Every few months my employer’s financial advisor, Michelle Bless of the Retirement Strategies Group,  comes by the office to update us on changes to our benefits package or give advice. Last time she was here, I asked for her top five financial tips for 2010. She provided a great list of things to consider for 2010:

1) Roth Conversion Income Limits Lifted! For most people, their retirement savings and/or income streams in retirement are 100% taxable. From an advisor’s standpoint, it is very helpful to have some tax free money to work with in retirement. I would recommend looking at a Roth Conversion which allows you to convert your IRAs to Roth IRAs and pay the income tax today and allowing the account to grow on a tax free basis (vs. tax deferred). Before 2010, you weren’t allowed to convert if your Adjusted Gross Income was $100,000 per year or more but now that rule has expired which is big news. A few things to keep in mind: 1) If you convert in 2010 and ONLY in 2010, the IRS will allow you to spread out your tax liability over two years, 2011 and 2012. 2) If you can’t pay the taxes out of savings I would recommend not doing it. There are many things to consider and strategies to implement to make sure that the conversion is right for you so seek professional advice first.

2) Beef up your Emergency Savings accounts to 3 months living expenses if you’re married and 6 months living expenses if you’re single. If anything, this recession has really driven home the fact that most people are unprepared to continue paying their bills for longer than a few weeks if they lost their job. This recession has affected people from all walks of life and has cost millions of people their jobs. You must have emergency savings in the bank to ensure that you can continue to pay your bills should you find yourself out of work. I know saving for retirement is important, but if your retirement account also becomes your emergency savings account (which for many it is) then that’s not good financial planning. Retirement accounts are for retirement, not to buy a first home, not to send your kids to college, and not to dip into if you are in a financial bind.

3) Buy real estate. Real estate has to exist somewhere in your financial life either a primary residence, rental properties, or with Real Estate Investment Trusts (REITS) – public or private. The IRS has extended the Home Buyer Tax Credits for first time home buyers as well as for current home owners. The rules are as follows:

  • Extends the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010.
  • Expands the credit to grant up to $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.

If you’re not in a position to purchase physical real estate, a public or private REIT can fulfill that asset class. If you don’t know what I’m talking about, send me an email or give me a call. For the tax credits consult your tax advisor.

4) Give yourself an annual financial review and calculate your Net Worth. One goal I have for my clients is to increase their net worth each year. If it hasn’t gone up, then we look at why – Was it market performance? Savings? Big expenses? It is a very empowering exercise. Add up all your accounts (bank, brokerage, retirement, cash value in life insurance, etc) and subtract your liabilities (mortgage, car loans, student loans, credit cards, etc).

5) Teach your kids about money now. If you have kids and they get an allowance or money for their chores, a good exercise is to have them divide that money into three groups: Save, Spend, Donate/Share. This will help them develop good money management skills at an early age and will also teach them the value of the money they earn/are given. You can buy these piggy banks with three compartments on Amazon.

Each year, American Express compiles a yearly spending summary and then sends me a link to it. It totals my spending by category and subcategory. I use it to see if any area of my spending is out of whack. Since we make most of our day-to-day purchases on the card, I can easily get a snapshot of my expenses. If you don’t have an American Express, or don’t use just one credit card for all your purchases, you can make your own spending summary. In fact, you should make a summary for ALL of your income and expenses to make sure you’re still on track.

How to Make a Spending Summary
By now you should have received all of your bills and credit card statements for purchases through the end of 2009. Hopefully you use software like Quicken or an online money-management program, which will make this easier.

If you use either of the above, just go to the reports tab and click through to generate an expense summary for all of 2009. If you don’t use software, then this is going to be tougher and take a long time, so maybe just start with a typical month.

  1. Open up Excel and label the rows by your expense categories and subcategories.
  2. Fill the columns with the amounts. If you’re doing more than one month, label each column with a month. Use this formula in the cell: =0.00+1.00+1.52. In place of the amounts I entered, use actual amounts. That will create a running total.
  3. Go through your receipts or statements and enter each amount into the appropriate column.
  4. Now look at your totals. Does anything surprise you? Do you see any large jumps?

The nice thing about using personal finance software is that you can see where you made each purchase. With an Excel chart, you’ll have to go back to your receipts to detect the pattern.

