Tax Savings at Home

The holidays are here and it’s a time of gathering family and friends. Do you feel that itch for a bigger homestead? Tax incentives make the jump even more enticing. On 11/6/2009, the homebuyer credit was expanded. Under the new law, you may be eligible for up to an $8,000 credit if you purchase a home in 2009 or enter into a binding contract to buy a principal residence before May 1 of 2010 and close by June 30, 2010. For qualifying purchases in 2010, you have the option of claiming the credit on either your 2009 or 2010 tax return.

The new law opened up the credit to long-time homeowners buying a replacement principal residence as well as raised the income limitations. The full tax credit is available to taxpayers with modified adjusted gross incomes (MAGI) up to $125,000, or $225,000 for joint filers. Those with MAGI between $125,000 and $145,000, or $225,000 and $245,000 for joint filers, are eligible for a reduced credit.

For more detail on eligibility and how to take advantage of this tax credit, click on the title of this entry to link to the IRS description of this credit.

Vehicle Tax Savings

Do holiday trips and gas prices get you thinking about a new ride? There are a few tax advantages you may want to consider under the American Recovery and Reinvestment Act of 2009 when looking at your new vehicle options:

1. Plug-in Electric Drive Vehicle. Purchasing a plug-in, 4 or more wheeled electric drive vehicle after 12/31/2009 can earn a tax credit between $2,500 and $7,500, depending on the battery capacity of the vehicle.

2. Low Speed Plug-Ins. Certain low-speed electric vehicles and two- or three-wheeled vehicles can earn a credit of 10% of the cost of the vehicle (up to $2,500) for purchases made between 2/18/2009-12/31/2011.

3. Conversion Kits. You can earn a tax credit of 10% of the conversion cost (up to $4,000) for converting a vehicle to a qualified plug-in electric drive motor vehicle between 2/18/2009-12/31/2011. A taxpayer may claim this credit even if the taxpayer claimed a hybrid vehicle credit for the same vehicle in an earlier year.

4. Lowering Alternative Minimum Tax (AMT). Starting in 2009 the Alternative Motor Vehicle Credit (including the tax credit for purchasing hybrid vehicles) can be applied against the Alternative Minimum Tax.

5. New Vehicle Sales Tax Deduction. Taxpayers who buy new vehicles in 2009 can deduct the state and local sales taxes they paid or other taxes and fees they paid in states with no sales tax.

Tis the Season

It is the holiday season. Are you worried about it being a budget breaker? Do you hate fighting the crowds at the shopping malls? Consider going away on a family retreat in place of exchanging gifts. All the stress about the right size, color or spending money on something they won’t like goes away.

At our household, we go away as a family each Christmas. It is such a gift to focus on time and having fun with one another. We do a few trinkets in a stocking and sometimes draw names at Thanksgiving for a Secret Santa to carry out over the days on the trip, but the days of gifting have to total less than $25. Spending the holiday on a vacation with family, whether at a pricy ski resort, tent camping on a beach or a long weekend at an indoor water park, you are creating memories, relaxation and fun as well as staying in the spirit of the season.

Fun Friday Nights

In the past, we use to kick off the weekend with dinner out with friends. Once we all started having kids, the logistics of getting a sitter and leaving the kiddos, on top of the cost of eating out made for more stress than fun. We soon learned that it was more enjoyable and economical to collect at one of our homes, kids in tow and experiment with new recipes.

Last Friday, we fixed Anaheim Shrimp Scampi. Costs of our evening with friends amounted to $20 for 2 lbs of shrimp, spaghetti squash, an avocado and assiago cheese. Adding in the bottle of wine for $8, we fed four adults for $7 each. Our recipe was from George Stella's "Livin' Low Carb" cookbook which was both scrumptious and easy to make. This meal at a restaurant would have easily been $20 a person, a savings of greater than $80 long before you add in the wine and a tip. Culinary nights at home with friends are laid back, fun and frugal and make for a good way to start your weekend.

Welcome

Imagine your life 10, 20 or 30 years from now. Imagine you never have to worry about money. There are no arguments about money. Imagine being in control of your money, not your money in control of you. Imagine that you are working where you want because you find meaning in the work, not working for the paycheck. Imagine how you are living your life the way you want, in sync with your values. You are able to do what you want, when you want. You are able to give back to your community through giving of your time, talent and financial resources. Imagine your life full of purpose.

This blog invites you to look at your personal finances and think about different ways to achieve your goals. What is your definition of financial success? Financial success is unique for each individual. It may be living in a big house, driving fancy cars or traveling the world. It may be working in developing nations to help feed the hungry, inoculate people against preventable disease; or it may be living comfortably with your family, giving back to the community, and having a purposeful life.

Researchers have long strived to find the secret to happiness. Money does not provide happiness. One of the key contributors to happiness is to have a meaningful and purposeful life. Money is a tool, a resource, to be used wisely in accordance with your values, vision and mission. You can use money as a resource to help you achieve your goals or you can work you whole life trying to acquire more of this resource. How you use this resource and view this resource has a great impact on your happiness and life fulfillment.

Throughout this blog, we hope to share financial fitness tid-bits to help all of us find ways to save money. Take advantage of the frugal fun and financial fitness suggestions that fit you and start applying them to your daily life. You will be amazed at how little changes can make a big difference in achieving your personal financial goals.

Bob and Kristy