being a high risk candidate basically guarantees your premiums will be much higher, but when you have beneficiaries or a spouse that needs to be taken care of no matter what happens to you, buying a life insurance policy is critical.

If you are not an ideal candidate for life insurance, it may be difficult to get approved for a policy. In some cases, you can still get approved for high risk life insurance, depending on your situation.

Working in a risky profession or if your health isn’t that great, you fall into a category known as impaired risk. If you find yourself in a situation, there are steps that you can take to increase your chances of getting approved for a life insurance policy.

Here are a few factors to consider about high risk life insurance.

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Want to Succeed as an Entrepreneur? Learn the Art of Leverage

by Kevin Mulligan on May 10, 2013

risk reward

This will sound contradictory but the same traits that make you a successful business owner could also cause you to fail. If you understand why, you won’t join the legions of entrepreneurs that had the drive and passion to succeed but ended up going back to work for somebody else.

It’s all about leverage and if you’ve never studied how this largely misunderstood word is pivotal to your success, now is the time.

What are these personality traits?

According to Entrepreneur Magazine, successful entrepreneurs have certain personality traits in common.

  • They are curious. They’re always reading the latest article, they’re the person who asks all of the questions at the conference, and they never miss a chance to meet somebody new and ask, “How did you do it?”
  • They are controllers. They don’t want somebody else controlling their destiny and they want the autonomy to create their own vision and execute it in a way that they think is right.
  • They have tunnel vision. A little bit of adversity is fuel. It makes them work harder because it never enters their mind that they might fail.

These are all traits that lead to success but those same traits can limit growth if taken to extremes.

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5 Reasons to Plant a Garden this Year

by Miranda Marquit on May 9, 2013

grow a garden

I love my garden. My husband and I aren’t serious gardeners, but we grow tomatoes, cucumbers, a variety of bell peppers, herbs, and berries. We also have four fruit trees in the back yard, although only the gala apple tree has provided us with something substantial so far.

We’re not alone, either. The National Gardening Association reports that about 43 million Americans grow some of their own food. Gardening can be a great way to grow your own food, improve your health, and save money. If you are wondering if you should start gardening, here are 5 good reasons to start a garden this year: [click to continue…]

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IRS Gifting Rules for 2013

by Jeff Rose on May 8, 2013

Gifting Limits 2012The holiday season is already behind us but that doesn’t mean you still can’t give the perfect gift.

In the financial world, the term gift has a whole new meaning as it pertains to estate planning. Many investors look to “gift” a portion of their estate to prevent having to pay a hefty estate tax down the road.

If you want the bottom line about the gifting tax here it is: If you make gifts to friends or family that is large enough, there is the possibility that you may owe the federal government some tax money.

Of course, you probably want more information about the current regulations of the federal gift tax. Keep reading and I’ll share a few of the major points for 2013 and beyond. Sorry if this isn’t as exciting as the Nutcracker.
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Dollars and Cents: Should I Use Old 401k to Pay off Credit Card?

by Jeff Rose on May 7, 2013

Welcome to the first installment of “Dollars and Cents“. This is a new segment where I’ll be answering reader questions using video with a bit of humor.

It’s part of my life mission of making personal finance fun. :)

If you have a question that you want answered, be sure to use our contact form here.

Here’s the first reader question:

So I am currently in college and working full-time. I took out student loans to cover the cost of tuition however, I had about $1300 in expenses that were not covered by that and had only a few days to come up with the funds. I put the charges on my credit card.

I have a 401K from my previous employer that I was planning to rollover into a Roth Ira. However, I am wondering if it would be better to cash out the 401K to pay down the credit card and then put the remaining balance in the IRA. I know that the fees/taxes are probably ridiculous. I just don’t know if it is better to do that or to leave the balance on the credit card and pay it down over several months.


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How to Be Financially Prepared for a Natural Disaster

by Jeff Rose on May 6, 2013

My wife is deathly afraid of storms. I, on the other hand, would kill love to be on the show Storm Chasers. (Does that make weird? Don’t answer that…..)

Either way, hearing that first tornado siren of the season is a frightening reminder each year that we live in the path of some pretty terrifying storms. We’ve yet to go through an actual tornado, a town close ours was hit.  A few years ago our region was also hit by an “inland hurricane” that left significant damage.

Year after year, I find that I don’t think about the possibility of a natural disaster until my wife rounds up our family and we are all huddled in the basement watching the weather radar on our iPhones. Otherwise, it doesn’t often occur to me to think about preparing for the possibility of a disaster.

financially prepared for natural disaster

Of course, being ready to ride out a natural disaster is about much more than having a safe zone ready in the house and stocking up on bottled water. The aftermath of a natural disaster can be financially devastating for survivors, particularly if they have not taken the time to prepare.
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Avoid these 3 Pitfalls of Debt Consolidation

by Miranda Marquit on May 3, 2013

debt consolidationOne of the best things you can do for your finances is to pay down debt. There are a number of different strategies designed to help you get rid of your debt.

Among the more popular strategies is debt consolidation. With debt consolidation, you gather all your debts in one place.

You can get a debt consolidation loan that pays off all the smaller loans and leaves you with the larger loan, or you can manage your debt consolidation through a third party, which collects payment from you and then disburses it to your creditors.

Debt consolidation can be a great way for some consumers to put a solid dent in their debt. This is because it gets all of the debt in one place, where it can be easily managed. You only have one payment to worry about, and one interest rate. Being able to concentrate your efforts can go a long way toward getting rid of debt.

However, debt consolidation isn’t for everyone, and it’s no guarantee that you will be able to get rid of your debt effectively — especially if you fall prey to the following 3 pitfalls:
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Are Roth IRA Contributions Tax Deductible?

by Jeff Rose on May 1, 2013

Are Roth IRA contributions tax deductible?

The simple answer is no. But a more nuanced answer will note that although Roth IRA contributions themselves are not tax deductible, you can claim a Roth IRA tax credit or a claim a loss on a Roth IRA if eligible.

So let’s take a look at the various options at your disposal.

Non-Deductible Roth IRA Contributions

Unlike 401k or Traditional IRA contributions, Roth IRA contributions are not tax deductible. According to the Roth IRA funding rules established by the IRS, all your contributions must be made with after-tax dollars.

For example, let’s say you earn $40,000, and you’re in the 25% tax bracket. If you want to make a $5,500 tax deductible 401k contribution, you’ll put $5,500 in your 401k first and then you pay your taxes, which leaves you with $25,875 (75% of $34,500).

However, if you make a $5,500 non-deductible Roth IRA contribution, you’ll pay your taxes first, which leaves you with $30,000 (75% of $40,000). Then you’ll make your $5,500 Roth IRA contribution, leaving you with $24,500 in disposable income.
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