You’re on Notice



It wasn’t too long ago that I talked about the importance of never getting comfortable with your level or source(s) of income. I’m a big promoter of always seeking different income streams as well as seeing how you can get raises. Your ultimate goal should be to be in control of an amount of income that covers your cost of living. That’s true financial independence. That way, if you continue to work, you are working because you want to and you can stop at any time. Most importantly, if you’re involuntarily out of work, you’re not likely to be homeless in 3 months.

I also talked about my experience using a Bank of America ATM with a remote teller (Teller Asssist), and the potential threat they pose to many retail banking jobs.

Here it is: CNN is reporting that within the next 10 years, 30% of bank jobs could be obsolete. Very alarming.

These are routine repetitive jobs that we could anticipate being replaced. They are customer service jobs that provide an experience as well as a service. Well, I used one of these machines, and I got the experience. The woman on the screen was sufficiently pleasant and helpful for me to not care that we were interacting on camera rather than in person.

Technology has done it: using machines to provide services that could only be delivered in person. If you have a lower skilled job, this should be your wake up call. Save, invest and set yourself free from the bondage of debt. Otherwise, you might find yourself with a negative net worth an no income.


No Such Thing As: “Tax Season”

IRS Investigation

Most of you should have submitted your taxes about two weeks ago. Those who for some reason didn’t, likely requested an extension from the IRS.  And if you did neither, well, you’re screwed. (Did you know that IRS agents carry guns?!?!)

Taxes are a pretty serious thing in this country. We can lose our wages and our freedoms for failure to pay taxes, and the government loses out on billions in revenue meant to improve our quality of life as a result of tax cheats. Despite the seriousness of this issue, many people don’t think about taxes until January 31st when W2s start shipping out.

We grow up thinking that tax season runs from January to mid-April. However, the truth of the matter is, every time you interact with money, it’s tax season. Tax planning is a year-long affair.

When you get paid, the government withholds taxes. When was the last time you checked your withholding? Did you get married? Did you have kids? Do you make more or less money? Most people have their withholding on “set it and forget it.” They filled fheir W4 six years ago when they took the job and haven’t looked at their check since.

What about major purchases? Could they be tax deductible at the state or federal level? Maybe you got some solar panels or an electric car that the government is willing to give you a credit for. You shouldn’t wait until next January to track it down. Keep your receipts handy and keep a journal.

Do you work from home? The IRS has different methods of calculating your home office deductions. If you plan ahead, you’ll know exactly which method works best for you and you’ll be better prepared when it’s time to file.

If you’re interested in making your life easier next year, I’m happy to share some of the things I do throughout the year to ensure a smooth filing season.

  1. Throughout the year, keep your receipts for items you’ll want to reflect on your taxes. I keep both paper copies and electronic copies (by scanning the paper copies) for easy reference at tax time.
  2. Create a journal of all your deductible items. That will help you know exactly what you need so when the time comes, if you didn’t get your real estate taxes from your mortgage company, you’ll know to contact them and request it.
  3. Notify your employer of any life changes immediately. Don’t delay. Not having the right withholding amount can cost you. Either at the end of the year when you’re hit with a stiff bill or over the course of the year when you’re giving Uncle Sam an interest-free loan with money you could have used to pay down debt.
  4. Stay informed. If you live in America, you have the great displeasure of being under one of the most complicated and ever changing tax rules in the world. The deductions from this year might be a different amount from the one next year. Read up and plan accordingly. There was a time when Roth contributions where $5,000, then they went up to $5,500. Those who didn’t stay informed either missed out on the opportunity or scrambled to come up with the money last minute.
  5. Know in advance if you should itemize or not. You may spend a lot of money, but if your deductions are less than the standard, itemizing is a waste of time. If your journal doesn’t indicate that you’ll be on track to hit your magic number (see IRS website  here to see what yours is).

Whether you do your own taxes our pay a professional, you’re looking at saving time and money. Tax mistakes can be costly; either in the form of penalties or by leaving money on the table.

It’s not to late to get organized. Paying taxes might be painful, but preparing for them doesn’t have to be.