Surviving Tax Season

Tax season is stressful for almost everyone, but if it’s your first time? It can be that much worse. Instead of feeling overwhelmed as you wonder where to start, don’t get intimidated. Doing your taxes can take up a lot of time, but it’s not as hard as you might think.

The three main options for filing a tax return are to fill out IRS Form 1040 or Form 1040-SR by hand and mail it, use tax software to file the form electronically, or hire a person to prepare your taxes. There are a lot of factors that go into whether or not you have to file, but you might want to do it either way. You could qualify for a tax refund, and who doesn’t love getting money back?

No matter who’s doing your taxes, make sure to get all your information ready, like your W-2 and your tax-deductible expenses. Then make sure you’ve got the right federal and state forms to fill out! If you’re filing electronically or with a person you’ve hired, it’ll be easier, but it’s always good to double-check.

If this is your first time doing taxes, or your situation has become more complicated, relax! Just start early so you have plenty of time to make sure you get everything right. If you have the money to hire someone to prepare your taxes for you, that is of course the easiest option, but not necessary.

Whether you’re a student doing your taxes for the first time, you’ve just started a business, or there are other changes in your finances, filing your tax return doesn’t need to be a stressful accomplishment. With a little preparation and research, you can file your own taxes without too much hassle, and not only survive, but thrive!

Worth Its Weight In Gold

By Misty W.

You’ve probably heard a lot about credit and how important it is. But what’s the big deal? There’s so much in your everyday financial situation to keep up with. If you continue to pay the minimum  on your credit card, you should be good, right? Unfortunately, it’s not that simple.

Sooner or later in life, you’ll most likely need to get a loan. Need help with your tuition payments? Time to buy a new car? Ready to get your own home? Time to apply for a loan! When you apply, lenders will look for credit experience, which tells them how responsible and how consistent you are with your payments. The better credit score you have, the more likely it is you’ll receive a better rate. Now, many will focus on their monthly payment being manageable – but the lower rate you have, the less you’ll pay overall!

You build credit worthiness by making consistent payments on bills and loans; the longer the better. Lenders base the limit of what you can borrow on your credit experience.  Maybe you’re the kind of person who likes to pay cash for everything and doesn’t want credit cards or loans, because you don’t want to deal with any debt. While this is understandable, it’s incredibly important that you to have some kind of credit established. It helps lenders to see how much they can trust you to maintain a loan.

To build your credit, don’t overextend yourself with several different credit cards. Many businesses offer a variety of deals to encourage you to sign up for their particular card, we know! But this can cause a “high debt-to-income ratio”, meaning you have too much debt. The ratio is calculated by taking the amount of debt you have versus the income you’re getting.

Remember, it is perfectly okay to have a few credit cards, but try to only use them in emergencies. We understand that life happens and sometimes your credit line is the best option, but try not to use more than half of the available credit. It’s important not to max them out because using the entire allowable balance can have a negative impact on your credit score. Plus, once they are at maximum, it can be more difficult to pay them off; especially as high as some of the credit card rates are. Keep in mind, negative credit can remain in your credit history for 7 years and bankruptcies can remain for 10 years. Why risk that kind of stress?

So when making payments on your credit card or loan, try to pay more than the minimum and stay consistent. If they have a 0% interest rate, you definitely want to take advantage of that. Not having to pay any more than you already spent is the way to go! To pay off your balance during that promotional period, set up your own payment plan for the length of the offer period to make sure it will be paid off by that expiration date. That will save you a lot of money in the long run, a goal we always encourage!

If you have any questions related to your credit, send them to us via social media or the comments down below!

 

What Is A 401k?

If you’re starting your first full-time job in college or right after you graduate, you might begin to hear a lot more about contributing to a 401k. But what does that mean? How does it help you? A 401k can actually help you prepare for your future when your career has just begun.

A 401k is a retirement savings plan. Only an employer can sponsor one for their employees, and not all employers offer one. It allows you to choose how much money you want taken from each paycheck – before taxes are taken out – and deposited into the plan. So, any contribution you make will have great tax benefits.

