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Ask Chuck: Should I Co-Sign A Loan?

By Chuck Bentley

Dear Chuck,

So, I cosigned for a student loan and now I’m stuck paying for it. Is there anything I can do?

Regretful

Dear Regretful,

Unfortunately, the same thing happened with my Dad and we have not found a satisfactory remedy. He was approached by an employee whose son needed assistance to get a “head start in life.”  Because my father wanted to help and believed the story that the young man would respect those who helped him do what no other family member (of this boy) had ever achieved, he cosigned for a large student loan. As soon as the boy graduated, his mother quit her job at my father’s company and he never heard from either of them again. He was conned.

It’s easy to make an emotional decision when trying to help a friend, family member, or person in need. But trouble brews when emotions overrule God’s Word. When someone cosigns for a borrower who is honorable and responsible, payments are made in a timely fashion and no problems occur. But, when someone does not pay on time, either by choice or by circumstances outside their control, the cosigner is stuck, sometimes completely unprepared to pay the balance due.

Surety and Cosigning Defined

Surety is the principle of taking on an obligation to pay or to make a pledge for an obligation. When a borrower cannot get approval for a loan, a cosigner makes it possible by loaning their creditworthiness, thus reducing the risk for lenders. Cosigners are simply people with decent credit and credit history who guarantee payment of a loan should the prime borrower fail to make payments.

Responsibility of Cosigner

  • Subject to all payments and late fees the primary borrower does not pay.
  • Cosigned loans or credit cards are listed on credit reports.
  • To communicate with the borrower to encourage, remind and praise timely payments.
  • Get a notification if payment is not made.
  • Know the state’s laws on co-signing.

Consequences for Cosigner

  • Late payments negatively affect credit scores.
  • A legal judgment can be filed if the loan goes to collections.
  • Wages can be garnished until the debt is paid in full.
  • If the primary borrower files bankruptcy, a cosigner must pay the balance.
  • Possible tax liability.
  • Strained and possibly ruined relationships.

A Few Options

  • Tangible debt (as with a house or car) can be sold and the proceeds applied to the loan.
  • Borrower can refinance or consolidate the loan at which point a cosigner should bow out.
  • If left with the loan, cosigner should try to work out a payment plan with the borrower.
  • If left with the loan, cosigner should negotiate with the lender, refinance or consolidate for better terms.
  • Purchase term life and disability insurance for a student if cosigning student loans. 
  • Determine the risks to your own credit before cosigning for anyone.

Another Option: Cosigner Release

This is an important provision for some student loans. Upon graduation and once working full-time, former students should pursue cosigner release. There are numerous requirements but this protects graduates and cosigners in the long run.

What the Bible Says

Surety is the primary means our society uses to “buy now” and “pay later.” Many Christians, ignorant of what the Bible says, cosign because they genuinely want to help family or friends. But, one of God’s financial principles is avoiding surety. It keeps His people on the correct financial path and protects them from traps set by the world’s economic system. Those who take on surety pledge their future and presume upon God’s will.

One who lacks sense gives a pledge and puts up security in the presence of his neighbor. (Proverbs 17:18 ESV)

Whoever puts up security for a stranger will surely suffer harm, but he who hates striking hands in pledge is secure. (Proverbs 11:15 ESV)

The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty. (Proverbs 21:5 ESV)

When someone asks you to cosign, explain that it goes against Biblical principles. Use the opportunity to offer to teach basic personal finance, direct them to Crown’s online study, and explain that you want to avoid souring your relationship over money. If they do need a loan, suggest they consider the following options.

Ways to Get a Loan Without a Cosigner

  •     Build credit
  •     Pay down debt
  •     Fix errors in credit reports
  •     Add income
  •     Borrow less
  •     Search other lenders
  •     Pledge personal collateral

In Your Case

While you did not reveal your relationship with the original borrower of the student loan, most often this problem occurs between family members when the student looks to parents, stepparents or grandparents for help. Try to preserve your relationship with the one who has defaulted and left you responsible for the debt. Pray for them to have a change of heart or circumstances to enable them to take back over the loan at some point. Go so far as to ask how you can assist them in getting in a position to be able to take back the obligation for the loan. Since you have no other remedy that I am aware of, do your best to pay the note in full and ask the Lord to work it together for good in a mysterious way only He can do.

Thanks for asking your question. I hope your pain will help many others like you and my Dad avoid a similar plight. That would create some good out of it all. 