How to Use Your Spending Summary
The spending summary is good for two things: patting yourself on the back for keeping your expenses low, and spotting the areas where your spending is creeping up. For example, our Amex summary showed $108 at Bars & Cafes for Oct.-Dec. 2009. I clicked for more detail and discovered that all but $30 of that was my husband’s Saturday pizzas. We’ve talked about him not eating out six days a week, but he hasn’t broken the habit. Now I see that if it continues, it will cost us over $400 a year! It’s time to have a talk again.

I also worked out that we spend only $85 a week, on average on groceries. This would be great, if only we weren’t spending another $60-$70 a week on my husband eating out. So, that tells me we have enough money in our budget to spend more on groceries if I can at least get him to eat at home on Saturdays.

Of course, some categories will be much higher than you expect, until you dig deeper. For example, our “internet purchases” category was shockingly high, until I clicked through and discovered our laundry machines and blinds were both in that category (rather than furnishing, where I would have put them.)

Don’t use your spending summary to make yourself or anyone else feel guilty. It is what it is. If you find something alarming, talk about it and agree to do better. Then, make a plan to reduce that spending. I see that was my mistake with my husband – we talked about him not eating out six days a week, but he continued to do so. Since he ate out, I stopped buying him lunch food. And then when we discussed it again, he said, “But that’s my pizza day.” I need to start buying him the frozen mini-pizzas he likes again. Maybe that will solve the problem. I can usually get coupons for those.

You should also use your spending summary to adjust your budget if any of the items are markedly different from the amount you planned. That will help you better manage your spending in 2010.

If you’ve visited any store at any point since December 26, you’re no doubt aware that Valentine’s Day is coming. Even worse, this year it falls on a Sunday and a holiday weekend. The pressure will be high to go romantic and go big. But I say ignore the pressure and go small, if you go at all. Here are five more frugal ways to celebrate V-Day.

Vow “Just Cards” This Year
Maybe a chocolate or two, if you must. If you both make a vow that it will be just cards, and promise to keep that vow, and agree that no one will be offended if you don’t get “a little something extra,” this vow should keep your money firmly in your pocket. So ladies, if you go “just cards,” don’t decide to pick up “just a little something,” because you know that will just result make him feel bad.

Make a Nice Home-Cooked Meal
As much as I try to ignore the holiday, it’s still ingrained on me that I should do something. Usually I make small steaks (3-4 ounces each, not 22) with a red wine sauce, thin-sliced roasted potatoes, and a walnut-gorgonzola salad. Served with wine and a scrumptious dessert, and it’s perfect. And since I serve small steaks, we’re not too exhausted for after-dinner activities.

Eat Out on a Different Night
There will probably be more people choosing this option this year, but if you’re set on going out, try Friday or Saturday rather than Sunday. Don’t try to go out Monday, though. It’s a holiday, so you really will be eating the slimmest of the slim pickings!

Rent a Romantic Movie
After eating your home-cooked meal and reading your cards, you might want to settle in for a romantic movie. If you have Netflix or Blockbuster Online, adjust your queues now to ensure that something appropriate to the evening arrives that week. Appropriate to the evening depends entirely on your tastes! It might be a horror movie, a comedy movie, a drama, it doesn’t matter so long as you can snuggle up while watching it.

Go Out to Breakfast
Instead of making a big “to do” about dinner, go out for a nice breakfast. It is a Sunday, so you may have some competition from church-goers, but it’s also brunch day, so you should be able to make brunch reservations somewhere. Then you’ll be free to enjoy the rest of your holiday weekend without the pressure of ROMANCE!

As you can see, I’m not a huge fan of V-Day. I was into it when I was younger, but then I got tired of the crowds and forced feeling of it all. The Valentine’s Day that coincided with the All-Star basketball game being played in Los Angeles was the last straw. I may never go out on V-Day again!

Want more ideas for avoiding the day? Check out my previous posts on cheap Valentine’s Day ideas and five ways to save money on Valentine’s Day.

Recently Progressive Insurance has taken a tactic from Priceline and offered customers the option to “Name Your Price” for auto insurance. Now, it’s one thing to name your price for a hotel or an airline ticket, neither of which really make a huge difference in your life, but naming your own price for auto insurance could be a gamble with your financial future.

