KNS Financial

Personal Finance From a Biblical Perspective

Are You Preparing for the Next Recession?

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This is a bit of a depressing topic, isn’t it? After all, we’re in the middle of summer and it’s just about the peak of the high vacation season, right? Why try to throw cold water on everyone’s good times?

Three reasons:

  1. The economy is already showing signs of slowing,
  2. The presidential election will be over in three short months, and no matter who wins it’s anyone’s guess what will happen after that, or even
  3. I’m a mean person who’s trying to rain on everyone else’s summer fun.

I’m not sure that we ever really got out of the last recession, or if the last one wasn’t just an uglier continuation of the one before that, but the reality is that we have a downturn every few years. Since the last one officially ended sometime during 2009, 2013 seems like a good guess on the arrival of the next one. That gives us about a year to prepare, and that’s Reason #4 why I’m writing about this topic.

In the strange way that life works when we’re prepared for trouble, it never seems to happen! So how do we prepare for the next recession?

Coming Economic Recession

Avoid (or Tone Down) Major Purchases

Major purchases do two things that hurt us when the economy turns bad: 1) they drain savings, and/or 2) they put us in debt. I’m talking about cars, houses, furniture, boats—anything that has the potential to cost a couple thousand dollars or more.

Before making any major purchases, ask yourself the following questions:

  1. Do I actually need this item, or do I mostly just want it?
  2. Will this item put money in my pocket? (for example, a car for work, or a computer for business)
  3. Were I to lose my job six months from now, will I regret having made this purchase?
  4. Even if it’s something we truly need, do we have the ability to buy it without draining our savings or adding more debt?
  5. Would a decent second-hand model get the job done?

Major purchases can’t be easily undone—especially in recessions.

Find Income Sources Outside Your Job

For most of us, the biggest threat from recessions is the loss of a job. One of the best ways to deal with this (in advance) is by creating income sources outside your job. It’s not just a matter of adding more income, but also of exploring and developing other career directions. This is especially important if the business or industry you’re in is already wobbling.

{Learn how to honor God in the workplace}

Working outside your job will give you the experience and business contacts and references that might enable you to transform a side job to your next full time position. Get your foot in the door before the economy takes another slide.

Another option is to start a side business. You can start it and grow it while you’re still on your employer’s payroll, but if you lose your job you can ratchet the business up to full time.

Say NO to New Debt

The last thing you ever want to do is to create financial obligations during good times that you’ll have to pay for during not-to-good times. This is what drives foreclosures and car repossessions. If you want to avoid that fate, don’t add any new debt.

And while you’re at it, start working on paying off old debt. Debt is a big enough pain during good times, but its pure excess baggage you don’t need to be lugging around during the bad ones. If you lose your job, you can always cut expenses quickly, but debt takes time. You have that time right now.

Build Up Those Savings

At a minimum, a fattened bank account can give you breathing room to deal with a sudden job loss or other financial calamity. It enables you to face problems without having to borrow from banks, or beg from family. Start working on increasing your savings now.

Remember those major purchases I recommended that you not make? You can add to your bank balance with the money that you didn’t spend on them. And the extra income from your side job or side business can go right in the bank too. A year from now you could have a few months living expenses sitting in the bank, and that’ll feel good.

Get In Shape

This reads like my most ridiculous preparation, but actually it isn’t. In fact, it’s far from it. Exercising, dieting and improving your overall physical condition are always important, but never more than when hard times hit.

Consider:

  • If you’ll be in the job hunt sometime next year, you’ll be glad lost a few pounds and toned up a bit. When jobs are hard to get, they often go to those who look the most capable of doing them.
  • In the event you have to juggle two or three income sources, you’ll need the increased stamina getting in shape can bring.
  • The healthier you are, the less you’ll need to spend on healthcare, and the less time you’ll lose from work.
  • Concentrating on your health could be the significant distraction you need that will boost your mental and emotional state at a time when finances are getting difficult.

A recession will come whether or not you’re prepared. But if you are prepared, there’s a good chance it won’t be your recession! And if it doesn’t come, you’ll be better prepared for what ever else you want to do in your life. Like that run for financial independence you may have been putting off for a few years.

photo credit: Freedigitalphotos.net

5 Ways to Get a Job After Long-term Unemployment

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The financial meltdown that began in 2007/2008 hasn’t just eliminated jobs, its destroyed careers entirely. Millions of people have been unemployed for six months, a year, two years or even longer. Extended unemployment benefits that initially allowed up to 99 weeks have been cut back to 73 weeks, and unless the program is restored, benefits will be cut back again by the end of this year.

If you’re one of the people who lost their career during or since the meltdown, or if you’re facing the prospect of disappearing unemployment benefits and you need to get back into the job market after a long layoff, you’re facing an uphill fight. There’s fierce competition for jobs, little chance of on-the-job training and no small number of employers who are reluctant to hire the unemployed.

