The year is coming to an end, and with any conclusion comes a last-minute checklist. This is your final financial to-do list of 2010. With only a few days to complete these items, do not waste time getting started.
1. Fund your IRA or Roth IRA. For 2010, investors can add up to $5,000. If you’re over age 50, add an additional $1,000.
2. Maximize 401(k) contributions. For 2010, savers can add up to $16,500 to their company’s 401(k) plan. If you’re over 50, add an additional $5,500.
3. Rebalance investments. Rebalancing is selling part of what has done well and buying what has not done so well, thus selling high and buying low.
4. Review portfolio quality. Look at the rankings of the investments in your portfolio and keep the quality high. Don’t hold onto any low-quality investments.
5. Review the tax impact of your portfolio for the year. Now is the time to make any changes to offset portfolio taxes. This needs to be done in 2010 to impact your tax bill in 2011.
6. Review your financial plan. Make sure you are hitting your goals by looking at your results compared with your financial plan. If you don’t have one, complete a financial plan prior to year end.
7. Contribute to your child’s or grandchild’s 529 plan. You may be able to get a 2010 deduction from state taxes.
8. Convert your IRA to a Roth IRA. You’ll be able to pay the taxes over two tax years, 2011 and 2012.
9. Take out your minimum required distribution. If you’re over 70 1/2, you must take your MRD in this tax year. If you don’t, the penalty is 50 percent.
10. Get married. If you are planning on getting married without the hoopla, do it now to receive tax benefits.
11. Review your credit record. Check to see if you have any blemishes on your credit record. You are eligible for one free credit report a year.
12. Make an extra mortgage payment. One extra payment a year can reduce your 30-year mortgage by seven years.
13. Pay your state taxes this year. If you do, you may be able to get a deduction.
14. Calculate your net worth. Each year it is a good idea to see the value of all your assets and review your annual progress.
15. Develop your 2011 budget. Building a budget can be the best way to meet your financial goals. Putting it down on paper is the first step.
None of these items are difficult and some may not even pertain to your situation, but these friendly reminders can prove to not only put you on the right track, but keep you there.
by AnnaMaria Andriotis for Smart Money
Source: Yahoo
When small business owner Kevin Schimelfenig finally examined his smartphone bills, he was shocked to find he was paying 25% more for his indispensible BlackBerry Storm—he uses it to email, text and call clients all day long—than the price he was quoted for the plan. Schimelfenig, founder of a medical-device marketing firm in Cary, N.C., says the extra fees totaled $1,400 over the last three years.
Buying everything from small gadgets to cars seems to be getting cheaper these days, but owning them isn’t. Taxes and fees on cell phone plans, installation and repair costs on home appliances, and hefty financing fees on cars can now add up to more than 50% of the sticker price of the purchase, according to estimates from experts and data analyzed by SmartMoney.com. And the costs are rising, says Linda Sherry, of consumer advocacy group Consumer Action: Taxes are going up, consumers are keeping appliances and cars longer — and paying more for repairs and poor efficiency. “The result is a real budget buster,” she says.
In all of these niggling little ways, consumers keep paying for things, long after they’ve ostensibly bought them. Buyers rarely take into account these financial ripple effects, which can add up to thousands of additional dollars, says Ed Mierzwinski, consumer program director at the U.S. Public Interest Research Group. For example, over the course of a two-year service contract, smart phone owners may spend an additional $1,000 on taxes, fees, roaming charges, and meatier data plans—all add-ons that are rarely considered when the contract is signed.
This steady drip of ongoing costs isn’t stopping soon. Cell phone users pay about 15% in taxes and fees, on top of the base cost of their plan and usage, up about 2% this year and expected to rise again next year, according to the CTIA-The Wireless Association, a trade group. The average cost of a smartphone app has risen 43% in the last year. And gas prices are up 9%, insurance another 5%. And yes, consumers have noticed: The number of people canceling their lease agreements because of unexpected expenses—like higher insurance or maintenance costs–is up 150% this year over last year, according to LeaseTrader.com.