Even putting just 1 or 2% of your paycheck into a 401k can make a big difference in the long run. But remember, it’s a plan for retirement, not savings. The money you invest in a 401k won’t be easy to withdraw, so don’t plan on accessing it for an emergency. The rules for taking money out are complex and there can be costly penalties.

Sometimes, employers will also contribute a certain amount into your 401k. They might go so far as to match the amount you’re depositing from your own paycheck. Whether or not they do, you should contribute as much as you can afford to. It will be invested into different areas of the financial market, and the sooner you start investing, the more time it has to grow. You want to be able to pay all your bills after you retire!

So get that 401k started today. Got any more questions about this retirement savings plan? Leave a comment here or on our social media!

Got Money Back After Doing Taxes?

You’ve hopefully filed your taxes by now. Maybe you had to pay more, but maybe you’re getting a refund! If so, do you know what you’re going to do with it? While it might be fun to spend it all on a treat, how about putting some of it toward something more beneficial in the long run?

If you owe any money on loans or credit card debt, you could start by making an extra payment or two. It’s best to put your money toward the highest-interest debt first. This might also positively impact your credit score!

You can donate to charity – it’s not always easy to find the extra money during the rest of the year, but now you’ll have some. Not only will it make you feel good to pick your favorite cause to support, but you can claim it as a tax deduction next year.

Another good use for some of your money would be adding to your emergency fund – or starting one, if you haven’t already. It doesn’t hurt to have some backup money for those unexpected events like your fridge breaking down or losing your job. With anywhere from three to eight months’ worth of savings being suggested, that can take a while to build up if you’re just taking a little out of each paycheck. The tax refund could help boost your emergency fund a bit more quickly.

Of course, it doesn’t hurt to spend some of your refund on something you’ve wanted for a while. From a nice dinner for yourself or your loved ones, to a more substantial vacation, just try not to get carried away. You could even use it to improve on your own well-being: maybe buy a new mattress if you haven’t been sleeping comfortably, or get a gym membership for a year if you have a goal of getting healthier.

Whatever you choose, if you’re lucky enough to get a tax refund, put it to good use! Check out these articles for more ideas. Let us know what you plan to do in the comments below or on social media!

Managing Your Money in College

We know college is a huge expense, especially if you don’t get a lot of scholarships or grants. The average yearly tuition can be anywhere from around $10,000 to $25,000, and that’s just for a public four-year college. Getting financial aid can be a huge help and students should focus their efforts there. However, they shouldn’t forget they will still need to manage their money well in order to not go into more debt than necessary!

However you get your funds, from scholarships to loans to a job, make sure to live within your means. Don’t spend the money just because you have extra from your loan that didn’t all get used up on tuition and books and rent. Everyone needs to enjoy themselves a little bit, but don’t go wild. Save now so that you don’t have to keep living like a student after you graduate.

If you find yourself running out of money, go to your college’s financial aid office. They can often help you find more sources of funding. Just remember, taking out loans should be a last resort! You don’t want to add more to your debt than you already have, if you can help it. Similarly, be careful with your credit cards. A lot of them can have high interest rates, and it’s so easy to spend money that you might spend too much too quickly without even realizing!

Use a money management tool like Microsoft Money or Mint.com to record your spending. You can keep track of how much you spend on needs versus wants. Everyone has had to figure out how to balance the two at some point in their life! The sooner you start, the sooner you can take control of your spending habits! Budgeting will help a lot, and you can try other helpful things too, like the envelope system. Every month, you keep just enough cash in envelopes for things like food and gas, and only spend what’s in the envelope for those categories. A system like this can keep you from overspending.

Start working on good money habits now so that it will be easier for you as time goes on. You’ll feel much more prepared for life after school if you already have a head start on knowing how to manage your finances! Making payments on debts like student loans can help your credit score, but not if you’re behind. There are plenty of apps to help you budget and stay on track. For another step in the right direction, check out our Journey Accounts for young adults. If you have any questions, leave us a comment or come talk to us in person at any of our branches!