Get Here: Financially Preparing for the Holidays

Tuesday, December 21, 2010

Financially Preparing for the Holidays - Bargaineering

Posted: 21 Dec 2010 09:18 AM PST

With it being a few short days until Christmas and nearly two weeks since the end of Hannukah, it’s a little late to be “preparing” for the holidays. That, however, doesn’t mean that you shouldn’t be financially prudent in the waning few days before the crescendo. I saw the results of a recent myFICO holiday study (packaged up into a pretty infographic) that gave me greater insight into the American shopper this holiday season. myFICO is a part of Fair Isaac Corporation, originator of the FICO credit score.

Tightening the Belt

I wasn’t surprised that 75% of people would be changing holiday traditions because of the economy – that’s just smart. The holidays are important not because of what we spend in dollars, but in what we spend in terms of time. If you’re used to spending a ton and you’re feeling the pinch, it’s certainly prudent to tighten up this year. You can always have a blowout holiday season next year, when things get better.

Budgeting

The scariest statistic from the infographic, which is something that’s hard to counter right now, is the fact that 58% of people do nothing to prepare for the added bills coupled with the fact that half of respondents charged an average $100-500 more. That’s the equivalent of a small emergency! One of your New Year’s Resolutions should be to budget for the extra spending during the holidays by starting a savings fund, preferably in a high yield savings account, and contribute to it every single month. That way, when it’s time to spend, you can pay it off immediately.

Finally, to the 10% of people who sign up for an in-store credit card for the 10% discount – avoid it if you’re going to get a loan. A hard inquiry dings your score and you’ll be paying far more in interest later on.

Financially Preparing for the Holidays from personal finance blog Bargaineering.com.

Why You Shouldn’t Cheat On Your Taxes

Posted: 21 Dec 2010 04:46 AM PST

Taxes! Have you ever been tempted to cheat on your taxes? asks a recent article in the NYT’s You’re the Boss column. Like almost everyone else, I’ve been tempted (everyone has been tempted or thought about it… if you haven’t, then you’re a much better person than the majority!) but I’ve never cheated on my taxes.

Here are just three reasons why:

It’s Illegal

The first reason is the most obvious one, tax evasion is illegal. Remember Wesley Snipes? He’s in jail right now for three years after being convicted for tax evasion.

How much would you pay to avoid being in prison? I don’t know about you but I’d happily pay my taxes to avoid jail.

It’s Not Profitable

Would you steal a dollar if you could keep only thirty five cents? What if you could only keep twenty five cents? Depending on your tax bracket, that’s exactly what you’re doing. When you fail to declare a dollar of income, you basically “get” a fraction of that. Even after you add in FICA and state taxes, you’re still getting only half of what you’re stealing. You take all of the risk but you only get half of the return… it’s simply not profitable.

Let’s say you play the numbers game… how many people evade taxes and aren’t caught? How many hours does it take to try to clear your name? Do the math and tell me whether it’s better for you to spend that time trying to earn more money or whether you should try to evade taxes on what you’ve already earned (let’s not even consider how much prison time you might get!).

It’s Bad for Society

When you don’t pay your taxes because of tax evasion, you’re basically stealing from everyone else who does pay taxes. You aren’t stealing from The Government or some amorphous entity that you can dehumanize. You are stealing from your neighbor. You are stealing from your parents. You are stealing from your children.

The rules are the rules and you pay what you owe. I’m glad to read stories like this where people who fail to pay taxes are punished (Gary Barbera failed to pay $77,675 in taxes). He had to pay $119,744.55 in restitution and interest, a $30,000 fine, and three years of probation that included ankle-bracelet monitoring while on house arrest.

There are plenty of reasons why you shouldn’t cheat on your taxes, these were just three.

(Photo: alancleaver)

Why You Shouldn’t Cheat On Your Taxes from personal finance blog Bargaineering.com.