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Back-to-School Strategies to Stay Out of Debt

By Bonnie Spain, American Center for Credit Education

Q: I enjoy back-to-school shopping, but no matter how hard we try to avoid it, we always end up in debt. I don’t want to be paying for school supplies until December. Can you give us any suggestions to help us stay on track this year? 

A: Back-to-school shopping is the second-biggest shopping season, eclipsed only by the Christmas season. According to a study by Deloitte, 29 million households will spend an estimated 26 billion dollars on back-to-school shopping this year. Given this, it’s easy to see how back-to-school shopping can get out of control. Still, with a few easy steps, it is possible to rein in your spending and avoid the back-to-school debt trap.

First, take an inventory of what you already have for each child. Start with clothing: what fits and what doesn’t? If clothes still fit and are in good condition, then you don’t need to replace them. Make a list for each child that reflects the clothing that he or she still needs.  

Next, inventory your school supplies. How many notebooks, pens, pencils, crayons, etc. do you have that are in good condition? When you have a handle on what you already own, download or pick up a school-supply list from your child’s school or at the store. Compare what you have on hand to what you still need.  

Take your list of clothing and school supply needs and create one master list for each child. Assign a dollar amount to each item on the list and then tally it all up. If this amount exceeds what can afford to spend, you will need to revise the dollar amount and maybe even the list. Visit with each of your children and find out what is most important to them. Pare down your list to reflect each child’s priorities. Having a plan, in this case a written list, is half the battle.

When you’ve got a solid list, it’s time to shop. If possible, shop with one child at a time. Children often want what their siblings are getting, even it if doesn’t represent a need for them. Every child loves to have his or her parents’ undivided attention, and this is one of those opportunities. To keep emotions out of the equation, shop with your list in hand, and do not deviate from it.  

To get the best deals, watch for sales. And remember that you don’t necessarily have to purchase everything in a single trip. If your son or daughter has something new to start the school year, the rest may be able to wait. By waiting, your kids may change their minds or refine their priorities.

With a plan, back-to-school shopping doesn’t have to put you in debt until the holidays. Most of what children learn about money, they learn by watching their parents. So when it comes to shopping for fall, ask yourself: Will my kids see that back-to-school shopping puts us in debt and creates stress, or will they see us take control of our back-to-school shopping with a realistic plan?

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Ask Chuck: Avoiding The Paycheck-to-Paycheck Trap

By: Chuck Bentley, Crown Financial Ministries

Dear Chuck,

I read an article recently about how many Americans live paycheck to paycheck and question how many really have to live that way. I don’t want to be calloused, but doesn’t the Bible tell us not to live that way?

Financially Secure

Dear Financially Secure,

Unfortunately, I am all too familiar with people caught in the paycheck-to-paycheck trap for multiple reasons. Many are there due to circumstances beyond their control, including tragic health issues, job loss, unwanted divorces, and basic financial illiteracy.

A key consideration regarding household finances and overall economic well-being is the ability to withstand financial disruptions. A lack of emergency funds is the onset of financial suffering for many. With little or no margin, an unexpected expense or loss of income throws their finances into chaos.

A 2017 report by the U.S. Federal Reserve revealed the following issues that contribute to the paycheck-to-paycheck problem.

Dealing with Unexpected Expenses

  • 4 in 10 adults, if faced with an unexpected expense of $400, would either be unable to cover it or would find it necessary to sell something, borrow from family or friends, or carry a balance on credit cards. (This is an improvement from half of the adults in 2013.)
  • Over 1 in 5 adults are unable to pay their current month’s bills in full.
  • More than 1 in 4 adults skipped necessary medical care in 2017 because they could not afford the cost.

Income

  • 3 in 10 adults have family income that varies from month to month.
  • 1 in 10 adults experienced hardship because of monthly changes in income.
  • Nearly 25% of young adults under 30 and 10% of all adults receive some sort of financial support from someone living outside their home.

Financial Literacy

  • On average, people answer fewer than 3 out of 5 basic financial literacy questions correctly.
  • Lower scores fell among those less comfortable managing their retirement savings.

What To Do

There are emotional stories of those living paycheck-to-paycheck, but, like you, I question how many are willing to change their lifestyles, to adjust priorities, and make some sacrifices to protect themselves from financial disaster.

People rely on debt because it’s easy and “everyone” does it. It is certainly easier to buy a new car with low-interest rates than saving to pay cash. After all, saving means you have to forfeit (or postpone) a bigger house, the latest fashion, a new phone, or eating out; but easy is ultimately the more costly option.

