Business & Finance 2011

January 23, 2011

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BUSINESS & FINANCE

2F Sunday, January 23, 2011

The Daily Nonpareil

New law packed with obscure business tax cuts WASHINGTON – The massive new tax bill signed into law by President Barack Obama is filled with all kinds of holiday stocking stuffers for businesses: tax breaks for producing TV shows, grants for putting up windmills, rum subsidies for Puerto Rico and the Virgin Islands.

There is even a tax break for people who buy race horses.

Millions of homeowners, however, might feel like they got a lump of coal. Homeowners who don’t itemize their deductions will lose a tax break for paying local property taxes.

The business tax breaks are part of sweeping $858 billion measure signed by Obama that extends Bush era tax cuts for families at every income level through 2012. It also provides a new payroll tax cut for wage earners and extends jobless benefits to the long-term unemployed.

Most of the business tax breaks – about 50 in all – are part of a package that expires each year, creating uncertainty for tax planners but lots of business for lobbyists. Many of these tax breaks have been around for years but expired at the end of 2009 because lawmakers couldn’t agree how to pay for them.

The new law extends most of them through 2011, some through 2012. They will be paid for with borrowed money.

Nearly 1,300 businesses and trade groups formed a coalition urging Congress to extend the business tax breaks. Others lobbied for specific provisions, including a generous tax credit for research and development and subsidies to produce alternative energy.

There is a generous tax break for banks and insurance companies that invest overseas, a tax credit for railroad track maintenance, more generous write-offs for upgrading motorsport race tracks, and increased deductions for businesses that donate books and computers to public schools and libraries.

Many of the tax breaks are designed to encourage economic activity. But passing them each year at the last minute, or skipping a year and passing them retroactively,

AP

In this Dec. 17, 2010 file photo, President Barack Obama signs the bipartisan tax package that extends tax cuts for families at all income levels, during a signing ceremony at the Eisenhower Executive Office Building on the White House complex in Washington. The massive new tax law signed by Obama is filled with all kinds of tax breaks for businesses: Tax breaks for producing TV shows, grants for putting up windmills, and rum subsidies for Puerto Rico and the Virgin Islands. isn’t terribly efficient, said Clint Stretch, a tax expert at Deloitte Tax LLP. “It gives it a lot of dignity to call it a ‘system,’” Stretch said.

Every year, taxpayers risk losing their favorite tax breaks, if they are not renewed. That’s what happened to millions of homeowners. For 2008 and 2009, homeowners who didn’t itemize their deductions were able to get an extra deduction – on top of the standard deduction – for paying local property taxes.

Individuals could reduce their taxable income by as much as $500, couples could cut theirs by $1,000.

The provision, which has saved homeowners about $1.6 billion a year, expired for 2010 and was left out of the new tax law.

“A lot of Americans don’t make so much money that they

itemize their tax returns. But those same Americans own property,” said Sen. Max Baucus, D-Mont., who sponsored the original tax break. “It seems to me that they, too, should have the ability to deduct it. It’s a matter of equity.”

Taxpayers who itemize will continue to be able to deduct local property taxes. About two-thirds of tax filers don’t itemize.

Among the provisions in the new law: ■ A tax break that allows profitable companies to write off large capital expenditures immediately – rather than over time – giving some companies huge tax shelters.

The tax break, known as bonus depreciation, benefits automakers, utilities, heavy equipment makers like Caterpillar Inc. and John Deere, air

freight companies like Fedex Corp., and wireless companies like Verizon and AT&T, said Anne Mathias, director of research for the Washington Research Group, which pro-

vides research to institutional and corporate investors. It will save companies nearly $21 billion over the next decade.

“It helps companies that use expensive capital equipment, that spend a lot of money,” Mathias said. “It also helps places where the economy is growing, like wireless infrastructure, because there is a pretty big wireless build out right now.”

The tax break is also available to people who buy race horses and farmers who buy cattle for breeding or dairy, according to a depreciation list produced by the Internal Revenue Service.

■ An exemption that allows banks, insurance companies and other financial firms to shield foreign profits from being taxed by the U.S. through 2011. Cost: $9.2 billion.

The tax break is important to major multinational banks and financial firms, such as Citigroup, Bank of America, Goldman Sachs and Morgan Stanley, and to the financing operations of other international companies, Mathias said.