But here are some strategies that could help you get back into the job market, if only gradually.

Get A Part-Time Job

If you’ve been unemployed for a long period of time, getting back into the job market will be like starting over. It’s very much like when you were a teenager looking for your first job. You have to start somewhere, and a part-time job is a way to ease in gradually.

No, a part-time job isn’t like a full-time job—you probably won’t have benefits and you’ll get nothing close to a living wage. But here are a few things a part-time job can do for you:

  • Working part-time will get you out, about and circulating, and meeting people who might help you find a full-time job
  • It will provide you with a current work reference when you apply for jobs
  • A part-time job could turn into a full-time job down the road
  • A part-time job can be an opportunity to earn-and-learn your way into a new field
  • Earning money in any kind of job improves self-esteem, and that’s something that probably needs to be rebuilt after a long period of unemployment
  • When you apply for full-time jobs elsewhere, you’ll have something to put in that ever present little box that asks “Present Occupation?”

Working part-time won’t be the answer to your career problem, but view it as a necessary and temporary step on the road to something better.

Do Volunteer Work

One of the biggest problems with being unemployed for a very long time is that you can get out of the work routine entirely. It’s not just a time management issue either—there’s a psychology to working that can get lost when you haven’t done it for a while. A good way to get around that is by doing volunteer work. You can do this at churches, charities and even hospitals and schools.

Even though you won’t be paid for the work you do, it can get you back “into the groove”, giving you a place to go everyday and something other than your unemployment status to think about. And much like a part-time job, it gets you out meeting people and making new contacts, and might even turn into a paying job at some point.

Look Into Temporary & Contract Assignments

This is an area that’s gotten tougher in recent years—it’s been degraded by the same factors that have weakened the overall employment picture. Even so, it’s still worth looking into.

Even if the assignments are sporadic, they will place you on the inside of potential employers where you can get valuable contacts who might help you get a job. Also, many companies are now hiring primarily by temp-to-perm, giving them an opportunity to see potential employees in action.

{Learn all you need to know about the contingent workforce.}

If nothing else is happening, give it a try—when you’re unemployed, doing something is always better than doing nothing.

Work For Small Businesses

Everyone wants to work for large employers; they pay more and offer more comprehensive benefits. As good as that sounds, it also creates a traffic problem—too many applicants for too few jobs. As a result, large employers can be very selective when it comes to hiring and they don’t look too kindly on the unemployed.

If you’ve been out of work for a long time, look for small businesses instead. I’m talking small as in no more than five to ten employees. You won’t get anything close to top dollar, and benefits will probably be out of the question, but small businesses do have their advantages, and they aren’t minor.

Small businesses can’t draw in the top talent—sometimes they can’t get any talent at all! And being closer to the ground, small business owners are likely to be more sympathetic in regard to your long period of unemployment. If you have a skill set that matches their needs, and there’s a good personality fit, you can get hired much more quickly than you could at a large employer.

While you’re working at the small business, you’re getting new experience and training that could translate into a better position somewhere else later on.

When All Else Fails, Try Working For Free

This is similar to volunteering, only you’re doing it with for-profit businesses instead of charities. Most organizations have plenty of work that needs to be done—they just can’t afford to pay anyone to do it. That’s an opportunity for you!

Find out what jobs a business needs done that they can’t afford to pay for, and offer your services to do it for them. This will work better with small employers than with large ones, and there are several ways you can play this:

  • You can use it as a chance to show your worth to the business—if they see how good and reliable you are working for free, they may decide they can’t live without you, and make you an offer for a paid position
  • While working for free at a business you’re also building contacts and an important referral who may be able to help you land a paid job elsewhere
  • After completing one unpaid assignment, they may call you back again—for pay!
  • By troubleshooting at one business, you can start doing the same at others on a paid basis; as you build “clients” you’re beginning to develop your own business—self-employment could be the ultimate solution to your career problem.

Working for free won’t be easy, but is a chance to start making things happen, and that’s what you need to do when you’ve been out of work for a long time.

Have you gone through a very long unemployment? What did you do to get back into a job?

photo credit: FreeDigitalPhotos.net

The IRS Has Over $1.1 Billion In Unclaimed Refunds

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The IRS has more than $1.1 Billion in unclaimed refunds for nearly 1.1 million people who did not file an income tax return for 2007. Many taxpayers may have chosen not to file a return because they did not earn enough income to require filing an income tax return, even though they had taxes withheld from their income. There are many reasons for you to file a return even when you are not required to do so.

How To Get Your Unclaimed Refunds

In order to recover your unclaimed tax refunds, you must file a return for tax year 2007. Taxpayers are given 3 years from the due date of a return in order to file – there are no late-filing penalties charged when a refund is due. Since the tax return deadline has been extended, you have until April 18, 2011 to file your 2007 return.

