It’s said that the only two certainties in life are death and taxes. Although it’s true that everyone can expect to pay taxes in some form or another during their lifetimes, within the framework of our tax system, there still are a lot of uncertainties. For example, depending on how you crunch the numbers, the average federal tax paid by an American household is either about $9,600 or about $14,600. There’s a lot of variance among tax filings. Yours may be significantly different, depending on the steps you take when filing. Many Americans file their taxes without taking all of the deductions and credits to which they are entitled. As a result, they may pay much more in taxes than necessary.
Everyone’s situation is unique. With the recent tax reform bill that was just signed into law, the tax structure is much different today than it was a year ago. That means, it’s extremely important for individuals filing taxes to seek expert advice from experienced and knowledgeable tax professionals in their area. In general, however, there are many details that the average taxpayer may not remember to do when filing his or her taxes that may result in lower tax bills or larger refunds.
For example, most American taxpayers don’t claim all possible exemptions and credits. These may include child-related tax credits. Other actions that could have a positive impact on your tax bill include participating in a flex spending account, planning for retirement savings or participating in education savings plans. Simply by remembering to look for these items and including them in your tax return filing, you could save yourself a significant amount of money. When preparing your tax return for 2018, remember these and other tips and strategies for reducing your tax burden found in the checklist below. Combined with expert advice from seasoned tax professionals, your next tax return may be much less painful than last year’s. Paying taxes may be unavoidable, but that doesn’t mean you shouldn’t do all you can to save the most money the next time you pay.
Have you ever noticed how incredibly hard it is to pull the plug on a bad investment? While this may be true for most people, I think we tightwads of the world may have an extra tough time letting go. Given our aversion to wasting anything, it can be extremely difficult to admit when we’ve done it.
My first insight into how tightly I could chain myself to a bad investment came when I was still just a kid. My parents had insisted I play an instrument. I’d chosen the clarinet, and I had to practice for 30 minutes a day. After years of this daily torture, it was clear to everyone involved that I would never be a clarinet virtuoso. Even the family dog howled in agony when I played. My parents finally relented and told me I could quit. I, on the other hand, gritted my teeth and kept going for another three years. Not because I liked it (I hated it, actually) but because I had already put in so much time that I couldn’t bear to stop.
Behavioral economists will tell you that this is a known and extremely common tendency. (Too bad for my dog that nobody explained this to me in junior high.) For example, Gary Belsky and Thomas Gilovich address this mental pitfall, among many others, in their wonderfully insightful book Why Smart People Make Big Money Mistakes. They refer to it as the “sunk cost fallacy.”
According to Belsky and Gilovich, “This tendency is harmful for the simple reason that past mistakes shouldn’t lead you to make future ones. The past is past, and what matters is what is likely to happen from now on. So a person who turns down an offer for a house because the bid is lower than the original purchase price may be following one blunder (paying too much in the first place) with another (not getting out while the getting is good).”
Below are some places where you may be falling prey to the sunk cost fallacy.
Retaining assets that have lost their value – Hanging onto an unsuccessful business, a car that frequently breaks down, or a stock that’s plummeting in value? Reassess that asset’s true value now (both financially and emotionally) to help you determine whether to hold tight or jump ship.
Sticking with bad financial choices – For years, I failed to participate in a plan at my company that would have allowed me to buy stock at a discounted price. Although this meant turning down a virtually guaranteed profit, failing to put the necessary money aside in the first year I worked there made it easier to justify skipping this during each subsequent year. It took me a decade to acknowledge the money I’d already wasted and take action to reverse my decision.
Holding on to clutter – Got closets full of dated clothes, old toiletries, mismatched Tupperware, or other stuff you don’t use? Make a decision to use it now or donate, recycle, or sell it. Clutter may apply to your investments or financial records as well. If you’ve got a bunch of different little 401k funds from past employers, for example, it may behoove you to consolidate.
Shooting your happiness in the foot – Busting your butt for an apartment, nice clothes, or other material goals may have seemed like a reasonable idea when you were younger, for instance, but remember to regularly examine how much satisfaction your priorities are bringing you today. Continuing to climb the corporate ladder only makes sense if the top is still where you actually want to be.
