This afternoon I was sitting around reading for grad school, and I went into a daze about Spring Break next week and what all I hoped we could do in Ruidoso. Of course I thought about how much I wanted to save for our little vacation, and it hit me. While I'm no expert at financial advisement, it's well known in my family that I have a unique ability to pinch a penny.
So when I announced to my parents and sister last year that I had started talking to this guy and his name was Cash nonetheless, I am fairly certain they knew it was fate at its finest. I've had a plethora of jokes thrown at me in the past 14 months due to my frugality..or cheapness as some like to call it..coupled with my boyfriend's name.
Okay, all this mumbojumbo boils down to 1 thing: I'm going to start a series on Sundays "creatively" called Sunday Savings where I'll focus on one savings tip for the week. Keep in mind I teach 8th grade and a 2 week unit on economics. I'm not a financial consultant, a personal banker, a stockbroker, or any other professional on this issue. I'm just a girl who bottle fed calves, invested that money into the stock market, then bought my own car at 16 with the money I had made.
Yes, I did that. haha. In 8th grade I heard a guest speaker, a financial advisor, in class and from that moment was hooked. At the time I had a wad of money stuck at the back of my sock drawer (I would let my sister borrow this money with interest :-) ) and a check from my grandparents framed on my bedroom wall...never cashed. When I found out I could take that money and make more (and never have a job since I was 13), I instantly knew it was something I wanted to do. I went home, talked it over with my parents, and a few days later my dad helped me buy my first shares of stock with money I had saved my whole life doing odd jobs with my sister like bottle feeding calves, mowing the yard, and getting allowance. We were lucky that our parents taught us how to save, so I've always tried to help when asked. So that, in a nutshell, is how this whole Sunday Savings series has started...hope you find something useful. Enjoy...
One thing I want to caution you on is to not think of your tax returns like a savings account. Don't make plans for your return before you know how much you may be getting back, because I've seen too many people disappointed in this. Often times we miscalculate what we think we might be getting, then we either get much less or have to pay back.
If you do not plan ways to spend your tax return beforehand, you will be much more delighted when you do get something back. I encourage people to save money the old fashioned way (we will get to these ways on other Sundays) for vacation or a luxury item. Put your tax return into its own investment. Maybe you have a savings account already set up, a mortgage, or a vehicle payment. By using your return on another investment, it will dramatically give you more back in the long run. More on investments at a later date.
Of course if you do happen to get money back from Uncle Sam, by all means by yourself a gift if you want! This year I was pleasantly surprised, so I put most of it an investment and saved about $100 of it to buy a piece of luggage I've been oogling for a couple months. It's all about balance. In the past I've saved so much that I never enjoyed myself. You don't want to do that--but you do want to save the majority.
So how can you get (more) money back? I have a few ideas that are by no means an exhaustive list but instead are things I've come across the last few years.
- Have a home mortgage. If you have a mortgage on your house (meaning you have bought your own house but do not have it paid off), you will get to claim the interest on your taxes. Another reason not to rent!
- Go back to school if you're not already there. College classes, even if it's non-degree seeking, will pay out not only in an educational realm. The American Opportunity Credit and Lifetime Learning Credit are two ways the government helps put money back in your pocket for advancing your education. To me that's endless benefit! Make sure you read up on these, because they do have salary limits.
- Buy a vacation home. What? I'm supposed to be talking about saving money, I know. Cash and I dream about having a home in the mountains one day, so I decided to research it a few weeks ago. True that it does get very complicated, and it would be up to you how you want to venture this quest, but not only can you claim a 2nd mortgage on your taxes, many times you can make money off the investment. We'll discuss this a different day. But for today--if you never rent your 2nd home, you can write 100% of the interest up to a certain amount (over a million dollars). If you rent out your home, it gets tricky in how many days you can rent vs use for personal time vs time allotted for maintenance. This link will break down the tax rules for a second home, and I've found it very useful in understanding the current policies. To me it makes buying a vacation home sound more appealing--but only if the means are in place.
- Have kids. I've never experienced this one personally, but it's true that if you have dependents you are getting more back in taxes.
- Spend money in your classroom. Are you a teacher? You know that every year you are spending money out of pocket for your classroom. While I've never spent excess amounts, I've always kept my receipts in a certain drawer with my name on them for that fiscal year (remember that spring semesters are different tax years). When I looked through my tax return this year, the amount I turned in through out of pocket school receipts was listed. This benefits your classroom without you having to be out of pocket--for too long!
- Have a farm? You probably already know that many subsidies exist for America's farmers. Also, it's hard to keep a working profit throughout the year. I've known farmers who show legitimate losses on their farm for the year (cows die, new equipment, etc.), so that increases the amount for a tax return.
- Tithe or donate to a local charity. (All preachers are now rejoicing.) If you give money to a non-profit like a church, United Way, or the Wounded Warrior Project, make sure you get a receipt. Most charities (churches included) will send you a form at the end of the year with your donations. In case they don't, make sure you've recorded this somewhere. I always suggest writing a check for the recording of it, but many people still pay with cash. If you choose to pay with cash, either get a receipt or put your offering into an envelope. Most churches have these, and they are for tax purposes. Also, I know that Cash remodeled his kitchen this year. Since he got a new oven, he took his old oven to a 2nd hand shop (sorry, don't know exactly where he took it. maybe Salvation Army??). They gave him a receipt, and he was able to use that! If you take clothes or any other item to places like the Salvation Army, ask them for a receipt. Sure you like to be charitable, but it's always nice to have it noticed on your tax return!
Stay smart. Be savvy. Save money...