Of course, sometimes there’s no practical alternative. Renting a smartphone or a home appliance doesn’t make much sense in this day and age; when brakes or tires wear down, replacing them isn’t optional. But that doesn’t mean ownership has to be quite as expensive as it has become. SmartMoney did an analysis of five bigger-ticket items, their true cost, and easy ways to keep the money faucet to a trickle. Here’s what you need to know.
E-readers
The number of consumers buying e-readers, like the Kindle or Nook, tripled this year, to roughly 6.4 million, according to the Consumer Electronics Association. Once they own the device, consumers buy about three books a month, according to Marketing and Research Resources. That totals about $300 to $380 per year on books, plus the cost of magazine and newspaper app downloads (for example, a monthly subscription to The Wall Street Journal costs $15; the most-downloaded magazine, the New Yorker, costs $3 per month). Cases and screen protectors start at $15 and go up.
Total Cost: Voracious readers and media hounds should budget up to $785 extra per year.
Easy Trim: Find a book-share partner. Nook users can lend a purchased e-book to another Nook owner. Amazon will offer a similar service for Kindle owners before the end of the year.
Smartphones
Over the course of a two-year smart phone contract, the average buyer pays $2,140 for their plan, plus talk time, data, and extras, according to BillShrink.com, which tracks the wireless industry. That’s up 13% over the past three years. Then there’s the tax bill. On average, wireless service is taxed at about a 15% rate, with rates higher than 20% in Washington, Nebraska, Florida and New York. Want that hot new app? Prices are rising there, too — up 43% over the past year to about $2.85 per, according to KnowYourCell.com, which tracks the mobile phone industry.
Total Cost: Up to $3,400 over two years.
Easy Trim: If you mostly use your phone to make calls, surf the Web and download music in areas with wifi networks, you can get away with the most basic data plan and save up to $1,000 per year. With AT&T’s limited data plan, the iPhone 4, for example, costs about $2,400 over two years, but with unlimited data, that increases to around $3,300 — one of the priciest packages available.
Video Game Systems
Nearly 70% of U.S. households play video games, according to the Entertainment Software Association. And while major manufacturers, like Nintendo, Sony or Microsoft, haven’t introduced new systems lately, they are rolling out new, pricey accessories. For $150 each, Microsoft’s Kinect motion controller for Xbox 360 has sold more than 2.5 million units since introduced last month, for example. The average gamer also buys four games per year at an average cost of $40 each, although prices run up to $100, says Loren Johnson, senior industry analyst at tech research firm Frost & Sullivan. And then there are the extra remotes. The Nintendo Wii system, for example, comes with only one remote controller, even though up to four people can play; each remote is $30 or more.
Total Cost: About $160 to $300 per year, initial console purchase not included.
Easy Trim: Video game rentals start at about $6 on GameFly.com, and on Gamerang.com—a sort of Netflix for video games—gamers can rent an unlimited number of video games each month for $18. Or swap games at online game swap stores on Swap.com and Goozex.com—you’ll pay swapping fees of 50 cents to $2 depending on the site, plus shipping.
Owning a Car
A car’s true cost of ownership rose about 15% this year, which means that popular car models like the 2010 Toyota Camry and Honda Accord cost a whopping 60% more than the sticker price over the first five years of ownership, according to Edmunds.com. That includes an expected $4,000 on maintenance and $6,000 on insurance. Then there are the incidentals, like parking in a major city ($5,000 per year), or interest on a car loan (say, another $1,600). “Many buyers are in a state of denial, watching a car ad on TV and thinking ‘oh I can afford that’,” says Phil Reed, a senior editor at Edmunds.com
Total Cost: In the first five years, drivers can expect to spend $3,600 per year.
Easy Trim: Dealerships often offer coupons and discounts for maintenance while the car is under warranty. If you’re in the market to buy, consider deals that include scheduled maintenance for cars that are similar—and close to the same price—as ones you already like.
