The 37 Cent MistakeWritten by Wayne M. Davies
Reprint Guidelines: ** Attention Ezine editors / Site owners ** Feel free to reprint this article in its entirety in your ezine or on your site so long as you leave all links in place, do not modify content and include my resource box as listed above.If you do use material, please send me an email so I can take a look: mailto:Wayne@YouSaveOnTaxes.com =========================================================== The 37 Cent Mistake -- by Wayne M. Davies Copyright 2003 Wayne M. Davies Inc. =========================================================== When it comes to filing your tax return, spending 37 cents could be biggest mistake you ever make. Millions of taxpayers make mistake of putting their income tax return in a regular letter-sized envelope, sticking on a 37 cent stamp, and placing envelope in their mailbox. And millions of taxpayers "get away" with this mistake year after year. Why do I say that putting your tax return in mailbox is a mistake? Let me explain. Every year, a small percentage of mail doesn't get delivered. The U.S. Postal Service doesn't like to admit this, but it's true. Furthermore, even if your tax return gets delivered to IRS, every year a small percentage of tax returns get lost by IRS. Don't believe me? I'll never forget day one of my clients showed me a letter he received from IRS: "We regret to inform you that we received your return.... but have lost it." Honest to goodness, this actually happened! So my question to you is this: What are you doing to do if this happens to you! If your tax return doesn't get delivered, or if it gets delivered but is subsequently lost inside mammoth IRS, what are you going to do to prove that you actually mailed return? Just calling IRS and saying, "Well, I mailed it on time. I know I did!" isn't going to prove anything. And burden to prove you mailed return on time will rest on your shoulders. You have two ways to solve this potentially dangerous problem: OPTION #1: File your return electronically. There are many benefits to e-filing. The one I want you to focus on now is this: When you e-file your return, you receive an electronic acknowledgement within 48 hours that IRS has accepted your return. Bingo! Now you have proof positive that return was filed. 'Nuff said? E-filing is rapidly becoming filing method of choice. But majority of returns are still filed on paper, so here's a second way to avoid "missing return" dilemma. OPTION #2: If you're a "paper filer", go to post office and spend a measly $4.05 to send letter via Certified Mail, Return Receipt Requested.
| | How to Live Within Your MeansWritten by Ann M Marosy
Planning and goal setting are critical to your success if you want to become wealthy. The two key traits of people who do not become wealthy are, firstly, they tend to spend all of money they have and, secondly, they do not know what they spend their money on. The lack of goals is main culprit. Ric Edelman, author of The Truth About Money and Ordinary People, Extraordinary Wealth, calls this "spending unconsciously". He says reason why people spend without giving it much thought is they have no goals. Without goals, we live unconsciously from moment to moment, we never plan for future, we spend all of our money, and as a result, we are unlikely to ever become wealthy. "Unconscious spending" is more prevalent in our society than we realise. I would estimate approximately 80% to 90% of population do it. With exception of one or two people, vast majority of my clients had no idea what they spent their money on until I asked them to prepare a list of their total expenditure and outgoings before our first session. In fact, many were too frightened to do initial exercise and waited until they arrived at my office, so I could help them through ordeal. Money matters simply scare people. They are terrified to know how out of control their finances are. Yet, this is precisely what needs to be done before we can start working on a solution.Whilst it is important to become relaxed and carefree with our financial matters, this does not mean careless. We become carefree with money when we know that it is not a scarce resource, we work on increasing our income, we invest a little time on a regular basis to plan and review our finances, and we systemically set aside part of our earnings regularly to build our savings and investments for future. We are careless with money when we don't keep track of what we are spending and squander money on things that are wasteful, extravagant and not needed. I often compare money to water, another important commodity in our lives. Both are essential and critical to our survival, however, we rarely worry about water in same way we do about money. We systematically set aside water when it rains in dams and reservoirs to provide us with water ‘on tap' when we need it. We are careful not to waste water, however, at same time we can relax and not have to worry about it on a day to day basis. When we apply same reasoning to managing money we are well on way to becoming wealthy. After we resolve our beliefs about money and realise that becoming wealthy is within our possibilities, next step is to put aside a little time to set goals and do some planning. Planning does not have to be an arduous affair. It takes approximately one to two hours upfront to prepare your plan and, thereafter, an hour a month to review or revise it. The first part of your plan is to set some goals. For example, accumulating $500,000 in income-producing assets in 15 years is not a difficult goal to achieve. If you save $170 a week into investments returning an average of 15% per annum for 15 years, you will have your half a million dollars. Goals will help you focus on future and increase your willpower to prevent overspending. The more concrete you make your goals, more committed you will be to achieving them. Set timeframes and break them down into manageable steps, as in example above, to make your goals more realistic and attainable. Along way, however, we also need to manage our day-to-day spending to ensure that we set aside required savings to achieve our goals. In designing Money Program, I used a simple, effective formula that everyone can apply to easily manage their finances. I call this 40%-30%-20%-10% rule. This formula is used to measure your expenditure and cash outflows. You divide your expenditure into four categories and calculate total of each category as a percentage of your net (after tax) income. The four categories are Fixed Costs, Variable Costs, Discretionary Costs and Savings. Fixed Costs are your essential costs that are known and have to be paid on a regular basis. For example, mortgage or rental payments, personal loans and credit card repayments, insurance, council rates, and school fees. These costs are usually determined by your lifestyle choices, size and cost of your house, cars and major possessions, and therefore difficult to change without making major adjustments to way you live. However, because fixed costs are comprised of debt and committed payments, they are critical in determining your ability to create wealth, as well as your capacity to lead a stable financial lifestyle. If your fixed costs are too high, you will probably be living from payday to payday worrying about next large bill that arrives. If your fixed costs take up too much of your weekly pay packet, there will be less to spend on other essential costs, and often little for luxuries - unless you go further into debt. Variable Costs include our essential living expenses, which can vary from week to week, yet you have some control over what you spend. These will include food, clothing, groceries, mobile phone expenses, medical and motor vehicle running costs, such as petrol and repairs. The previous two categories relate to essential costs that we cannot live without. Some are controllable (variable costs) and some are set (fixed costs). Discretionary costs are expenses that are non-essential and highly variable. These costs are very much in your control and where most choice is possible about how much is saved each month. For example, entertainment, dining-out, presents, holidays and all luxury items that we love but can live without. I affectionately call this part of our budget, our ‘play money'. The problem with most budgets is they often exclude this significant element and this is why most people fail. We all need a little play money and a few luxuries in life.
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