Advantages of Naming Your Price
Certainly I can see the advantages of naming your price for insurance. First, you can make sure that your policy fits your budget. If you’re in a tight financial situation, but don’t want to cancel your auto insurance, then a lower-priced policy may be just what you need. Cancelling your auto insurance is always a worse option than reducing your coverage. Insurance is required in most states, and not having it could result in big fines if you’re caught. You’ll also be on the hook for the full amount if you cause an accident, and possibly if someone hits you and they don’t have insurance.

Second, by choosing your own price, you can see all the options and decide which are best for you. Some insurance companies tack on a variety of additional fees and coverage options that you don’t really need in order to jack up the rate. By choosing your own price, you can avoid these unnecessary extras.

Disadvantages of Naming Your Price
The price shouldn’t be your primary concern when choosing auto insurance. First, you need to find the right coverage for your needs. Second, you need to find a reliable insurance company. Some companies are cheap, but the adage that you get what you pay for is definitely true with them.

Choosing your own price, which may result in a policy that offers less coverage than you need, could expose you to serious financial harm if you cause a major accident. While you might be able to get away with the minimum if you have no assets, make sure you’re fully protected if you do have assets. Even if you don’t have assets, you may want to choose more than the minimum because you can be sued and have future wages garnished if your insurance isn’t enough.

Progressive is the only company that currently lets you choose your price, and they are a reliable company. My fear is that shadier insurance companies will jump on the bandwagon, leaving people with cheap policies that provide little to no coverage, or that are nearly impossible to file claims for.

If you get into a serious accident and your insurance doesn’t adequately cover you, you could spend years recovering from the financial wreckage.

The Best Way to Shop for Auto Insurance
It’s a good idea to shop for new insurance every couple of years to make sure you’re still getting a fair price for the same level of coverage. Don’t start with price, though. First, research reliable insurance companies. Next, contact them to get quotes for your current coverage level. Choose the one that offers the best price for the coverage you need. If the best price is outside your budget, see if you can reduce the cost by increasing your deductibles – make sure you can afford the deductible if something happens. For example, we have a $1,000 deductible on our auto policy and a $2,500 deductible on our homeowner’s policy. By choosing high deductibles, we reduced the cost of each policy significantly.

If you’re going to choose high deductibles, make sure you have enough money in your emergency fund to cover them should something happen.

No one wants to buy insurance. It feels like a waste of money, but it’s necessary and worth it. So don’t skimp on coverage to save money. There are better ways to save money that won’t put your financial future at risk.

If you’ve been reading this blog for a while, you know I’m a dedicated menu planner. Not only do I plan my menus every week, I keep them in a little notebook, and save past notebooks so I can refer back to what I ate two years ago. (I’m wacky that way.) Anyway, sometimes my menu plan gets thrown off, or I’m away at the end of the week and don’t get to make the next one. That’s when it’s time to get creative. I’ve come up with a few easy meals that I can always rely on to keep us fed in a pinch.

Jerk Chicken with Homemade Tortilla Chips and Fruit
Ingredients:
Chicken breasts
Jerk spice mix
Corn tortillas
Oil
Seasoning salt
Fruit

Simply rub the jerk spice mix into the chicken breasts and grill or bake. While that’s cooking, heat about ½ inch of oil in a large pan. Cut tortillas into triangles. I get 8 triangles per tortilla. Fry triangles 5-6 at a time (depending on the size of the pan.) It takes about one minute, including time to flip the chips in the middle. Drain on paper towels and periodically sprinkle with seasoning salt if you want a kick, or regular salt if you don’t. Serve with oranges, grapes, or whatever other fruit you have on hand. Something a little tart is best.

Tortilla Eggs
Here’s another easy one I got from NPR’s The Splendid Table weekly newsletter.

Ingredients:
Stale corn tortillas (put them in the oven to dry them out) (about 2 per person)
Oil
Onions
Eggs, lightly beaten, about two per person.
Jack cheese, cut into smallish chunks
Salsa
You can also add other veggies like chopped bell peppers if you have them on hand.

Cut the tortillas into strips. Film the pan with oil. When it’s hot, add the tortilla strips and the onion. Fry until strips are crisp. Slide them to the side and drop the eggs in the middle of the pan. Scramble the eggs until they reach your preferred consistency. Sprinkle with jack cheese. Serve with salsa on the side.

Homemade Pizza
Yes, it’s easy to order a pizza, but this will taste better.