Home Appliances
About one in four consumers don’t consider things like installation and maintenance when buying an appliance, according to J.D. Power & Associates. But the cost of owning that deep-freeze or washer is at least 50% more that what you pay at the register, and shipping and set-up on some appliances can run about $200 or more, particularly if you need, say, a new gas line for an oven or a water line for a washer, says Christina Cooley, manager of the home improvement department at J.D. Power. And repair costs are up about 20%, according to appliance repair experts. That’s partly because consumers are keeping appliance longer in an effort to save money. The cost of repairing a clogged washing machine: $200 and up.
Total Cost: Over 10 years, the ongoing costs of a popular-model refrigerator will run about $1,700 — assuming only one breakdown.
Easy Trim: Skipping the warranty can save $300 or more. A new appliance probably won’t need to be repaired in the first five years, says Cooley.
When I was growing up, my mother would serve something she called “economy dinner.” Pasta, sauce, maybe a quarter-pound of hamburger meat mixed in and a little cheese sprinkled on top, baked together in the oven. We didn’t understand the name, but we loved the dish.
I was thinking I need to find my own “economy dinner,” as I had yet another supermarket freak-out while watching my grocery receipt print out and curl down two feet behind the register. At home with the receipt in front of me, I decided to crunch some numbers to see if I could feed my family of four for less than $100 a week.
Would it be possible to do 84 meals for less than $100? With room to spare, it turns out. According to my calculations, we could do it on $72.38. We’d be crying of boredom after Day 2. But we wouldn’t be hungry.
If we ate cereal and milk for breakfast, a PB&J and an apple for lunch, and protein-enriched pasta with store-brand marinara and a couple of carrots sticks and broccoli or green beans for dinner, we could get by on $10.34 per day.
I won’t bore you with the math, but this meal plan cuts out all the extras. No snacks, no OJ, no organic milk at $5.99 per gallon, no Parmesan cheese sprinkled on top of that pasta, no frozen yogurt at night in front of DWTS. The husband brown bags it to the office. I’ll admit I included my coffee, at $2.15 per week, because I consider it essential, along with milk for the kids at every meal.
This exercise has been an eye-opener for me. Now that I know our family’s bargain-basement dinner costs $3.40, I see the foods I thought were cheap (like a large pizza for $10) are pricey in comparison. And the foods I knew were expensive, such as a $10 steak, fish that’s $14 per pound, or deli meat at $8.99 per pound, now seem top dollar.
Some of the splurges, like the organic milk, I’d opt to add back in. But that package of Pepperidge Farm Nantuckets does more to the bottom line (both bottom lines, really) than I’ve cared, up until now, to realize.
To get out of our pasta rut, I consulted with Leslie Bonci, a dietician at University of Pittsburgh Medical Center, about other nutrient-rich foods that pack a lot of bang for the buck. Here’s what she suggested:
• Eggs: 99 cents per dozen, can be breakfast, lunch, dinner or hard-boiled for snacks.
• Canned beans, like kidneys or chick peas: 79 cents for a 16-ounce can.
• A five-pound roasting chicken ($5) could yield two dinners. For the first meal, roast with potatoes and carrots and eat half of the chicken. For the second meal, make a stir-fry with the leftover chicken and a bag of frozen mixed veggies ($1.29 for a 16-ounce bag) and serve over brown rice (99 cents for a 16-ounce bag).
• Oatmeal costs $3.69 for a 42-ounce canister and has 30 servings. That could replace at least $7 worth of boxed cereal, and the oatmeal is more filling.
• Bananas, at 49 cents a pound, cost less than most fruits, especially those “select” peaches and nectarines at $1.99 per pound. Bananas are definitely cheaper and healthier than the sugary granola bars I send in my daughter’s lunch.
• Texturized Veggie Protein, a lean meat substitute that’s a lot like ground beef and can be added to pasta sauce or tacos, is $2.69 for 10 ounces.