In the long-term, sacrifice has its rewards, and it isn’t all that painful once the decision is made to take control rather than letting the world dictate how to spend money. Learning to discipline oneself eventually becomes a habit and a way of life. Before long, the thought of carrying consumer debt becomes ridiculous.

I think most people who are experiencing the overwhelming burden of carrying credit card debt would tell you the small sacrifices upfront are worth it. If you’re dealing with overwhelming credit card debt, contact Christian Credit Counselors. They can help!

The trick is to develop a mindset of tight control over your income. With a budget in place, progress can be made toward getting people off the financial cliff so they CAN withstand financial emergencies.

Self-control, accountability, hard work, living contrary to the rest of the world, and disregard the availability of credit are some basic steps I recommend to anyone wanting to become financially secure.

Learning to wait is a great discipline. Pausing and praying for a need allows us to see God provide. God wants us to be good stewards of what He provides for our good and for the benefit of others. We are living examples of His goodness and offer hope to the hopeless. When we manage our finances the way He tells us, we have the freedom to live out our purpose and glorify Him in the process.

Debt Counseling

Dr. Anne Bradley with The Institute for Work and Economics summarizes this beautifully:

Good stewardship leads to flourishing, which is characterized by well-being, thriving, and abundance. It is the way God created all things before the fall, as well as what he will restore when Christ returns. In the parable of the talents, Jesus teaches that everyone is to maximize the gifts that he is given in order to contribute to the flourishing of the world (Matt. 25:14-30).

…Each of us is created uniquely by God to contribute something to his kingdom. We have a special opportunity to use our particular interests and abilities to do something significant.

This larger view of stewardship encompasses every aspect of life. That job that one takes, where you live, how many children you have, and where you send your children to school all involve stewardship. Those options require us to make choices with our scarce resources, as each tradeoff presents us with a cost and becomes part of the calculus of stewardship. Our efforts can bring delight to us and to the Lord and allow us to serve the common good.  

So let’s not disparage those who are struggling to make ends meet. Let’s work to help them discover and understand that God has a better way. Ultimately, we not only want to see them get out of the pain and stress of living paycheck to paycheck but to be prepared to stand before the Lord and hear Him say, “Well done, thou good and faithful servant. Enter into the joy of your Master.”

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6 Tips for Spring Cleaning Your Finances

By: American Bankers Association (ABA)

With the arrival of spring, consumers are encouraged to add a very important item to their spring cleaning to-do list: organizing their finances. As you kick off the spring season by cleaning, sorting, and tidying up around the house, don’t forget to rearrange your financial house.

“Spring is the season of renewal, which means it’s time to sweep away your winter bills and tidy up your spending habits,” said Corey Carlisle, executive director of the ABA Foundation. “Taking time to balance your budget today will set you up for sunny financial days throughout the rest of the year.”

Here are six tips to help you organize your finances:

  • Review your budget.

A lot can change in a year. If you’ve been promoted, had a child, or become a new homeowner or renter, be sure to update your budget. Determine what expenses demand the most money and identify areas where you can realistically cut back. Develop a strategy for spending and saving – and stick to it. In addition to the “Budget Boss” webinar available on our website, our trusted partner, Budget Ninjas, offers a multitude of budgeting tools and resources for free.

  • Evaluate and pay down debt.

Take a look at how much you owe and what you are paying in interest. Begin paying off existing debt, whether that’s by chipping away at loans with the highest interest rates or eliminating smaller debt first. Contact your Account Specialist at Christian Credit Counselors to add any new or existing debt that you may have left off the program to your debt consolidation plan.

  • Set up automatic bill pay.

By paying recurring bills automatically on the same day each month, you’ll never have to worry about a missed payment impacting your credit score. Plan out your automatic payments to ensure your checking account has an adequate amount of funds when the payments are scheduled to be withdrawn.

  • Save for emergencies.

About 40% of Americans are positioned to cover a $400 emergency expense. You can prepare by opening or adding to a savings account that serves as an “emergency fund.” Ideally, it should hold about three to six months of living expenses in case of sudden financial hardships like losing your job or having to replace your car.

  • Go digital.

Sign up for e-statements, paperless billing, and text alerts. Converting to paperless billing will help keep your house—physical and financial—more clean and organized, and will help protect you from fraud. Manage your money on the go. Utilize your bank’s mobile app to check your balance, pay your bills, transfer funds, deposit a check and send money to friends from wherever you are.