If after taking stock of your investments in both time and money you discover lots of places where you’re throwing good resources after bad, don’t be too hard on yourself. If your old dog died years ago, your new one will still thank you for ceasing to play the clarinet. And as Belsky and Gilovich point out, sometimes the sunk cost fallacy actually works for us. One example they cite is gym memberships. If your aversion to losing your original investment provides the motivation you need to pry yourself off the couch, then that’s a good thing. At the end of the day, the more we can learn about our own spending biases, the more skillfully we can use them to help us prosper.
Spouse consolidation student loan. We divorced and I look into my credit I found this amazing surprise. What are my options as for repayment, loan forgiveness? I currently can’t afford to make any payments due to my income and I don’t qualify for deferment since ex-spouse is missing in action.
Federal spousal consolidation loan are the worst. This must be a pretty old loan though. The Department of Education has not generated new spousal consolidation loans in many years. I believe they went away in 2006
If this truly is a spousal consolidation loan then you are 100 percent for the entire loan balance if your former spouse fails to pay. You can divorce your spouse but not this particular type of loan.
Deferment is only available if your former spouse participates. The Department of Education says “In order to qualify for a deferment both borrowers must individually and simultaneously qualify for the same type of deferment.” – Source
Even the Department of Education’s own working group meeting in 2003 thought Spousal Consolidation Loans sucked. They said, “Spousal consolidation loans, as they exist today, are not in the best interest of borrowers as both individuals are held jointly and severally liable for the debt regardless of their future marital status.” – Source
We recently wrote about steps that the FTC took to stop MOBE, an internet business-coaching scheme that was promoting a bogus online business opportunity to retirees and veterans. We’ve gotten a lot of questions from MOBE customers on our consumer blog and business blog. Here’s what you need to know if you were a MOBE customer.
Status of the FTC Lawsuit against MOBE
The FTC filed its lawsuit against MOBE in June 2018 and the case is ongoing. At the FTC’s request, the Court has temporarily suspended MOBE’s business operations.
The FTC’s primary goals in these types of cases are to stop companies from breaking the law, and to recover money that the company should not be allowed to keep. The Court will decide what we can do in MOBE.
Status of Refunds
It could take several months, if not longer, to resolve the case against MOBE. If the lawsuit results in refunds, we will tell you in the FTC’s consumer blog. We’ll use information from MOBE’s database to identify customers who lost money and are eligible for a refund. At that time, you might need to give information to verify your claim. But not right now.
What to Do Now to Get a Refund
Nothing. You don’t have to do anything right now to request a refund. If you hear that you have to send a request to get a refund, it’s not true. That could be scammers trying to steal your personal or financial information. If there are refunds, the FTC will tell you if you need to do anything. But right now, there’s nothing for you to do.
Amount of Refunds
If there are refunds for MOBE customers, each person’s refund may depend on several things, including: how much the defendants are able to pay; how much the court orders for refunds; how many people lost money; and how much each person lost.
Timing of Refunds
If the Court orders refunds for MOBE customers, we will send out checks as soon as we can. There are several steps, including getting the money and information from the company, getting the checks ready, and mailing them. Those steps often take several months.
What to Do If You Were a MOBE Customer
Report your MOBE experience to the FTC: ftc.gov/complaint. This information may help the FTC in its case against MOBE. Your report also makes sure the FTC can contact you, if necessary.
If you were a MOBE customer outside the United States, you also may want to report to the consumer protection agency in your country. For more information about reporting international scams, go to econsumer.gov.
Save your documentation. Save any emails, documents or receipts relating to MOBE. If the case results in refunds for MOBE customers, your records could help you prove how much you paid. That could be a factor in how much money you could get back.
More Information about the FTC Lawsuit
Find out more about the FTC’s lawsuit against MOBE:
The FTC’s action against MOBE is not a class action. A class action is a private lawsuit brought by multiple victims working with a private attorney. At this time, we are not aware of any class actions against MOBE.