You may not feel like going through the trouble of filing an old return for a couple of dollars (I probably wouldn’t either), but…

The IRS estimates that half of these potential 2007 refunds are $640 or more.

If you fail to file a 2007 return by the deadline listed above, the money becomes property of the U.S. Treasury. Here is another lost benefit that you need to consider:

By failing to file a return, people stand to lose more than a refund of taxes withheld or paid during 2007. In addition, many low-and-moderate income workers may not have claimed the Earned Income Tax Credit (EITC). The EITC helps individuals and families whose incomes are below certain thresholds, which in 2007 were $39,783 for those with two or more children, $35,241 for people with one child, and $14,590 for those with no children.

There are a few things that you must know when filing a return for tax year 2007:

  • You will not be able to file an electronic return, although you will be able to request direct deposit
  • If you did not file a tax return for 2008 or 2009, your 2007 return will not be released to you
  • Your 2007 refund will be used to satisfy any outstanding debts owed to the IRS, unpaid child support, and any delinquent federal student loans

    • To be honest, if you any of the outstanding debt mentioned above, collecting an unclaimed refund from 3 years ago would be a great way to pay it off! This way, you don’t have to worry about taking out any unsecured loans! If you don’t have any of the above, then take a look at the IRA contribution limits and prepare yourself for retirement!

    Here is some final guidance that the IRS issued in order to make this process as easy as possible:

    Current and prior year Internal Revenue Service tax forms and instructions are available on the Forms and Publications page of IRS.gov or by calling toll-free 1-800-TAX-FORM (1-800-829-3676). Taxpayers who are missing Forms W-2, 1098, 1099 or 5498 for 2007, 2008 or 2009 should request copies from their employer, bank or other payer. If these efforts are unsuccessful, taxpayers can get a free transcript showing information from these year-end documents by ordering on-line, calling 1-800-908-9946, or by filing Form 4506-T, Request for Transcript of Tax Return, with the IRS.

    It may be helpful to look at your last year tax return as well.

    Hopefully, a few of the 1.1 million people who are due money will read this before the deadline – be sure to share this article with everyone that you know before then 😉 !

    photo by Salvatore Vuono

    To Keep Up To Date With The Latest IRS News And Regulations, Sign Up For Our Email Updates:



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    What You Need To Know About Tax Exemptions And Dependents

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    Some tax laws and guidelines affect every person who may have to file a return – this includes rules governing tax exemptions and dependents. Ever since I became involved in preparing taxes, I have noticed a lot of confusion regarding exemptions and dependents.

    Apparently, so has the IRS. Therefore, they have released a bulletin outlining six facts regarding tax exemptions and dependents that will help you when you file a tax return:

    Tax Exemptions And Dependents:

    1. Exemptions reduce your taxable income. There are two types of exemptions: personal exemptions and exemptions for dependents. For each exemption you can deduct $3,650 on your 2010 return.

    2. Your spouse is never considered your dependent. On a joint return, you may claim one exemption for yourself and one for your spouse. If you’re filing a separate return, you may claim the exemption for your spouse only if they had no gross income, are not filing a joint return, and were not the dependent of another taxpayer.

    3. Exemptions for dependents. You generally can take an exemption for each of your dependents. A dependent is your qualifying child or qualifying relative. You must list the social security number of any dependent for whom you claim an exemption.

    4. If someone else claims you as a dependent, you may still be required to file your own return. Whether you must file a return depends on several factors including the amount of your unearned, earned or gross income, your marital status, any special taxes you owe and any advance Earned Income Tax Credit payments you received. [Find out if you need to file an income tax return]

    5. If you are a dependent, you may not claim an exemption. If someone else – such as your parent – claims you as a dependent, you may not claim your personal exemption on your own return.

    6. Some people cannot be claimed as your dependent. Generally, you may not claim a married person as a dependent if they file a joint return with their spouse. Also, to claim someone as a dependent, that person must be a U.S. citizen, U.S. resident alien, U.S. national or resident of Canada or Mexico for some part of the year. There is an exception to this rule for certain adopted children. See IRS Publication 501 (opens a PDF),  Exemptions, Standard Deduction, and Filing Information for additional tests to determine who can be claimed as a dependent.

    Hopefully, these guidelines have helped you to develop a better understanding of exemptions and dependents. If you need more assistance, visit out tax help page. There you will find guides, articles, and other reference material related to this and other subjects!

    Once you are ready to prepare a return, be sure to contact us to set up an appointment for tax preparation. If you decide to file your own taxes, we recommend using TurboTax to do so.