Ingredients
Ingredients for your preferred pizza crust recipe
Toppings of your choice

Mix the crust by hand or in a stand mixer. If using a yeast crust, let rise for 20 minutes or so. Bake until set at the temperature called for in the recipe, about 7 minutes. Top with your preferred toppings. Bake another 20 minutes until the cheese is melted and slightly browned.

Shrimp Fondue
If you don’t even want to go to the effort of cooking, this is the easiest recipe in my arsenal.

Ingredients:
Defrosted shrimp, shelled, tail-on (about 4 ounces per person)
Chicken broth (about 1.5 cups per person)
Garlic
Lemon juice
Dipping sauces of your choice

If you have an electric fondue pot, this recipe couldn’t be easier. Pour chicken broth into the pot. Smash a garlic clove and drop it in. Add a teaspoon or so of lemon juice. Heat, but do not boil. Each person attaches their own shrimp to their fondue forks. Place in the pot and cook until shrimp is pink and curled. It takes a minute or two. Remove, dip in sauce, eat, and repeat with more shrimp. I usually serve this with a mustard tartar sauce and a sweet and sour sauce. A salad and a side of rice fills out the meal.

Fried Rice
Some people say fried rice is best with leftover rice, but I don’t usually have leftover white rice. This is easy to throw together in a pinch and always tastes good.

Ingredients:
White rice
Eggs, lightly beaten (about ½ per person)
Chicken or pork, browned and cubed (about 4 ounces per person)
Green onions, diced
Cashews or peanuts, toasted
Snow peas, regular peas, green beans, green or red peppers, whatever you on hand, cubed
Soy sauce
Oil

Cook the rice and set aside. Toast the nuts and set aside. If you’re using a veggie that requires a long cooking time like snow peas, steam them and set aside. Film a nonstick pan with oil. Drop in the green onions and the eggs. Scramble until set. Remove from the pan and set aside. Add the chicken or pork to the pan. Cook through. Add more oil if necessary. Add the rice to the pan. Heat through. Add the veggies. Heat through. Add the nuts. Add 1-2 tablespoons of soy sauce per two cups of cooked rice. Test after each tablespoon because it varies by brand and your personal preference. Add the eggs and green onions. Heat through. Serve with potstickers, egg rolls, a salad, or eat it alone. It’s certainly got everything you need.

I find that if I keep most of these ingredients on hand, I’m always able to come up with a meal in a pinch if our plans change or I don’t have time to make a menu. Some weeks I’ll just look in the freezer and pantry, see that they’re full, and declare a “creative kitchen” week. I promise you we never go hungry.

This has been a rather frustrating week. First, it’s a deluge this week, so the roads are crazy here in Los Angeles (and also, we’re floating away.) Second, the hospital where my husband was scheduled for surgery screwed up the schedule and it’s been delayed. Third, as I mentioned before, the hinge on my cell phone broke. And that is what I’m going to discuss today: what a waste cell phone insurance is.

My Story of Cell Phone Insurance
I’ve been a loyal AT&T Wireless customer for several years, and I was a Cingular customer before AT&T bought them. Basically, I’ve had service with some division of their company for 13 years. In October, 2008, my husband and I bought new LG CU515 phones and agreed to a two-year contract. Now 15 months in, the hinge on my phone has cracked. When we bought our phones, they asked if we wanted insurance. I don’t usually go for these things, but we’ve had phones break before, so we said yes. One monthly insurance charge was added to our monthly bill. Now I am told that the insurance only covers my husband’s phone. We were not told the insurance would only cover one phone when we opted for it.

I called LG, but they’ve chosen not to recall the phone, despite numerous complaints on the AT&T forums and several review sites about the hinge cracking. They will apparently fix the problem free if it’s in warranty, but my phone isn’t.

I called AT&T for help, but my phone is out of warranty, they insist it’s not insured even though we thought it was, and it’s too soon for an upgrade so I can’t switch to an iPhone at the discounted price. I was told my only option is to go to one of their stores to buy a cheap GoPhone and have it added to my account. She kept saying, “We have this option for people who might be short of funds.”

I’m not short of funds, but I’m sure as hell not paying $200 for another piece of junk just to get me through the next nine months of my contract.

