“Don’t even try it” tax deductions

Benjamin Franklin said “in this world nothing is certain but death and taxes.” We are required to pay taxes to support individuals and government programs locally and nationally. While frustrating at times, Christians are commanded by God’s word to pay taxes.

“Because of this you also pay taxes, for rulers are servants of God, devoting themselves to this very thing. Render to all what is due to them; tax to whom tax is due; custom to whom custom; fear to whom fear; honor to whom honor.”(Romans 13:6-7)

To lighten our load there are various tax deductions that can help you reduce the amount of taxes you have to pay. A tax deduction is an expense you pay with variable amounts that you can subtract, or deduct, from your gross income, which allows you to pay less in taxes. However, it is wise to consult a professional Certified Public Accountant (CPA) to be certain about which deductions you can use. Many people get wrong or misleading advice and it ends up doing more harm than good once their taxes are filed.

I came across an article on MSN Money titled “10 don’t even try it tax deductions.” This article and professional assistance can guide you in the correct steps to take to ensure you don’t end up in trouble with the IRS.

Making Home Affordable program

While we don’t want to overreact and make statements like “everyone is losing their homes,” we also want to face the reality that some people really are stuggling to make their mortgage payments. The reasons vary and can be contributed to job loss, unexpected sickness, salary cutbacks, they could have bought more house than they could comfortably afford or they signed up for a subprime mortgage. There are many different reasons and they should be acknowledged but more importantly, where do we go from here.

The Obama Administration has introduced two programs to help people struggling to make their mortgage payments. They have a “loan refinance” and “loan modification” program. I will be talking about the Loan Modification program.

Making Home Affordable Loan Modification

This program is available to those who can no longer afford their monthly mortgage payments because their interest rate increased or they have less pay. Qualifying for a loan modification will make your mortgage payment more affordable. You can visit this website for more detailed information, to see if you qualify and what steps to take. You or someone you know may need to take advantage of this program. Below are a few of the frequently asked questions.

Can Making Home Affordable help me if my loan is not owned or securitized by Fannie Mae or Freddie Mac?
Yes. Making Home Affordable offers help to borrowers who are struggling to keep their loans current or who are already behind on their mortgage payments. By providing mortgage servicers with financial incentives to modify existing first mortgages, the Treasury hopes to help as many as 3 to 4 million homeowners avoid foreclosure regardless of who owns or services the mortgage.

Do I need to be behind on my mortgage payments to be eligible for a Home Affordable Modification?
No. Responsible borrowers who are struggling to remain current on their mortgage payments are eligible if they are at risk of imminent default, for example, because their mortgage payment has recently increased to a level that is not affordable. If you have had or anticipate a significant increase in your mortgage payment or you have had a significant reduction in income or have experienced some other hardship that makes you unable to pay your mortgage, contact your servicer. You will be required to document your income and expenses and provide evidence of the hardship or change in your circumstances.

How do I know if my servicer is participating? Are all servicers required to participate?
Servicer participation in the program is voluntary. However, the government is offering substantial incentives to servicers and investors, and it is expected that most major servicers will participate. Participating servicers will sign a contract with Treasury’s financial agent, through which they agree to review every potentially eligible borrower who calls or writes asking to be considered for the program.

You can visit www.makinghomeaffordable.gov for more FAQs and to read information on how to avoid being scammed. These are tough times for many people but resources are available that may be the help that is needed.

Justifying our financial decisions

You’ve heard it before, “I’m buying this car because I need a new car” or “I had to get that sofa because mine was worn out.” You may have even been the one who said it. It’s no secret and even though we are slow to admit to it but we justify many things to make ourselves feel better about doing them. It’s no different when it comes to our money. We will spend much more money than we have and conjure up a reason to justify it.

Why do we justify it

Why else? Because it lessens the guilt and removes the responsibility of discipline. I have done it before. At one point one of my cars had been stolen and totaled beyond repair, so when the insurance company sent me the check I started telling myself I deserve a better car than I had. I wasn’t making much money and once I paid rent and other expenses I wasn’t left with much. However, I signed up for a newer car with a huge payment that I could not afford and justified it with the fact that my car had been stolen so I deserved something better.