■ A tax credit for research and development, benefiting a wide range of industries, including pharmaceutical and high tech companies. The law extends the tax credit through 2011, at a cost of $13.3 billion.

“The House and the Senate are in the holiday spirit and giving US companies a present of $13 billion in potential R&D Tax Credits!” says a press release by Braithwaite Global Inc., a firm that advises compa-

nies on applying for research tax credits.

■ Increased tax rebates to Puerto Rico and the Virgin Islands from a tax on rum imported into the United States. The U.S. imposes a $13.50 per proof-gallon tax on imported rum, and sends most of the proceeds to the two U.S. territories.

Previously, the rebate was $10.50 a gallon. The new law extends a more generous rebate of $13.25 a gallon through 2011.

Cost: $262 million.

■ Extends a grant program for the production of wind, solar and other renewable energy through 2011. Cost: $3 billion.

“This is a great holiday present for the 85,000 American workers in the wind energy industry, tens of thousands of whom will now be able to get back to work in a sector that has been a bright spot in the recession so far,” Denise Bode, CEO of the American Wind Energy Association, said in a statement.

■ Extends a 50 percent tax credit for expenses related to railroad track maintenance through 2011. Cost $331 million.

■ Enhanced deductions for companies that donate food to the needy, books to public schools or computers to public libraries, through 2011. Cost: $537 million.

■ A tax break that allows TV and movie productions to more quickly write off expenses, extended through 2011. Sexually explicit productions are ineligible. Cost: $101 million.

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BUSINESS & FINANCE

The Daily Nonpareil

Sunday, January 23, 2011 3F

Don’t delay filing taxes this year Slew of code changes could complicate tax preparation CHAD NATION News Editor cnation@nonpareilonline.com (712) 325-5738

A slew of changes in the tax code could complicate tax preparations this year; but don’t fret, the government has given taxpayers three extra days to file.

The IRS said that taxpayers will have until April 18 to file their income tax returns.

Emancipation Day, a holiday observed in the District of Columbia, falls on Friday, April 15, which normally is Tax Day. By law, the IRS said, District of Columbia holidays affect tax deadlines in the same way that federal holidays do. That gives all taxpayers three extra days to file.

While there are three extra days for those running late, some early filers, especially those who itemize deductions, will have to wait a couple of weeks to submit information.

But Francis Clark, a certified public accountant at Dickinson & Clark CPAs, said he would still recommend people come in early with their tax information.

Tax changes that Congress approved in December required the IRS to reprogram its tax processing systems, said Christopher Miller, an IRS spokesman. It could take until mid- to late February to get that done, he said.

Taxpayers will need to wait to file if they fall in any of these three categories: ■ They are taxpayers who claim itemized deductions on Form 1040 Schedule A. Such deductions include mortgage interest; charitable deduc-

tions; medical and dental expenses; and state and local taxes.

■ They claim the Higher Education Tuition and Fees Deduction. That’s the deduction for parents and students covering up to $4,000 of tuition and fees.

■ They claim the Educator Expense Deduction. That’s a deduction for K-12 educators with out-of-pocket classroom expenses of up to $250.

Delays will be minimal for taxpayers who already itemize deductions, the IRS said, because those taxpayers normally have to wait to receive certain financial documents anyway.

Clark said it is estimated that 50 million taxpayers itemized tax returns out of 140 million that filed returns last year.

Of those 50 million, only 9 million filed during January and February.

“So, it might affect 9 million taxpayers,” he said.

Clark said other tax law changes could affect Iowans as well.

He said accountants and tax preparers have been advised by the Iowa Department of Revenue to assume Iowa will not conform to all federal tax law changes.

Some of the provisions that were not adopted are: ■ Tuition and fees deduction for higher education.

■ Deduction for educator expenses.

■ Election to deduct state sales/use tax as an itemized deduction in lieu of state income tax.

■ Tax-free treatment of IRA distributions donated to charity.

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Francis Clark, a certified public accountant at Dickinson & Clark CPAs, says with all the changes, new deadlines and potential delays, individuals should consult their tax preparers sooner rather than later. butions to charity up $100,000 do not have to be reported on a federal tax return as income, however, Iowa does not allow it.

“These changes can complicate things on an Iowa return,” he said.