Many school forms require personal and sensitive information. Here are some tips for keeping your child’s personal information safe — from pre-school through college.
Safeguard your child’s Social Security number (SSN). Don’t carry your child’s Social Security card with you, and don’t share it unless you know and trust the other party. Ask why it’s necessary and how it will be protected. Ask if you can use a different identifier, or use only the last four digits.
Know your rights under FERPA. The Federal Educational Rights and Privacy Act (FERPA) protects the privacy of student records. FERPA requires schools to notify parents and guardians about their school directory policy. It also gives you the right to opt out of sharing contact or other directory information with third parties, including other families.
Limit what kids share online. Teach kids not to post their name, address or full date of birth on social media. For more tips, check out the FTC publication, Net Cetera: Chatting with Kids About Being Online. It offers practical tips and ideas for getting the conversation started about social networking, privacy, mobile devices, computer security, and dealing with cyberbullying.
Use strong passwords on smartphones, tablets or laptops. Teach the importance of changing passwords – and not sharing them. This is especially important for college students in a dorm or other shared living space.
Use a shredder. Shred all documents with your child’s personal information before throwing them away.
Check whether your child has a credit report close to the child’s 16th birthday. If there is one — and it has errors due to fraud or misuse — you’ll have time to correct it before your child applies for a job, seeks a loan for tuition or a car, or needs to rent an apartment. Contact Equifax at 1-800-525-6285; Experian at 1-888-397-3742; and TransUnion at email@example.com.
The federal government recently implemented new security clearance guidelines that make it more important than ever for servicemembers to stay on top of their bills and monitor their credit histories.
Mission: Continuous monitoring
The Department of Defense (DoD) will now “continuously” monitor the financial status of servicemembers with security clearances. This means that a past-due bill or an error on your credit report could jeopardize your clearance status.
General instructions: Changes to background investigation
Military personnel are subject to a full background investigation. Many servicemembers, including all officers, are required to have national security clearance checks that include detailed reviews of their credit history and ability to meet their financial obligations. Prior to this change in policy, the federal government performed an initial credit check when servicemembers applied for their security clearances and performed follow-up checks every five to 10 years, depending on clearance level.
Following a number of publicized security breaches, the President of the United States issued a directive that all federal employees (including servicemembers) in national security positions shall be subject to continuous evaluation. This means that a person who is able to access classified information can have their background reviewed at any time, including an automated review of their credit file, to see if they have a history of failing to meet their financial obligations, being in excessive debt, or having a high debt-to-income ratio.
This new process might impact your DoD security clearance and prevent you from being deemed “deployable,” which could greatly impact your military career unless you can prove to DoD that you were the victim of identity theft, fraud or a mistake, and that you’re currently living within your means and are making a good-faith effort to resolve your unpaid debts. Two of the most reported issues to the Bureau from servicemembers, veterans, and their families are issues with credit reporting and debt collection.
Special instructions: How to make sure your credit doesn’t harm your security clearance
To safeguard your credit record and prevent problems with your security clearance, follow these tips.
1. Check your credit report
You are entitled to a free credit report every 12 months from each of the three major consumer reporting companies (Equifax, Experian, and TransUnion), which you can access at AnnualCreditReport.com. This is the only authorized source under federal law that provides free credit reports from the three major national credit reporting companies. You can dispute any item on your credit report you know to be inaccurate, and the companies are required to conduct a reasonable investigation upon notice of a dispute. Other websites that promise free credit reports may require you to sign up for “free trials” that eventually charge you or try to sell you other products or services you may not need.
2. Consider setting up a fraud alert or security freeze
Recent legal changes will provide servicemembers with free credit monitoring in the future to help better protect their credit record. This law takes effect in May 2019, and in the meantime, you can still contact Equifax, Experian, and TransUnion and ask them to put a freeze on your credit reports. A freeze prevents prospective lenders from accessing your credit file unless you lift the freeze for that lender or for a specified period of time. There is also a special “active-duty alert” available to servicemembers on active duty who are assigned to service away from their usual duty station. The alert notifies credit reporting companies of your military status and limits new credit offers while you’re away.
