IRS Blues

Yes, we had two extra days this year before your tax bill was due. Even with two extra days, it is still painful. Make sure it is postmarked by April 17 at midnight. Need a playlist to help numb off the sting? If you are working late on your taxes, here is some music to keep you motivated:

-Taxman by the Beatles
-Money by Pink Floyd
-It’s Money that I Love by Randy Newman
-Take the Money and Run by the Steve Miller Band
-Tax Free by Jimi Hendrix
-Who Will Buy My Memories by Willie Nelson
-Taxman, Mr. Thief by Cheap Trick
-I Want to be a Billionaire by the cast of Glee
-Mo Money Mo Problems by the Notorious B.i.G. ft. Mase & Puff Daddy
-Sweetest Girl by Wycliff Jean
-If I had a Million Dollars by Bear Naked Ladies
-Take this Job and Shove It by David Allen Coe

Filing Bankruptcy While Averaging $115,881 per Month?

Yes, this is what Warren Sapp, former NFL player and Dancing with the Stars contestant did on March 30, 2012.  Mr. Sapp filed for Chapter 7 in South Florida stating that he owes more than $6.7 million to creditors and back-child support and alimony.  His reported assets are $6.45 million.  What does this mean and how did it happen?

It happens because Mr. Sapp was spending more than he could afford, even more than his income of $115,000 a month.  Bankruptcy happened because of poor financial decisions, poor financial planning and thinking of the short-term, immediate gratification--not the long-term gain.  It happened because he was living life beyond his means.

Chapter 7 bankruptcy is also known as “straight” bankruptcy or liquidation and allows an individual to keep certain exempt property.    Assets are sold by a bankruptcy trustee to repay creditors and many unsecured debts are discharged.  Florida does not allow the bankruptcy courts to sell your home because the equity is protected by the Florida Constitution.  Florida also exempts IRS approved retirement and pension funds and personal property valued at $1,000 or less.  Chapter 7 bankruptcy also allows you to reaffirm your secured debt so you can keep your car, furniture or house by renegotiating with your lender.

For Mr. Sapp, he has 240 pairs of Nike Jordan shoes worth $6,500, a watch worth $2,250 and a lion skin rug worth $1,200 that will likely be liquidated by the bankruptcy courts.  However, his Super Bowl ring and 1991 national championship ring will not be auctioned off because he lost them.

Lessons Learned:

Ø  One can always spend more than he or she makes.
Ø  You need to have a budget and keep a spending limit to what you can afford.
Ø  When is enough ‘enough’? Really…how many Jordan athletic shoes do you need?
Ø  Review your values and make sure you are using money as a resource to reflect your values.
Ø  Live below your means; always pay yourself first and save at least 10% of your income.

If you want a pair of Nike Jordan shoes, contact the South Florida bankruptcy court!

Budgeting Household Chores

Spring is here in two hours. Spring cleaning officially starts in two hours. Do you share a household with others? Do those of the household not share an equal level of desire to maintain an orderly and clean environment?

Whether a husband and wife or roommates, sharing this responsibility can be a challenging task. How do you peaceful resolve the differences? One option: the envelope. How much would it cost to have a cleaning service come in weekly and keep the home in a 'guest-ready' state?

Each of you contribute proportionally to the envelope. Each of you record your contribution to the clean environment for the past week. If the effort has been equally shared then divide the contents of envelope equally back to all of you. Somewhat lopsided? You get that percentage of the envelope that equates to your percentage of exerted work. No one worked at it - you have the budget collected to hire out.

Either way, the "envelope" method helps for everyone to feel fair about how much effort they contribute and the household stays orderly. Budgeting the work and budgeting the pay helps everyone feel compensated for extra effort and the house stays organized. Try this one at home and let us know how it plays out. 

15% for All

We filed our taxes this week. The picture on the wall of our tax preparer’s office included the quote: “When the first 1% income tax rate was being debated in 1913, a U.S. Senator opposed to it stated, "If they get away with 1% today, some day it may be raised to as high as 5%!" How lovely would it be today to be capped at 5%? We would even be excited to cap at a certain ex-governor’s 15% if fairly distributed to all tax payers, whether their earnings were by way of nursing a patient bedside or from long-term capital gains.

We know that paying taxes is our legal obligation. And we believe it is a social responsibility to pay taxes to support the common good – our roads, street lights, schools, libraries, fire fighters, and so on. But it is a bit painful to see all in one lump sum the amount of our ‘giving’ to the government for the past year.

In the words of Scottish whisky distiller Lord Thomas R. Dewar (1864–1930) “The only thing that hurts more than paying an income tax is not having to pay an income tax.” Even though the unemployment rate is moving in the right direction, there are still too many unemployed and underemployed and we know we should be grateful that we have income for which to tax. But darn, how fun would it be if the tax rate would be capped at 15% for all?