Clark said there are also big changes in the law in the area of asset depreciation.

A business, including farmers, can expense $500,000 of eligible equipment purchased and placed in service in 2010, on a federal return. Clark said in Iowa, the business is only allowed up to $134,000.

“That’s a big difference,” he said. “Federal returns may also

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be eligible for a 50 to 100 percent bonus depreciation on qualifying property, while Iowa doesn’t allow any bonus depreciation.”

With all the changes, new deadlines and potential delays, Clark still said individuals should consult their tax preparers sooner rather than later.

“The IRS is advising taxpayers to go ahead and get their tax information together and begin doing individuals returns,” he said, “whether you do your taxes yourself or by a preparer, so they are ready to e-file once the IRS is ready.”

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BUSINESS & FINANCE

4F Sunday, January 23, 2011

The Daily Nonpareil

Time to start gathering tax data Tax season is right around the corner, which can be good news or bad news depending on the individual.

For those accustomed to getting a tax refund, that annual financial windfall is welcomed with open arms. On the other hand, those used to a tax bill every April are far less enthusiastic when tax time rolls around.

With tax season on the horizon once again, it’s time to start preparing to file a return. The following guide can help individuals get their tax materials in order, whether they’re filing themselves or enlisting the help of a tax professional.

Personal items To file a tax return, individuals will need their own social security number, as well as that of anyone else they might be helping or listing on their own return. This includes a spouse and any dependents. If preparing someone else’s tax return, be sure to inform them this information will be needed to avoid any unnecessary delays.

For those men and women who will be enlisting a professional to prepare their return, bring all of this information to the meeting. Tax season is especially busy for accountants and tax prep professionals, so it might be difficult to secure another appointment should you forget to bring all of the necessary information.

Income documents It’s easy to get confused when attempting to file a tax return. For men and women who visit the local library for their filing information, that table full of documents can be intimidating. What’s more, the Internal Revenue Service Web site can be difficult to navigate for those who have not visited it in the past.

No document is more necessary than a W-2, which employers must provide by the end of January. Men and women will get one from each of their employers, so those who work multiple jobs, even part-time jobs, will need a W-2 for each job they’ve worked in the past 12 months.

Additional documents that can be necessary might pertain to investment income, business

Building your wealth the smart, safe way Accountant offers tips on how to create a safety net TIM ROHWER Staff Writer timothy.rohwer@nonpareilonline.com (712) 325-5752

MCC

Avoid the stress of tax time by preparing documents well in advance of April. or farming income, alimony received, and forms for state and local income tax refunds.

A good rule of thumb to avoid getting lost in the documents is to start as early as possible the more extensive or complicated the employment and income history may be.

For example, men and women with one job and no outside income should be able to file quickly and easily. The more extensive a person’s investment portfolio or the more jobs a person has, the more difficult it will likely be to file the return. So start early if

things are complicated.

Credits The government gives men and women all sorts of credits that reduce the amount of the income taxed. These include homebuyer credits, IRA contributions, green energy credits or student loan interest.

■ Homebuyer credits: A properly executed settlement statement must be attached to a return, and men and women should keep in mind the IRS now has greater authority to deny homebuyer credits.

■ IRA contributions: A yearend account summary or bank

statement is often all that’s needed.

■ Green energy credits.

Among the items potentially eligible for residential energy credits are insulation, energy efficient exterior windows, energy efficient HVAC appliances, and solar hot water heaters. Of course, receipts will be necessary for those attempting to earn a credit for any of these items.

■ Student loan interest: A year-end loan statement should be received sometime in January.

– Metro Creative Connection

Did you know: Interesting financial facts The general public often gets conflicting information about the state of the economy.

Some news reports say that people are doing well, while others say the collective public is barely scraping by.

Though it might seem impossible to get a straight answer on the economy, there are certain trends that may be indicative of how the country is faring in these trying times.

The following are some financial statistics that may reveal how healthy or unhealthy the economy is: ■ Six in 10 homeowners wish they understood the terms and details of their mortgage better. (Freddie Mac/Roper poll

FAST FACT Fifty-two percent of employees live paycheck to paycheck.

– MetLife Study of Employee Benefit Trends: Findings from the 2003 National Survey of Employers and Employees, November 2003.

of 2,031 U.S. homeowners, conducted 2005.)