I explained to AT&T that my husband is scheduled for surgery and now is not a good time to be running over to the phone store. At the time of the call, his surgery was a mere 15 hours away. Yes, I can use his phone while he’s under, but I also need to be reachable on my own number. I explained this to AT&T, but only got apologies and “Sorry, a GoPhone is your only option.”

I realize that it’s not AT&T’s fault that my husband requires surgery at the same time my phone broke, but it is their fault that they sold me a phone that would not last the contracted two years. This was not a free phone – I paid $80 for it, plus the two-year contract. Without the contract, the phone would have been $200.

What the Worthless Insurance Cost Us
So far, we’ve paid $4.99 a month for 15 months. That comes to a total of $74.85. Over the term of the contract, the total cost will be $119.76. In addition, my particular model has a $50 deductible, if they were willing to replace it. Some phones have higher deductibles. Total cost to replace a phone: $169.76. I could buy a used, unlocked phone on eBay for less than that. Yes, it would be used, but it would get me through the rest of my contract. At which point, I’d have the cash to get a new phone with a new contract.

When Cell Phone Insurance Might Be Worth It
If you have a really expensive phone, one that would cost $600-$800 to replace, then yes, the insurance might be worth it. But you’re also going to pay a high deductible, and your replacement phone will be a refurbished phone, not a new phone. So ask yourself, do you want to pay $120 for insurance plus $150 for the deductible for an old, refurbished model? And be warned that not all damage or losses are covered – so you could pay all that money and still be left without a phone.

A Better Alternative to Insurance
Next time we renew our cell phones, I’ll be doing two things: 1. Considering switching my business to another carrier, and 2. Creating my own cell phone insurance plan. Rather than pay for crappy cell phone insurance, I’ll simply add the amount we would have paid to our emergency fund each month. Then if something happens to our phones, we’ll have the money to replace them. If nothing happens, that money is ours to keep.

Now I realize that a different carrier may be no better than AT&T, but I’m pretty ticked off right now. This phone is crap, and THEY know it’s crap, but have chosen to do nothing about it. I may just be willing to sacrifice the iPhone in order to take my money elsewhere. I could get a G-Phone! By the time I can switch, they’ll have all the G-phone kinks worked out.

I understand that states are strapped for cash, but I’ve heard two recent proposals from California and New York governors that strike me as going too far. It’s one thing to try to close the gap by increasing the sales tax, but another thing entirely to drive us into a total nanny state. These attempts to get more money out of taxpayers and non-taxpayers alike make me stabby.

California: Catch Speeders on Red Light Cameras
Governor Schwarzenegger’s proposal is to reconfigure red light cameras to catch speeders, too. For those going 1-15 miles an hour over the limit, the fine would be $225. For those going more than 15 miles an hour over the limit, the fine would be $325. Now I appreciate the goal of reducing speeding, but I have a problem with the fine kicking it at 1 mile an hour over the limit. Speedometers are not that exact. AAA even offers speedometer testing because they can be off! My car was routinely five miles per hour off until I got a new timing belt. I don’t think it’s fair to penalize people for speeding if they don’t even realize they’re speeding! Rules like this should start at least 5 miles per hour over the limit. It’s what most cops do, and the cameras should be the same.

New York: Taxes on Non-Diet Sodas
Today Governor Patterson announced a proposal to add another $1 tax to cigarettes and a 15 percent tax on non-diet sodas.  He says the second one is necessary to combat obesity. I don’t necessarily have a problem with taxing cigarettes because states do often bear the burden of smoking-related health costs once smokers enter the Medicare system. There is no such thing as safe smoking.

You can’t put non-diet sodas in the same category. Millions of people drink an occasional soda without getting fat. Should I have to pay extra for my one soda a month because I don’t like the taste of diet soda? Are we going to put a 15% tax on candy bars and fast food, too? What about potato chips? Pizza? Doughnuts? Sugary coffee-beverages? Heck, let’s just tax everything that isn’t a vegetable. The root of the problem is the way people in our country eat, not a specific food item, so taxing one food item will have no effect on obesity. Those people will just eat or drink something else to get their sugar fix.

States need to learn to balance their budgets without introducing poorly-considered fees in the name of the public good. Is a soda tax really going to close New York’s budget hole? How about those red light cameras? I doubt it.

