by Ruckertax | May 9, 2014 | Frequently Asked Questions |
TABLE OF CONTENTS Should I prepay my mortgage? When should I refinance my home? Should I borrow against my securities? What is a home equity line of credit? What are the costs of obtaining a home equity line of credit? What is an interest rate “lock-in”? What disclosures must a lender give you? What is a reverse mortgage? What loan interest is tax-deductible? What are the limitations on deductibility of loan interest? Is interest expense incurred for business purposes deductible? Is investment related interest expense deductible? Is interest on educational loans tax deductible? When can you stop paying private mortgage insurance? SHOULD I PREPAY MY MORTGAGE? As a general rule, if you are able to prepay your mortgage (and if there is no penalty for doing so) you should prepay as much as you can every month. There are however, two exceptions to the general rule: You do not have an emergency fund of three to six months’ worth of expenses stashed away. Any extra money you have should be put towards the emergency fund. Once you’ve achieved this essential financial goal, then you can begin paying down your mortgage. You have a large amount of credit card debt. In such case, all of your extra funds should be used to pay down those debts. In addition, there are a few individuals for whom paying down a mortgage earlier might not be as beneficial financially, particularly if they achieve a better return by investing that money elsewhere. Whether an investor fits into this category depends on his or her marginal tax rate, mortgage interest rate, the return they can...
by Ruckertax | May 9, 2014 | Featured-on-home-page, Frequently Asked Questions |
TABLE OF CONTENTS How do automated teller machine (ATM) and other electronic transfer transactions work? What should I do if I find an error related to an electronic fund transfer or ATM transaction? What happens if my ATM card is lost or stolen? Will I be able to use my ATM card overseas? How will I know a pre-authorized credit (such as automatic payroll deposit) has been made? How do I stop a pre-authorized payment? How do I protect my ATM and debit cards against fraud? HOW DO AUTOMATED TELLER MACHINE (ATM) AND OTHER ELECTRONIC TRANSFER TRANSACTIONS WORK? There are various transactions that fall under the umbrella term “electronic funds transfer.” Automated Teller Machines (ATMs). You can bank electronically and get cash, make deposits, pay bills, or transfer funds from one account to another. ATM machines are used with a debit or EFT card and a code, which is often called a personal identification number or “PIN.” Point-of-Sale (POS) Transactions. Some EFT cards can be used when shopping to allow the transfer of funds from your account to the merchant’s. To pay for a purchase, you present an EFT card instead of a check or cash. Money is taken out of your account and put into the merchant’s account electronically. Preauthorized Transfers. This is a method of automatically depositing to or withdrawing funds from an individual’s account, when the account holder authorizes the bank or a third party (such as an employer) to do so. For example, you can authorize direct electronic deposit of wages, Social Security, or dividend payments to their accounts. Or, you can authorize financial institutions to make regular,...
by Ruckertax | May 9, 2014 | Frequently Asked Questions |
ABLE OF CONTENTS What banking fees do I need to look out for when shopping for an account? What are the different types of bank accounts available? What type of account should I open? How should I shop for a “best buy” bank account? How much protection is provided by federal deposit insurance? How can I negotiate checking account fees with my current bank? What is overdraft protection and should I have it? What is the Truth in Savings Act? WHAT BANKING FEES DO YOU NEED TO LOOK OUT FOR WHEN SHOPPING FOR A BANK ACCOUNT? Fortunately, banks are required to give you a list of fees for their accounts. Even with interest, the best account is usually the one with the lowest fees. Checking accounts are minefields for potential banking charges. Be sure you ask about monthly fees, fees for check processing, and ATM fees. A no-cost checking account may impose a charge if your balance drops below a minimum dollar amount. Check printing charges have sky-rocketed in recent years to as much as $24 at some banks. You can have your checks printed for much less by an outside financial printer. It rarely makes sense anymore to park money in an old-fashioned “passbook” savings account. Monthly account fees may overshadow the small amount of interest you will earn. Put it in your checking account instead if you can refrain from spending it. If it’s a big enough sum, you might want to put it in a money market account. You will earn more interest than in a savings account, but make sure you don’t get hit with...