■ Forty-three percent of American households spend more than they earn each year.

(Homeownership Preservation

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Foundation data of 60,000 homeowners.)

■ Fifty-two percent of employees live paycheck to paycheck. (MetLife Study of Employee Benefit Trends: Findings from the 2003 National Survey of Employers and Employees, November 2003.)

■ Forty-six percent of American households have less than $5,000 in liquid assets, including IRAs. Most cannot support daily living for three months with these assets. (Asena Caner and Edward N. Wolff, “Asset Poverty in the United States: Its Persistence in an Expansionary Economy,” Levy Economics Institute of Bard

College, 2004.)

■ More than 6 in 10 homeowners delinquent in their mortgage payments are not aware of services that mortgage lenders can offer to individuals having trouble with their mortgage. (Freddie Mac/Roper poll of 2,031 U.S. homeowners, conducted 2005.)

■ One foreclosure can result in as much as an additional $220,000 in reduced property value and home equity for nearby homes. (William C. Apgar and Mark Duda, “Collateral Damage: The Municipal Impact of Today’s Mortgage Foreclosure Boom,” May 11, 2005, p. 4.)

There are ways to reduce debt and create a financial safety net for the future, and you can do it at the same time, according to a local insurance agent.

John Butterbaugh is among many who believe in the financial steps preached

by Dave Ramsey, an American financial author, radio host, television personality and motivational speaker.

“We believe a lot of what he says,” Butterbaugh said.

Ramsey, according to Butterbaugh, suggests several steps to a healthier financial life, beginning with the creation of an emergency fund of, for example, $1,000. This way, there’ll be money available for special needs like a new furnace without adding more onto credit cards, Butterbaugh said.

The next step is to pay off credit card balances, emphasizing those with the least amount to pay off, he said.

Obviously, people need to continue to pay on all the cards on a monthly basis.

Ramsey, according to Butterbaugh, suggests paying the minimum amount on those larger bills and paying $100 or $150 extra on the smaller

ones until they’re paid off.

Then, the process starts again on the next lowest amount.

The key here, Butterbaugh said, is the mental satisfaction of knowing that one particular debt has been paid off and the growing motivation to continue the process.

When people are faced with so much debt, there can be that immediate feeling of being overwhelmed, he said.

“Most people don’t know where to start,” Butterbaugh said. “Most ask, ‘What do I do?’”

After the credit card debt is paid off, the next step is to create a savings account with enough money to last six months. The purpose of this is to provide a temporary safety net should people lose their jobs.

“Then, you invest in retirement,” Butterbaugh said.

After that, put money away for college for the children if that is a goal.

Butterbaugh Insurance and Investment Services offers auto and home insurance, business insurance, plus health and life insurance.

Many people may not be aware, but credit scores can influence premium costs, Butterbaugh said.

“All insurance companies use credit scoring for premiums. The worse the credit score you have, the more apt you are to have claims. We tell everybody who wants a quote that credit scoring is a part of it.”

Butterbaugh also recommended that people check their credit score at least once a year to ensure accuracy, especially with the threat of

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BUSINESS & FINANCE

The Daily Nonpareil

Sunday, January 23, 2011

5F

Salvaging your retirement plan DENNIS FRIEND

A good strategy to find out where the money goes and whether or not spending can be cut is to track spending for a month. There may be unnecessary expenses and optional spending that can be cut, and the money could instead be placed in the cash emergency fund.

For instance, “instead of going out to eat two or three times a week, go out once a week,” Worth suggested. A large tax refund could also go into the cash emergency fund.

Some experts suggest keeping two-thirds or more of your money in stocks and reducing the percentage to 60 percent and later to as little as 40 percent in stocks as you move toward and into retirement.

Staff Writer dennis.friend@nonpareilonline.com (712) 325-5746

The recession has hit hard for older workers who spent years trying to build a retirement portfolio. Many who assumed they were looking at a comfortable retirement now find they have to rebuild their retirement security.

“There’s a certain element out there who lost 40 to 50 percent of the value of their retirement portfolios. The bigger percentage lost 25 percent,” Mark Worth said. Worth is a registered representative with ING Financial Partners in Atlantic and has offered financial advice for nearly 30 years.