When we justify something our purpose is to prove that the action or the future action is reasonable. We disregard the logic, we don’t count the cost, we don’t sit down and weight the calculated risk concerning the purchase. We simply justify doing it. It doesn’t mean that the reasoning is not valid but there are always other options that could be considered.

If you are digging yourself out of debt or trying to build savings you may not be able to buy your newborn or toddler six different pairs of shoes because you want them to have the best. The reasoning is valid. Clothing and shoes are a need but even our needs must be purchased and planned out wisely.

Decisions

We are surrounded by financial decisions every day. We are presented with a choice and we make the decision. How do we increase the chances of making the right decision? We think it through. We ask ourselves will this positively or negatively affect me in the long run? Will I reap good or will I reap bad from this? It’s when we simply say well little Johnny does need a winter coat and we just buy one is when we move into the area of overspending, living above our means and take the walk into financial ruin.

We can’t make bad financial decisions then give a “good reason” to justify that decision. Financial maturity tells us to plan out purchases through a budget by making it work on paper before ever attempting to making it work off paper.

Think it through

Proverbs 14:15 says “a wise man gives thoughts to his steps.” We have to consider the long term costs for our financial decisions. Justifying something may seem like a good idea in the present moment but it could cost you much more if you don’t give it careful consideration.

Inaccurate bills can cost you

In a world of online bill pay and automatic payment withdrawals we can forget that sometimes computers and humans make mistakes. There is a chance that your bill could have inaccurate information on it causing it to be higher than it should be. I came across this short article written by Trisha Wagner with useful information.

A few highlights of the article are:

• In an economy where every dollar counts it is imperative that you get in the habit of checking each account statement carefully…
• You should check all of your bills regularly and pay close attention to charges that seem unfamiliar or out of place.
• To prevent billing errors in the future make it a point to make sure you understand any new services you may sign up for.

My social security statement is not a bill but it stated that I only made $8,400 in 2008. Obviously, this is wrong so I have to call to have this corrected. We should always take a few minutes to review documents like bills and statements in case there is a human or computer error.

If something seems odd or looks out of place, pick up the phone and make the call. No one wants to throw money away. Proverbs 4:1 says “…and give attention to know understanding.” Not paying attention could end up costing you.

Common mistakes of a home purchase

Believe it or not, this is one of the best times to buy a home. Many people are looking to get out of their homes for various reasons and they are selling them for much less than they are worth. Bad deal for the seller but good news for the buyer!

What makes you ready to buy a home? Shouldn’t we learn from our current economic situation that it would be wise to be completely prepared before we make a purchase? Financial guru Dave Ramsey says you should be completely debt free and have three to six months of living expenses set aside for emergencies. Reflecting on today’s economy that’s a wise plan because we never know what type of storm could come and it’s good to be prepared.

An article on SmartMoney lays out 10 Mistakes that First-Time Home Buyers Make. Obviously, we should be prepared first before we start preparing for a purchase. An outline of the ten mistakes are:

1. Not knowing how much house you can afford.
2. Assuming foreclosures are great deals.
3. Letting your true feelings show.
4. Failing to find a good buyer’s agent.
5. Underestimating the costs of owning a home.
6. Failing to budget for property taxes.
7. Assuming your first offer will get accepted.
8. Skipping the inspection.
9. Doing too much too fast
10. Failing to include a contingency clause in the contract.

We should never build or purchase a house before we can afford it. If the plan is “we can make it work,” it’s probably not wise to move forward. Proverbs 24:27 says “Do your planning and prepare your fields before building your house.” These words of wisdom are telling us to make sure things are in order such as an outlined budget of being able to comfortably afford a house, an emergency cushion in case “life happens” one year after the move in and considering the taxes, insurance and repairs. Plan, Prepare, Purchase!