If you live in California or New York and disagree with these proposals, make your voice heard. It’s the only thing that will stop the stupidity. Or suggest your own stupid tax. Here’s one: let’s reconfigure the red light cameras to catch people texting or talking on the phone while driving. I’m sure the Governor will love that one until he gets the bill for his wife’s tickets.

I’ve got the ultimate conundrum for a dedicated frugalist: the broken cell phone. First the story, then the conundrum.

The Cheap Phone Plan
As soon as my husband and I got married, we merged our cell phone plans into a family plan. About a year after the first two-year agreement expired, the hinge on his phone cracked and we decided it was time to upgrade. We both went to the AT&T store and bought matching phones. They weren’t the cheapest phones in the store, but they were basic flip phones. My husband considered a Blackberry, but decided to wait until the next contract expiration.

Breakable Flip Phones
Last Thursday the hinge on my phone cracked. I currently have it taped together, but it’s not a long-term solution. However, we’ve got nine months left on our phone plans. It’s a known issue, so I’ll be calling LG to see if they’ll fix it free, even though it’s out of warranty. We also have insurance on the phone, but the deductible will be at least $50 and I’ll get a refurbished phone.

The iPhone Conundrum
Here’s where it gets tricky. Currently, we both receive cell phone reimbursements from our employers: $40 for me, $50 for him. That completely covers our current phone plan, so our phones cost us nothing.

My employer also offers company phones. They’ll give me a free Blackberry or I can buy an iPhone and they’ll pay for the service and data plan. But, I would have to get a new phone number or transfer my number. I’ve had my number for 13 years – I don’t want to change it!

If we upgraded to an iPhone for me and a Blackberry for him, we’re looking at $179 a month plus taxes vs. $70 a month plus taxes. We could use the lowest cost plan with rollover minutes since we have 4000 minutes accumulated, but that would still cost $125 a month.

My plan was to wait until October so I could go on my company plan and we could put him on an individual plan for a Blackberry. It would cost the same as it costs us now, but the net after his reimbursement would be $30ish, instead of $50ish.

Why I Want an iPhone
I primarily want an iPhone for the browser. There have been several occasions where I wanted to get directions, or check an online price, or find some other information while out and about.
I hate texting, but I do have friends who insist on texting me, so the iPhone would make that easier.
It’s becoming more important that I have access to office email on the weekends.
My co-workers all have them and use them during conference calls, while I sit quietly staring at the wall.

Why I’m Hesitant about the iPhone
I don’t really care about the apps. I’ve had a PDA before and used apps. Although handy, I wasn’t addicted to them.
I prefer to use a paper notebook to keep notes, to do lists, etc. It’s faster to write by hand than it is to keep it on a PDA.
I hate the iPhone keyboard – it’s hard to poke the letters with my fingertips. Maybe it’s just because I used to use a stylus and I’ll get used to it.
I already have an iPod that still works perfectly well, so I don’t need it for the music.
I just bought a new pocket calendar for the year and I like it.

My first plan of action is to try to get my current phone fixed for free. If that doesn’t work I’ll have to decide my next step. If we break our family plan now, we’ll have to pay a $100 early termination fee, unless we can avoid the fee by replacing our family plan with an individual plan at equal cost. Hmmm, I’ll have to look into that. If we can, then I’ll jump onto the office plan. If we can’t, then we’ll be doing some more math.

So, are any of you iPhone users? Do you think it’s worth the extra cost?

Most of us are familiar with tithing. Church members pledge to give a certain percentage of their income to the church every month. Typically it’s 10%. They ascribe to the theory that if you give to God, God will give back. There’s a certain poetry in the idea. However, even if you don’t belong to a church, you can still tithe. Just set it up yourself.

Choosing Your Charities
I’ve talked a lot about giving to charity and choosing just a few to support. If you can afford to give monthly to one or two causes, they will love you and you will be supporting their mission in good times and bad, which they desperately need.

Why Charities Need Regular Donations
Every time there’s a disaster, money pours in. As of this writing, the Red Cross had collected over $8 million just from text messages alone. But here’s the thing – it takes time to process and deploy those donations. To those who complain that some of the money goes into a reserve fund: remember that the Red Cross had to mobilize immediately when the disaster struck. They have to have money in their reserve fund to pay for staff and supplies to meet an immediate need. They also already had people in Haiti, because the situation there was dire before the earthquake. Donations made now will be used to continue their efforts, but any overage will be used when the next disaster strikes. And one will. It may not be a disaster that makes the news, but the Red Cross will be there anyway.