While many economists believe the worst of the recession may be over, Worth said that thought will be of little comfort for those nearing retirement who now are looking at a big hole in their retirement assets.

“It’s a little tougher to make up (the losses) for those over 50,” he said. “A lot of workers who were planning to retire say they might work another two or three years to try to make that up.”

For those near retirement age, the best way to safely rebuild might be to consider a bond fund or fixed-interest fund as a more secure investment. However, he said he does not recommend selling off investments or going to certificates of deposits because “that’s not what you’re looking for.”

Instead, “variable or fixed annuities might be a good way to offset losses, but you wouldn’t want to go with companies showing bonuses of more than 5 percent, because they might lock you into a 14- or 15-year surrender period. Seven years is generally what I look at,”

“What I’ve been talking to people about is fixed-index annuities that will participate in growth when the Dow Jones has a good year,” but there’s no penalty if the Dow goes down, Worth said.

He also recommended continuing to make monthly contributions into 401(k) and IRA accounts.

“Think about increasing your contributions when stocks are down, and if your company matches the contribution, do that. It’s just free money, and way too many people are not getting that match.”

For information, call Worth at Brocker, Karns and Karns in Council Bluffs at (712) 3221228 or call the Atlantic office at (712) 243-4984.

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YOU CAN GIVE YOURSELF AT RETIREMENT. Worth said.

Those who are older than 50 and looking at retirement also need to have a cash reserve.

“Some people say you should have at least a year of your income in a cash reserve,” he said. “Realistically, six to 12 months should be set aside in a

savings account or in CDs. A money market or savings account would probably be the best,” to protect in case of layoffs, illness or other events.

Worth said he knows that a lot of people cut back on savings to build up their retirement fund.

“They’re not putting as much into savings,” he said.

One strategy for rebuilding a cash cushion is to cut spending, but “that’s easier said than done,” Worth said, adding “If they haven’t done it by age 50, they won’t do it by the time they’re 60.”

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BUSINESS & FINANCE

6F Sunday, January 23, 2011

The Daily Nonpareil

It’s your money: Donate wisely Questions to ask before donating

Make the most of your vehicle donation When a vehicle has lost its luster to its owners, generous drivers often seek to donate the car to charity. While such donations are valuable to charities and can even help donors when it comes time to file their tax returns, there are tricks of the trade that can benefit donors and charities alike. ■Don’t go through an intermediary. Intermediaries are often for-profit organizations that keep a substantial portion of the dollars the donation creates, sometimes as much as 90 percent. Whenever possible, find a charity that handles the transaction itself. Those charities will keep 100 percent of the profits. If an intermediary is necessary, research the percentage of the auto proceeds that will go to the charity itself.

Some intermediaries have been investigated in the past, so find a charity that works with intermediaries that don’t take advantage of the charity. ■Drive the car yourself. If the car runs, drive the car to the charity yourself. This saves the charity from having to hire a towing service to pick up the vehicle. ■Make sure the intended organization is a 501 (c) (3).

501 (c) (3) organizations are recognized by the government as public charities, meaning

Did you know: Charitable statistics Charitable giving can make an individual feel good and provide many other benefits. Here are some philanthropic items to ponder: ■Americans are the most generous charitable donors in the world. It would take 14 Italians, three French and seven Germans to equal the donating power of one American. ■There are close to 975,000 public charities in the United States. ■Research has indicated that when calculated as a percentage of income, those who make the least tend to give the most. ■Individuals with a conservative political perspective are more likely to donate to charity than liberals. ■The most common reason upper-bracket earners cite for not giving to charity is, “I can’t afford it.� –Sources: Charity Navigator, National Center for Charitable Statistics and The Center on Philanthropy

any donations to such organizations are tax-deductible.

Donations to nonprofits designated as 501 (c) (4) organizations are not tax deductible. ■Correctly transfer the vehicle’s title to the charity.

When donating a vehicle to charity, the auto must be formally signed over to the designated organization. If it’s not, donors will be liable for parking tickets or open to arrest if the vehicle is used in a crime.

Oftentimes, donated vehicles are not used by the charity, but sold to earn the charity money.