Underground Economies

On a recent trip to visit our son in the Army stationed in Italy, I started to think about the "underground economy," Greece and their debt problems, and taxes. As we were purchasing items, most if not all places prefers cash (Euros) then take a credit card. Some places even charged you 10% more if you used your credit card. Now I'm sure some of this is to offset the credit card fee but I wonder how many sales do not get reported for tax purposes.

Greece is, in part, in trouble because of an underground economy that deals in cash and where income is not reported to the government. As they implement their austerity measures and cutbacks, have they increased their tax collections and increased reported income? Would they need to cut back as much if everyone, and I mean everyone, reported their income? This may be against their culture and custom, but the Greek government needs every Euro it can get to provide services and pay down its debt.

The same is true in the United States, we all need to pay our taxes so the government can pay for services we use every day. We may think that we "won" by not reporting all of our income, or by claiming more in deductions then we actually earned, but when you do that, we as a country lose. We lose support of our streets, our education system, our libraries, and our national defense.

As April 17th approaches (tax day) lets not lose as a country. Take every legal tax deduction you can, but be honest and report all of your income and don't exaggerate your deductions. It takes us all to do our fair share to keep this country great.

Brown Bag Valentine

It is Valentine’s frugal fun time. In keeping healthy hearts, label one of these healthy snack items and sneak it into your sweetheart’s lunch box. The following are a few sweet (as in thoughtful) sample valentines lunch box label treats for you to consider:

1. Apple: “You are the apple of my eye”
2. Cheese Slices: “Our love is so cheesy!”
3. Cupcake: “You are my little cupcake”
4. Cherries: “I cherish the memories”
5. Almonds: “I am nuts about you”
6. Pepper Packets: “You spice up my life”
7. Turkey Roll Up: “Don’t’ be a turkey, go out with me”
8. Ham Roll Up: “I am a real ham when it comes to dating you”
9. Peanut Butter and Jelly: “We go together like peanut butter and jelly”
10. Sushi: “You are the wasabi of my sushi”
11. Lettuce Salad: “Lettuce enjoy our time together”
12. Relish Salad: “I relish our time together”
13. Tickets to Lunch: “Let’s ketchup”
14. Jar of Mustard: “I mustard enough courage to ask you out”
15. Olives: “Olive you”
16. Pickle: “If I am ever in a pickle, I want it to be with you”
17. Bouquet of 14 Carrot Sticks: “14-carrots for you”
18. Corn Chowder: “It may be corny, but I love you”
19. Tabasco Sauce: “You warm my up with your spice.”
20. Ice Cream Sandwich: “Ice cream with delight when I think of you”
21. Miniature Box of Lucky Charms: “You are my lucky charm”
22. Miniature Box of Corn Flakes: “Just like corn flakes, you are great!
23. Miniature Box of Raison Bran: “You are my Raison Bran, you keep me regular”
24. Jimmie Bean Sausage Muffin: “You are my Jimmie Bean Sausage Muffin, a little ray of sunshine”
25. Mentos and Diet Coke: “Our love is like Mentos and Diet Coke”
26. Maple Syrop: “ I’m stuck on you like syrup”
27. Grilled Cheese and Tomato Soup: “We go together like grilled cheese and tomato soup”
28. Pears: “We make the perfect pear”
29. Sweet Potato: “ You are like a sweet potato and I want to butter you up”
30. Plums: “Plum love into you”



Time to Sell or Buy a House?

Spring is the time for love, the groundhog to see or not see his shadow and time to buy or sell a house. This year we are selling our house. We want to move to the country and have chickens, a goat, maybe a llama, fruit trees, and a big garden. As empty nesters, we don’t need to be close to the schools, and our current home is in the perfect neighborhood to raise a family.

As this is my first time selling a home, I am learning a lot about trying to maximize your selling potential. Here are a few lessons learned:

It takes time, energy and effort to get a house ready to show. We have spent the last few weeks cleaning, repairing, editing, and donating things we no longer need. Good Will and Habitat Restore are great places to take your good-slightly used items that you no longer need. To clean, organize and minimize can be revitalizing.

Make repairs when things break. We had to replace two bedroom doors. It wasn’t a big deal to replace them. To think, we lived with our “slighted bruised” doors for years! Though not that noticeable, we should have taken care of it at the time of injury. Keeping everything in good repair will encourage everyone in the house to maintain that level of polish and care.

If you don’t use it in a year, donate it. After living in one location for the past 18 years, we have many things we rarely use. When I first moved to Iowa, I moved once a year for three years. If I didn’t use it in that year, I donated it. I was able to pack light and did not have a lot of things cluttering my life. It feels really good to get to be purged of all clutter.

Take the time to clean daily – really clean. It is nice to be living in a house that is ready to show perspective buyers at any time. We are making a conscience effort to make sure we never leave a room messy. We are doing what we were taught as little kids – put your toys away after you play with them. The little things make such a big difference.

We might have listed our house at the right time. Interest rates are low and the economy seems to be tracking optimistically, at least in our community. So far we have had three showings in the first four days. We will keep you posted on ups and downs of selling a home. And if you are interested in buying our house….you know what to do! (contact us).