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Archive for February 2013

Your money habits: nature or nurture?

Published 2/27/13  (Modified 3/14/13)

Your money habits: nature or nurture? By Jennifer Goforth Gregory

When we returned from a recent family vacation, my 11-year-old daughter's carry-on bag was crammed with colorful trinkets that she had purchased with her vacation money. My 9-year-old son, on the other hand, boarded the plane with pockets full of cash that he had decided not to spend and instead save for an iPad mini.

I have always been fascinated by the nature vs. nurture discussion, especially when it comes to spending habits. My kids are 19 months and 17 days apart (not that anyone counted) and have been raised in the same middle-class house where we try to instill good money habits. But each of their attitudes toward money has been apparent since they were preschoolers.

When my daughter received money for her third birthday, she immediately launched a campaign for one of us to take her to the toy store right that minute. And even as a toddler, my son put any money he was given directly into his piggy-bank.

The power of DNA

Recently I stumbled upon a study backing up what I have observed in my own kids. A 2011 study of 15,000 sets of twins by finance professors at the University of Washington and Claremont McKenna College showed that a high percentage of identical twins had the same investing patterns as each other -- even if they were raised apart. The researchers concluded that genetic factors account for one-third of an investor's behavior on average.

But even if our genes shape much of our money personality, that doesn't mean spenders are destined to a life of debt and savers can't learn to loosen their purse strings a little.

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3 tips for avoiding an IRS audit

Published 2/22/13  (Modified 3/14/13)

3 tips for avoiding an IRS audit By Peter Andrew

One of my favorite films is "Le Dîner de Cons" (The Dinner of Fools). Yes, it's French. But it comes with subtitles, and I can read. And it's about the funniest movie I've ever seen.

In it, a group of ghastly, elitist Parisian businessmen meets for dinner every week, and its members take turns to invite the most boring and/or stupid person they can find -- just so they can make fun of him or her. One week, one of these insufferable snobs brings along a minor civil servant, whose hobby is (guffaw, guffaw) making matchstick models of public buildings. Unfortunately for the group, the man is also a tax inspector, who subsequently sets out to wreak righteous revenge through his job. Add in troublesome wives and mistresses, and you have all the ingredients of a truly hilarious farce.

Tax audits may be funny when they happen to other people (especially, perhaps, if they're European snobs), but they're a whole lot less amusing when you're the one on the receiving end of them. You can't eliminate the chance of your being audited, because a small number of filers are chosen at random each year by computer. But here are three ways in which you can keep improve the probability of your flying below the IRS's radar:

1. Check your work

Nobody enjoys filling out tax forms, but it pays to take care when you do. One of the commonest audit triggers is incorrect math. Unless one of the characters in "The Big Bang Theory" was based on you (and not the ditzy neighbor), use a calculator or specialist software.

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The only savings strategies you really need

Published 2/20/13  (Modified 3/14/13)

The only savings strategies you really need By Tim Sullivan

According to a 2012 survey by CareerBuilder.com, two in five American households are living paycheck to paycheck. We could blame this on the state of the economy or the scarcity of jobs, but in reality, saving money often has more to do with psychology than it does with external factors.

In order to save money, you have to take in more money than you spend. If you've struggled to save in the past, you must adopt one or both of the startegies below to finally build your savings account to what it should be. Which option will you choose?

1. Cut your spending

Years ago, I started saving because of a banking error. I forgot to endorse a check before putting it in my account. The next day, I went about buying groceries, lunch, and a coffee, not knowing my bank had taken the money out of my account and sent the check back to my address for endorsement. After $105 in overdraft fees ($35 for each purchase), I was cursing the bank. Why didn't they simply reject my card!? After all, I didn't need that coffee.

After I paid the bank off and put my ego back together, I realized that month, I had made $105 available to pay off those overdraft fees.

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Review: Citi Dividend Platinum Select Visa Card

Published 2/13/13  (Modified 2/11/14)

By Peter Andrew

Editor's Note: Thank you for your interest, this offer expired and is no longer available.

My niece Jemma called recently, and launched into a long sob story about juggling small kids (it should be an Olympic sport) with trips to the laundromat. Her washer had recently broken down, and couldn't be repaired economically. She was too financially responsible -- something she didn't get from my side of the family -- to dip into her emergency fund, and was saving up for a new one.

The first questions I asked Jemma were whether she'd bought the old machine using a credit card, and, if so, how long ago she made the purchase. I was wondering whether her card offered an extended warranty, which might have doubled the coverage of a manufacturer's one. But the defunct washer was ancient so that was a non-starter. My second inquiry was whether she'd thought of applying for a zero-interest balance-transfer credit card offer. Most of these offer interest-free introductory periods for purchases as well as transfers, so she could easily pay down her new appliance over a year at precisely the same cost (nothing) as saving up -- but without those pesky laundromat trips. One of the cards I could safely have recommended was the Citi® Dividend Platinum Select® Visa® Card.

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So you're dead: What happens to your credit card bills?

Published 2/8/13  (Modified 3/14/13)

So you're dead: What happens to your credit card bills? By Justin Boyle

I was over at the house of some friends a couple of weeks ago when an interesting subject came up: What happens with your credit accounts when you die? Can your unpaid credit card bills affect you or your family once you've departed this mortal coil?

The answer, it turns out, is complicated. It depends on the amount of your debt, the status of your estate, the contracts you have with your credit companies and a few other factors that might surprise you.

Your debt is your own

Typically, your spouse, relatives and descendants cannot be held liable for the debt that you racked up in life, according to the Federal Trade Commission (FTC). In other words, your credit history follows you to the grave, and no credit company or collections agency has the right to force your debt on anyone else.

Credit companies do have the right, though, to attempt to recoup what they're owed.

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Review: CitiBusiness/ AAdvantage World MasterCard

Published 2/7/13  (Modified 8/14/14)

By Peter Andrew

Editor's Note: Thank you for your interest, this offer expired and is no longer available.

It could have been a lot worse. But at the time, last Sunday, it felt pretty bad. First, the delayed-take-off announcement. Then, the news that the airport to which we were flying was snowed in, and the flight had to be diverted. Next, on arrival, the three-hour bus trip (in a vehicle that had clearly been designed with the leg-room needs of seven-year-olds in mind) to the original destination. And, finally, the seemingly inevitable flu that comes from flying a budget airline that, in order to save a few bucks on fuel, endlessly recirculates the virus-laden cabin air.

If I still flew frequently, I'd cheerfully pay a few hundred dollars a year for one of those high-end airline credit cards that allow you to jump lines with priority check in, security screening and boarding, and give you free access to tranquil, comfortable lounges. But I don't, and those three-digit annual fees are impossible to justify for a few hours of discomfort each year. So perhaps I should consider something more affordable but with fewer privileges: something like the CitiBusiness®/ AAdvantage® World MasterCard®, which is currently offering 30,000 American Airlines AAdvantage bonus miles as a sign-up reward, providing you spend on it at least $1,000 in purchases in the first three months after your account is opened.

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