Should the title not be transferred to the charity and then sold without the car being transferred to a new owner, the donor remains the owner in the eyes of the law. * Be honest when valuing the vehicle. Unfortunately, in the past many people took advantage of legal loopholes when valuing donated vehicles. As a result, the IRS increased their audits of donated vehicles and pushed for legal changes that have now come about to eliminate fraud. Now, a deduction will be determined once the car is sold and the charity sends donors a receipt indicating the exact amount the car earned at auction.

While the economy has yet to fully recover from the recent recession, charitable donations have arguably never been more necessary.

As the Salvation Army noted in late 2009, charitable donations were on the decline while the need for charitable services was going up.For those who can afford to make a donation this holiday season, it’s important to ensure that donation is going to the right place. Charity Navigator, the nation’s largest evaluator of charities, encourages potential donors to ask charities questions about their programs as well as their mission and goals before deciding to donate.

The following questions should be asked of any charity before agreeing to support them.

What are the charity’s long-term and short-term goals?

A charitable organizations should have quantifiable goals by which it can measure its successes and failures. A good organization will jump at the chance to detail its short-term and long-term goals to prospective donors.

What progress has the charity made toward its goals?

Nearly every charity has

MCC

Before making a donation to charity, potential donors should discuss the charity’s track record and future goals with the charity to ensure their donation is put to good use. good intentions. While some might prove the rare bad seed, most do positive work.

However, good intentions are not enough to warrant a donation. Ask a charity what progress it has made and is making toward its goals. A charity worthy of a donor’s support won’t merely be well-intentioned. A charity worth of a donation should have a track record of success and be capable of making a difference going for-

ward as well.

Are the charity’s programs up to your standards?

This is a question potential donors must ask themselves. Just because a charity has a mission prospective donors believe in doesn’t necessarily mean donors will agree with how charities go about achieving that mission. If donors support the ends but don’t support, or understand, the means, the decision to donate or not donate won’t be easy. Learn as much as possible about the charity’s programs before making a decision.

Does the charity inspire trust?

Donors should not support a charity they are not confident in. Regardless of how

We’ve all heard the saying about nothing being certain but death and taxes. As the calendar year comes to a close, many people might be thinking about how to reduce their taxable income from 2010. Charitable giving is one way to pay less in taxes.

In many cases, taxdeductible charitable giving can save a person money in the long run. The added bonus is that it can feel good to give as well. Making charitable donations can save a person thousands in tax dollars, provided the correct steps are taken.

1. Ensure the charity is a tax-exempt organization eligible to receive taxdeductible donations.

2. Be sure to keep all receipts for charitable giving

throughout the year. Generally donations less than $250 can be recorded with a cancelled check. Other donations will need a written acknowledgment from the charity.

3. Itemize donations when filing tax returns. If non-cash donations were given (such as clothing or automobiles) be sure to complete the applicable tax form.

4. Figure out the fair market value of items being donated that aren’t cash.

This will help determine the value of the charitable deduction when it’s time to file a tax return.

5. Address any questions concerning charitable donations to a knowledgeable tax preparer or accountant.

– Metro Creative Connection

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much faith potential donors have in a given cause, if the charity isn’t trustworthy, donors are not likely to feel good about their donations or become repeat donors. If a charity seems worthy of a donation but donors remain on the fence, consult Charity Navigator or other evaluators to put any fears to rest.

Are you willing to make a long-term commitment?

When considering a charity, donors should look at it as a long-term commitment.

Potential donors should look for an organization they can support for years to come.

To learn more about finding the right charity, visit Charity Navigator at www.charitynavigator.org.

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– Metro Creative Connection

– Metro Creative Connection

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BUSINESS & FINANCE

The Daily Nonpareil

Sunday, January 23, 2011

7F

Restore your credit after filing for bankruptcy

MCC

When times are tough, downsizing financially could be the key to staying afloat.

Adjusting financial strategies and reassessing values can help individuals make it through the economic rough patches.

Making financial cutbacks For the thousands of people who have succumbed to economic woes, adjusting financial strategies has become a necessity. Downsizing financially could be the key to staying afloat or a temporary measure that helps individuals make it through the economic rough patches.

Although many people are programmed with the mentality of acquiring many material things and having the biggest home on the street, when money is tight, it could be time to reassess values and make some cuts wherever possible.

■ Consider renting. It could be a better financial decision to sell a home – even if it won’t yield what it could a few years back – than hold on to a home you can’t afford.