by Ruckertax | May 9, 2014 | Frequently Asked Questions |
TABLE OF CONTENTS What are the steps in the investment process? What types of risks are involved in investing? What steps can I take to avoid unnecessary risks? What questions should I ask before making any investment? What questions should I ask before making a mutual fund investment? What investment hazards should I look out for? What should I invest my IRA in? What are derivatives and options? How can I avoid the most-frequent money-losing mistakes? What is the difference between my cumulative return and annualized return? What is the rule of 72? What is “Total Return” and why is it important? How does “yield” differ from “total return”? Can I measure my return as the increase in the value of my portfolio over a given period? WHAT ARE THE STEPS IN THE INVESTMENT PROCESS? The investment process is comprised of several steps that enable you to select a portfolio appropriate to your risk tolerance and desired return. The primary steps in this process are: Determine your desired return and risk tolerance Develop an asset allocation plan Select diversified investments within each asset class Monitor your investments Q: How are risk and return related? A: Risk and return are positively correlated. The higher the risk of an investment, the higher a return it must offer in order to compensate for the risk. Risks comes in many forms such as the volatility of the market, inflation risk, interest rate risk, and business risk. You must determine the degree of risk that you are willing to tolerate. Your investment professional can assist you in this process. Select the level of risk that...
by Ruckertax | May 9, 2014 | Frequently Asked Questions |
TABLE OF CONTENTS How do I determine my long-term financial goals? Is there any validity to financial planning “rules of thumb”–such as “saving 10% of your gross income”? What do women in particular need to keep in mind with regard to financial planning? What special problems do unmarried couples have to be concerned with in financial and estate planning? HOW DO I DETERMINE MY LONG-TERM FINANCIAL GOALS? The first step is to decide what you realistically want to achieve financially. Financial goals might include: early retirement, travel, a vacation home, securing your family’s financial comfort on the death of a bread-winner, planning for the care of elderly relatives or building a family business. IS THERE ANY VALIDITY TO FINANCIAL PLANNING “RULES OF THUMB” SUCH AS “SAVING 10% OF YOUR GROSS INCOME”? The following rules of thumb may work for some people, but they do not make financial sense for everyone. What is more important is to be able to know whether a particular rule of thumb suits your situation. Here are six of the more common rules along with some considerations that should not be overlooked. 1. Life insurance should equal five times your yearly salary This rule of thumb has been used to answer the question: How much life insurance should I have? The ideal amount of life insurance is the amount that will, when invested, generate enough income to allow your survivors to maintain the level of income they are used to. “Five times your salary” will accomplish this objective in some cases, but there is no substitute for making the calculations necessary to find out how much life...
by Ruckertax | May 9, 2014 | College, Frequently Asked Questions |
TABLE OF CONTENTS What types of tax relief are available for costs of my children’s higher education? What is the education tax credit? Do any tax planning considerations apply to the education tax credit? Do living expenses while in school qualify for tax relief? How does a Coverdell (Section 530) program work? How can my family make best use of a Coverdell (Section 530) program? What are qualified tuition programs? How do Coverdell Section 530 plans and qualified tuition Section 529 plans differ? Can my traditional IRA be used for education? Can a Roth IRA be used for education? What tax deductions are available for college education? What tax benefits are available for continuing/adult education for a hobby or a sideline? Can I deduct student loan interest? If I take a home equity loan to pay education expenses, can I deduct the interest? What tax treatment applies if my student loan debt is canceled? What’s the tax relief for education savings bonds? Must I pay tax on my employer’s payment or reimbursement of my education expenses? Can I take tax deductions from education I pay for that helps me in my work? WHAT TYPES OF TAX RELIEF ARE AVAILABLE FOR COSTS OF MY CHILDREN’S HIGHER EDUCATION? A wide variety of tax relief is available, but you’ll need to choose which credit or deduction to claim or which savings plan to use based on your individual tax situation. You also can’t use two different kinds of relief for the same item. For instance, you can’t take the higher education credit and tuition fees deduction for the same student for...