    Be sure you are aware of the tax filing delay, as well as the fact that the tax filing deadline has been extended this year. To get the most out of your financial situation in 2011, you should know the IRA Contribution Limits, 401k Contribution Limits, and the Income Tax Rates for 2011!

    photo by jscreationzs

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    Free Tax Software Giveaway At KNS Financial

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    H&R Block was kind enough to provide us with several free copies of their H&R Block AT Home Tax Preparation software.

    Free Tax Software You Can Trust

    Many of you already know that H&R Block provides professional tax preparation all across the country. However, like TurboTax, they also provide software with which, you can prepare your own return. H&R Block AT Home is available in a few different flavors depending on your needs.

    Here are the variations:

    Free – File For FREE:

    • FREE to prepare, FREE to print, FREE to e-file
    • FREE expert advice from our community of tax specialists
    • FREE audit support and representation from an enrolled agent – NEW and only from H&R Block
      100% Accuracy Guarantee and Maximum Refund Guarantee

    Basic – Simple Tax Situations:

    Everything in Free, plus:

    • Import last year’s return
    • Step-by-step guidance to maximize your refund
    • Double check for errors

    Deluxe – Homeowners/Investors:

    Everything in Basic, plus:

    • Import your W-2, 1099 and last year’s return
    • Searches hundreds of deductions
    • Personalized tax guidance
    • Mortgage interest and charitable tax deduction maximizers
    • Sale of stocks, bonds, and mutual funds

    Premium – Self-employed:

    Everything in Deluxe, plus:

    • FREE live tax advice2
    • Schedule C guidance
    • Tax laws and planning resources
    • Advanced tax calculators
    • Rental income assistance

    The “Premium” version is what we are giving away here! The normal price is $49.95 just to file your federal tax return. To add on a state return, you have to pay $34.95 for each state! I guess it’s a real good thing that they are allowing me to offer this edition (the federal portion) as free tax software.

    Free Tax Software For All?

    Alright, maybe not for all, but for six! That’s right, H&R Block was nice enough to provide me with six codes for my loyal readers!

    How To Enter To Win Free Tax Software:

    1. Link to any of the following articles from your website using the anchor text provided: http://knsfinancial.com/ira-contribution-limits-for-both-roth-and-traditional (IRA Contribution Limits), http://knsfinancial.com/401k-contribution-limits (401k Contribution Limits), http://knsfinancial.com/should-i-cosign-for-a-loan (cosigner). Please note that if you do not use the anchor text provided in the parenthesis EXACTLY AS IT IS WRITTEN, then your entry will not count! This is worth 5 entries for each article (potential of 15 entries)

    2. Sign up for email updates from KNS Financial (you can use the form at the bottom of this post, or the one in the upper right-hand portion of the website) – 3 entries

    3. Subscribe to the KNS Financial RSS Feed – 3 entries

    4. Follow @KNSFINANCIAL on Twitter and Tweet about this contest to your followers using the following (1 entry) – “Win free tax preparation software from @knsfinancial – http://bit.ly/hXCJ0j”

    5. Follow @FGSW (“Fat Guy Skinny Wallet” my new website about Weight Loss, Diet, Fitness, and Debt Management) on Twitter and Tweet about this contest using the following (1 entry) – “Win free tax preparation software from @knsfinancial – http://bit.ly/hXCJ0j via @FGSW”

    So, you can have a total of 23 entries for this giveaway!!!

    Here are a few more details about this giveaway:

    • You must leave a comment for each method of entry

    • If you win, you will receive a code to use the H&R Block Premium online version for free – keep in mind that the state return is not included

    • If you have already done one of more of the following, you are still eligible for the giveaway – just be sure to leave a comment stating what you have done (and follow the other rules as well)

    • If you have signed up for email updates, please use the same email when you leave a comment (or provide me with the email that you used within the body of the comment). I will match up your comment to my email list to be sure that people aren’t trying to “game the system”

    • If you have tweeted about this giveaway, please provide a link to the tweet as well as your Twitter username so I can match up the entries

    • Although, I plan to reference my email subscriber list and the Twitter records for both accounts, you will only receive credit for an entry if you leave a comment below. For instance, if you are signed up for emails and you fail to leave a comment telling me that you signed up, then you will not be entered.

    • The contest will end on Monday February 21 at 11:59 PM EST

    • I will be using the random number generator found at Random.org to choose the 6 winners.

    • If you are chosen as a winner, you must respond to the confirmation email within 72 hours – if not, another entrant will be randomly selected to take your place. Please leave an email that you plan to check often!

    If you are more comfortable having a professional prepare your return, then be sure to contact us to set up an appointment for tax preparation.

    Be sure you are aware of the tax filing delay, as well as the fact that the tax filing deadline has been extended this year. To get the most out of your tax situation in 2011, you should know the IRA Contribution Limits, 401k Contribution Limits, and the Income Tax Rates for 2011!

    To Keep Up To Date With The Latest Tax News And Regulations, Sign Up For Our Email Updates:

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