The same can be said of Doctors without Borders.  This group does amazing work with a volunteer staff of doctors and nurse in poor and disaster-struck areas. However, medical supplies aren’t always free. They need money for transportation and supplies all the time, not just when disaster strikes. Like the Red Cross, they already had “boots on the ground” in Haiti when the earthquake struck. Obviously they need millions for their efforts in Haiti, but they also need millions to fund their year-round work around the world.

Choose Your Causes Carefully, but Include a Humanitarian Effort, Please
When we’re choosing our annual or monthly donations, most of us think of the causes that are important to us personally, like breast cancer or the environment. Then when a disaster strikes, we make a one-time donation to relief group. That’s great. But I personally believe that those of us who can afford it should give to humanitarian causes between disasters. Haiti is one of the poorest countries in the world. It’s been a victim of slavery, corruption, and neglect over the decades. Although it receives significant aid from the US government and local charities, it doesn’t frequently register with the rest of us.

That’s a sad statement about our level of awareness. It shouldn’t take a disaster to draw attention to suffering. Instead, all of us should regularly include humanitarian efforts in our giving. There are many choices: Oxfam, CARE, UNICEF, the World Food Programme, United Way, the list goes on.

At the start of 2010, consider adding a humanitarian cause to your charity list. The poorest people in the

I just saw the bad news on CNN for new homebuyers like me who want to file for the First Time Homebuyer tax credit. I’m used to filing my taxes online and getting my refund in ten days. This year, I will be stuck waiting for my sizable tax refund for months because I have to file on paper. We tried to avoid this by stopping withholding, but for various reasons, we still wound up overpaying by a few thousand. I want my money!

Prepare Online, but File Your 2009 Tax Return on Paper
You can still prepare your return online or with tax software. I’ll be reviewing two of the options in mid-February. However, due to fraud, the IRS is now requiring first-time homebuyers to file on paper and submit documentation in order to get the credit. I expect it will be the same for those who qualify under the extended credit or longterm owner credit, but those forms aren’t out yet.

Here’s the tricky part: the IRS doesn’t have this information on their website. The current form tells you to file it online as part of the Paperwork Reduction Act. According to CNN, they have been returning amended returns with requests for more information. I confirmed that the return must be filed on paper at the IRS website, but I have conflicting reports about the items you have to send along with it. You can still receive direct deposit of your refund if you file an original return on paper, so that should cut a couple weeks off the waiting time.

The IRS has posted the updated form. It only requires a copy of your HUD-1 form signed by all parties. If you, like me, didn’t receive signed copies of your documents, call your escrow company to request it.

What to Include with Your Return
If you closed escrow before November 7, 2009, you file form 5405 with your 1040. According to some sources, you only need to attach a copy of your HUD-1 settlement statement. According to CNN, you must attach a signed copy of your HUD-1 settlement form, a signed copy of a mortgage statement, and either a bank statement, photocopy of your driver’s license, or a paystub showing the new address. Hopefully you saved all your mortgage docs and received a paper mortgage statement! We only received one statement because we paid online. I hope we still have it. We’ve now refinanced, so we can’t even get copies of statements for the old mortgage.  If you haven’t yet closed, there are other documents to submit. See the form’s instructions for details.

I don’t mind submitting documentation – it was weird the IRS didn’t ask for proof in the first place. (They expected all taxpayers to be honest? Please.) I do mind that they don’t list the requirements on their website or have the new form out yet.

Progress on Amended 2008 Returns
If you filed an amended 2008 return to get the credit and haven’t received your money, you may receive a request for proof from the IRS. It’s also taking them months to process the amended returns, so that could be the reason you haven’t gotten your money. Unfortunately, you can’t cancel the amended return and claim the credit on your 2009 return. Once you’ve filed, you’ve filed.

Claiming the Credit for late 2009 and 2010 Purchases
If you bought a house in November or December of 2009, or will close escrow by April 30, 2010, you have to wait to claim the credit. you can now file for the credit on your 2009 return. The IRS is still working on the new form and regulations, so I wouldn’t expect to get your money quickly.

Before you file your return, double-check that you’ve done everything right. Hopefully the IRS will have the new rules out soon.

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