The Office of Servicemember Affairs is dedicated to aiding servicemembers, veterans, and their families with their financial challenges throughout their military financial lifecycle. It’s part of our mission and we are honored to help those who answered the call of service on behalf of a grateful nation. To stay connected to our work, sign up for updates on our website.
This report explores reporting of telecommunications-debt collections (telecom collections) to nationwide consumer reporting agencies. It documents the prevalence and dollar value of telecom collections and, in doing so, illustrates industry practices in collection and reporting of telecommunications debts.
Key findings include:
About 22 percent of consumer reports contained a telecom-related item at some point between mid-2013 and early 2018. Although consumers often pay for their telecom services on a monthly basis, most telecommunications providers do not report to credit reporting agencies unless an account is in collections. Nearly 95 percent of the telecom-related items were telecom collections items.
The median telecom collection balance is $408, and 17 percent of telecom collection balances exceed $1,000.
Telecommunications providers often hire collection agencies or sell telecom debt to debt buyers. Collection agencies are typically contracted to collect a telecom debt for several months. After the collection contract ends, the debt is returned to the telecommunications provider and the collection item is removed from the credit record. The debt may be sold or sent again to a collector and reported as a new item in the credit file.
The presence of a telecom collections item on a consumer’s credit record is associated with having a lower credit score, but the change in score before and after the item appears on the credit record is often small and therefore unlikely to affect creditors’ decisions for many consumers.
The data used in this report are from the Bureau’s Consumer Credit Panel, a longitudinal, nationally representative sample of approximately five million de-identified credit records maintained by one of the three nationwide consumer reporting companies.
When you use disposable products, you’re literally throwing money away after each use. Keep that money in your pocket and some extra trash out of landfills by replacing these disposable products with reusable ones instead.
Tissues – Handkerchiefs are easier on the wallet and the nose! You can buy these ready-made, use bandanas, or cut some from old t-shirts. 100% cotton feels best. You can sometimes find embroidered, vintage hankies at thrift stores that are almost too pretty to use. If your family uses two boxes of tissues a month, that’s a savings of at least $3.50 if you use store brand tissues. You’ll save even more if you’re buying expensive, brand-name, aloe-infused tissues.
Feminine supplies – According to the U.S. Department of Health and Human Services Office on Women’s Health, on average, females in the U.S. begin menstruating at age 12 and go through menopause at about age 50. That’s almost 500 periods in a lifetime. Reusable silicone menstruation cups can take the place of tampons and washable cotton sanitary pads eliminate the need for disposable pads, saving thousands of dollars over a woman’s life. Paper products also tend to leech moisture from sensitive tissues, so reusable products are often more comfortable to use than their disposable counterparts. You will save a minimum of $3.50 up to $10 a month or more per female family member.
Cotton swabs – According to the National Institutes of Health, you should never use cotton swabs to clean ears. Ears are self-cleaning. When you use a cotton swab to clean the ear canal, you may actually cause damage by pushing ear wax further into the ear. Stick to cleaning the outer ear with a soft cloth if necessary. A family of four could save about $.80 a month (and potential hearing problems) by swapping swabs for washcloths.
Swiffer-type pads – While Swiffer® floor cleaning systems (and their copycats) are certainly easier than conventional mops on your back, buying the refill pads is not easier on your wallet. Instead, cut an old towel into pieces large enough to fit the cleaning head and to tuck the edges into the notches on top of the cleaning head to hold in place. Wet the towel and clean away. Add a few drops of essential oils if desired, and never buy (or throw away) a Swiffer® pad again.
Swiffer® cleaners are old-fashioned dust mops. Buy one with a removable, machine-washable cover and it can take the place of both wet and dry Swiffer® pads. Forgoing a disposable pad for cleaning just once a week saves $3 a month.
Bottled water – Just like lunch bags, there are reusable travel cups for every imaginable situation and taste. Many are even insulated, so water stays icy cold all day long. Replacing just one bottle of water per day per family member in a four-person family could save you at least $20 a month.