Homes are expensive, with some of the biggest expenses going toward maintenance and upkeep. In a rental situation, a landlord is responsible for maintaining the property, saving the renter money. A smaller residence also means less spent on heating, utilities and furnishings.

■ Cut out luxuries. It is not uncommon for a modern household to have several

mobile phones, multiple televisions with cable hook-ups, DVR capabilities, and three or more cars parked in the driveway.

When financial times are tough, it’s time to start weeding through the items that are nice to have but not wholly necessary. Consider canceling cable, or at least reduce the mega-package to one that’s more economical. Some extracurricular activities, such as gymnastics or karate lessons, may have to be temporarily curbed as well.

■ Sell what’s not used.

Homeowners can take the time to go through their belongings and make piles of items that are seldom used but in good working order.

These can be sold in yard sales or even via online auction sites.

■ Stop dining out. It’s possible to cook and enjoy food for a fraction of the cost of dining out. One of the easiest ways to save money is to curb spending on breakfasts, lunches and dinners away from home.

Also, those $3 cups of gourmet coffee can quickly add up.

Stick to pots of Joe brewed at home.

■ Look for low-cost enter-

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tainment. Look for free events and other low-cost ways to have a good time. Borrow movies from friends or family members and have a movie night at home with microwave popcorn. Many cities and towns host free entertainment, such as cultural events and tours. A trip to the local park can be free and fun.

■ Shop off-brands. Many times brand name foods and clothing are more expensive simply because of the advertising spent to promote them.

Store brands or off-brands could be of equal quality and much more affordable.

■ Downsize the car. Now may be the time to trade in a leased vehicle or sell a financed car for a used one that is more affordable. Previously owned cars are often under warrantee and can make more financial sense than a brand new auto with a high sticker price.

There are a number of ways to make some financial cutbacks to improve household budgets. These actions can be temporary until finances improve, or a good way to have improved longterm saving habits.

– Metro Creative Connectio

According to research by the Federal Reserve, household debt relative to disposable income is at a record high in the United States. Should that continue, many financial analysts fear more and more households could declare bankruptcy.

Those analysts’ fears might be more than worrisome, as the American Bankruptcy Institute notes that bankruptcy filings are on the rise. The decision to declare for bankruptcy is never easy, and restoring credit after filing for bankruptcy won’t be easy, either. But restoring credit after filing for bankruptcy doesn’t have to be akin to climbing Mt. Everest. It just takes some hard work, patience and due diligence to get back on the right financial track.

■ Pay bills the old-fashioned way. While many people prefer paying bills automatically from their checking accounts, those who have declared bankruptcy should stick to the more traditional methods of bill payment.

When utilizing automatic bill pay, wherein bills are directly deducted from a checking account, men and women are risking overdrafting their accounts, which can be a black mark on individuals trying to restore their credit. Overdrafting won’t necessarily be the fault of the individual, but it’s still safer to pay via check while attempting to restore credit.

■ Make saving a top priority.

Declaring for bankruptcy will free up some money each month. Rather than using that money to buy things, save it instead. Opening a savings account in a large bank should eventually help people gain approval for an unsecured credit card down the road. This won’t happen overnight, as the card issuer will want to see that a person is capable of properly managing and saving money over an extended period of time.

But saving money each week is a great way to restore a credit rating that took a hit after filing for bankruptcy.

■ Pay every bill on time. This is obvious. Potential creditors and lending institutions want men and women, especially those who have filed for bankruptcy, to show they can pay their bills on time. A proven ability to do so illustrates financial responsibility, which men and women must be to restore their credit rating.

■ Once the dust has settled, apply for an installment loan.

MCC

After filing for bankruptcy, men and women must carefully monitor their credit report to avoid falling victim to any discrepancies.

Once bankruptcy has been declared, individuals should take some time to restore their rating by paying bills on time and not immediately applying for a new credit card or loan.

Doing so too soon after bankruptcy will likely end in rejection, which won’t look good on a credit report. Within six to eight months of filing for bankruptcy, seek an installment loan, such as a used car loan. When paid on time, installment loans are very good for a credit rating, demonstrating an individual’s ability to effectively manage

their money month-to-month, which is exactly what prospective creditors want to see from a borrower.