Paper napkins – Use cloth napkins instead. Save the fancy linen ones for special occasions. Darker-colored dishcloths make inexpensive, durable, stain-resistant napkins that will last for years. Replacing your disposable napkins at each meal nets a savings of over $2 a month.
Garbage bags – Wasterecycling.org states that the average American creates about 4.4 pounds of trash a day. That’s 123 pounds per week for a four person family, about six trash bags per week. Reduce your trash output and buy fewer trash bags by composting organic materials like fruit and vegetable scraps, eggshells, grains, coffee grounds, and tea bags. According to the United States Environmental Protection Agency (EPA), food scraps and yard waste currently make up 20 to 30 percent of the trash stream. These materials could be composted instead, meaning a household that composts could use 20% to 30% fewer trash bags. And you get free soil for your garden!
Using just two fewer trash bags per week (the amount you could save by composting alone) could eliminate at least $2 from your monthly budget, if you’re using bargain brands. Buying and using fewer of the disposable items in this article could reduce trash output even further.
Little expenses add up over time and can take a big bite out of your household budget. Adopting just the reusable products in this article can save a family of four a minimum of almost $40 a month, depending on the price of the disposable products you buy. That’s almost $500 a year you may be throwing away, even if you’re buying store brands.
Opportunities for eliminating disposable items from your home and your budget are everywhere. This is just a start. Look around your home (and in your trash cans) to see what else you could replace with a reusable item and stop throwing your hard-earned money away.
Hurricane Lane is a Category 4 churning in the Pacific with an eye toward the Hawaiian islands. If you haven’t made storm preparations, now is the time. The FTC has information to help you prepare for, deal with, and recover from the long-term impacts of a weather emergency. But how about the rest of us ready to help with donations after the hurricane? You should know about how to avoid hurricane relief charity fraud.
Here’s the rundown. After a hurricane hits, people rush to help those in need. If you are making a donation for hurricane relief, remember to give enough thought to where exactly you are sending your money. Because scammers are hoping that generous people like you, in your eagerness to help, won’t do your homework so they can steal that money. The best way to avoid this and other kinds of charity fraud is to go online and do your research to make sure your money goes to a reputable organization.
You can start at ftc.gov/charity – we have articles and resources, including links to six organizations that can help you check out individual charities.
For more information, look below to check out our new charity fraud video and a handy infographic on verifying a hurricane relief charity.
Co-signed a student loan for someone back in 2009-2010 for about 25,000. Forgot all about the loan but got a letter from Transworld yesterday saying I need to pay $47,000 (interest 7.4%) within 30 days to dispute it or will be considered a valid debt. Currently, they are not reporting to credit bureaus. I feel like if I contact them they will start reporting.
If I do contact them would they take a settlement without putting a negative mark on my credit? What is the best way to attack this?
If you did cosign for a student loan you agreed to be 100 percent responsible for the debt. Most people are confused and think when they cosign they are just helping someone they like to get approved for a loan. That’s not what cosigning is for.
It sounds like the person you tried to help has not made payments on the loan in some time. That would explain the large balance due.
Since you are a cosigner the loan has always been possible to report the loan on your credit. That remains a possibility moving forward as well.
Your best bet at this point may be to negotiate a cosigner release. You would have to pay about half the loan to get out of the debt. Only you can determine how much the release is worth to you. Once the release was agreed on, paid, and issued, then you would be totally off the hook for the remaining balance due.
Alternatively, you may want to explore if the debt can be verified at this point. If the lender can’t produce documentation and evidence you are the cosigner you could use that as a defense if you are sued by the lender. But the lack of a verification will not prevent them from trying to collect on the debt.
You can always sit back and wait to see what the collector does but you have no control over this situation if you are only waiting for the next shoe to drop.
The credit report notation is the lesser of the issues here. Getting off the hook as the cosigner is the primary thing that needs to be resolved.
You can either attempt to negotiate yourself, hire someone to represent you, or find an attorney who is licensed in your state to represent you in the inquiries or negotiations with the creditor.