■ Be diligent with a credit report. Men and women who have filed for bankruptcy should check their credit reports three to four times a year to make sure there are no discrepancies. There should be post-bankruptcy records on the report and those should be positive for men and women who have managed to stay on track since their filing.

– Metro Creative Connection

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BUSINESS & FINANCE

8F Sunday, January 23, 2011

The Daily Nonpareil

Making sense of ‘workshifting’ Millions of Americans face tighter budgets than ever in this struggling economy.

Instead of cutting employee numbers to cut costs, business owners and employees re-evaluating spending habits may wish to consider “workshifting.”

Workshifting is a term coined by Citrix Online, creator of the popular GoToMeeting web conferencing and GoToMyPC remote access solutions, which enable individuals outside of the office to connect and work from anywhere Internet service is available.

TechCast, a virtual think tank based at George Washington University, forecasts that 30 percent of employees in industrialized nations will telework two to three days a week by 2019. Working from home, workshifting, telecommuting, teleworking – whatever it’s called – can bring reduced costs and better productivity to a business. Employees who are able to occasionally work outside the office can realize a number of benefits as well.

Benefits to Employers Some of the most obvious advantages of workshifting to employers are a reduced need for office space and equipment and lower utility bills, according to “Workshifting Benefits: The Bottom Line,” a report compiled by the Telework Research Network and commissioned by Citrix Online.

In a traditional office environment, employers have to rent space, furnish that space and provide the equipment employees need to do their jobs.

But depending upon the workshifting arrangement, employees who work from a remote location may be responsible for their own computers and equipment, and they may pay their own utilities. The savings for an employer in real estate space and utilities alone can

MCC

Workshifting is an option for employees and employers looking for financial savings and other benefits. total thousands of dollars a year. And the ability for an employer to recruit from anywhere gives them an expanded pool of workers from which to choose.

Workshifting also saves money by increasing employee productivity and reducing absenteeism. Individuals who work from home are 27 percent more productive than their office counterparts, according to the report.

Employees who workshift are less likely to call in sick or take days off for personal needs

such as doctors’ appointments or child care. They can simply work their schedules around these appointments accordingly. Unscheduled absences can cost employers $1,800 per employee per year. Across the United States, this costs businesses up to $300 billion annually. Companies that allow part-time workshifting for an average of 50 employees may realize a savings of more than $55,000 per year, according to the report.

Workshifting can be a boon to employers who want to keep

valuable employees but can’t afford to recognize their efforts with a pay raise. Further, employers looking for a bargaining tool with employees can offer workshifting as an option during negotiations.

According to the report, when polled, nearly 80 percent of workers said they would like to telework and might even take that option over a pay raise.

Replacing an employee can be expensive. In addition to the resulting recruiting costs – which include advertising, hours spent sorting through

resumes, and interviewing – an employee who quits may take away customers. Staff reductions can lead to lost business.

This makes keeping employees who are productive a top priority. Workshifting can instill feelings of trust in employees and boost morale – making them more apt to stay with a company even if a pay raise is not an option, according to the report.

Benefits to Employees Employees come away with many benefits from the workshifting arrangement – includ-

ing the potential for financial gains.

With restrictions lifted on where a person can live or work, employees from different geographic locations can apply for jobs around the country or world. That may mean greater salary potential from what their local markets offer.

Employees who workshift spend less on commuting tolls, train or bus fares and gas.

They subject their vehicles to less wear and tear. The average teleworker can save roughly $362 annually on fuel expenses alone, offers the report, which also notes that individuals who work from home a portion of the time may not experience stressrelated illnesses as much as those who spend all of their time in the office. This helps to reduce medical-related costs and wages lost due to absenteeism.

Workshifting can also mean saving on expenses like child day care or elder care. Teleworkers may be able to keep children at home or figure out other arrangements that reduce dependence on a care facility or program. Daycare costs for babies and toddlers in the U.S. range from $4,388 to $14,647 a year ($366 to $1,221 monthly), according to data from the National Association of Child Care Resource & Referral Agencies.

Workshifting provides a viable way for both employers and employees to save money while boosting productivity.

Companies and employees considering the workshifting option need a reliable, secure way to meet, transfer files and access remote desktops online.

For more information, go to www.workshifting.com or www.citrixonline.com.

– Metro Creative Connection