  • Check your credit report.

Every year, you are guaranteed one free credit report from each of the three credit bureaus. Take advantage of these free reports and check them for any possible errors. Mistakes can drag down your score and prevent you from getting a loan, or cause you to pay a higher than necessary interest rate.

“People are motivated to get things done when the weather warms up and the flowers bloom, which makes it an ideal time to look closely at your savings and spending habits. Putting in the work now will help you live your best life in the months ahead.”

Corey Carlisle, ABA Foundation
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Ways to Improve Your Financial Capability Now

By: America Saves

Are you ready for National Financial Capability Month? Here are three actions you can take now to make sure you are prepared for any financial disaster, big or small.

1. Have a Disaster Plan for Your Finances.

Sure, you keep bottled water, canned goods, flashlights, and batteries close at hand, but you should also have a disaster plan in place for your finances. The first step is building and maintaining an emergency fund. Saving is the best financial defense against disasters. A little bit at a time can go a long way. Then you can make sure the rest of your finances are in order.

The Federal Emergency Management Agency (FEMA) has an Emergency Financial First Aid Kit (EFFAK) that is great for identifying all your important financial information and then helping you keep track of it. The EFFAK also provides advice on managing finances, offers insights on dealing with credit scores, and describes what to expect should a disaster strike your community. All of this will help your family prepare today for both the big incidents and minor emergencies.

2. Check Your Financial Well-Being.

Just like you should go see a doctor once a year for a check-up, so too should you assess your financial wellness. Like your health, you should assess your savings annually to make sure you are saving for all the right things. Evaluate the status of your savings to see if you are saving adequately and create a savings plan. Start saving automatically by setting up automated regular transfers with your bank or credit union so your savings will increase each time you get paid. Automating your savings can take the guesswork out of reaching your savings goals.

The Consumer Financial Protection Bureau (CFPB) has a nifty tool that lets you take a ten question quiz that not only evaluates your financial well-being but also compares you to other Americans in your age group. Then it suggests ways to improve your score and where to find help.

3. Make Sure You’re Properly Insured.

Review your insurance coverage. Most homeowners and renters insurance policies do not cover flooding, so you may need to purchase a separate policy from the National Flood Insurance Program. An inch of water in your house can cause $25,000 of damage and 20% of flood claims come from areas outside of flood zones. Think because you’re a renter you don’t need insurance? If you don’t have renters insurance, and you lose your personal property to theft or disaster, you will have to replace everything out of pocket.

Let America Saves help you save money. It all starts when you make a commitment to yourself to save. Take the first step today and take the America Saves pledge to save money, reduce debt, and build wealth over time. And it doesn’t stop there. America Saves will keep you motivated with information, advice, tips, and reminders to help you reach your goal. Think of us as your own personal support system.

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7 Better Ways To Use Your Tax Refund

Are you expecting a tax refund soon? If you’re like most Americans, you’re probably expecting somewhere around $3,000 to show up in your mailbox over the next months. Receiving a refund check has become a strangely normal piece of financial planning for Americans – we count on receiving that extra cash and plan to spend it.

But your refund check is just your own money going back into your pocket. I recommend you adjust your withholdings for the next tax year so you can have more money in your hands every month instead of lending it to the government interest-free all year. And if you are planning to receive a refund this year, here are 7 better ways to use it!

1. Save.

Did you know that 70% of Americans don’t have $1,000 saved? In fact, six out of 10 Americans couldn’t even access $500 in an emergency. And 34% of Americans said they don’t have any savings…at all.

Saving is not only critical to getting out of debt and building a stable financial future, but it’s also an essential part of stewardship. Saving does not represent a lack of faith, it reflects the heart of a faithful steward. Planning to care for your family, disciplining yourself to create financial margin, and balancing your savings are all opportunities to honor God and experience His blessings.

We recommend you make your first savings goal $1,000; then work your way to 3 months’ worth of your living expenses; then 6 months’, and finally 12 (you can track all these goals on Crown’s Money Map). If you’re working to reach any of these savings goals, commit to depositing your refund check directly into your savings account. According to a survey, 43% of Americans are planning to do so!

2. Pay Off Debt.

Barely second, 42% of Americans are planning to use their refund to pay off debt. As Proverbs says, the borrower is slave to the lender, so using your refund to pay off debt can help you break the chains of financial bondage and debt.

If you’re specifically dealing with credit card debt too large to be paid off by your refund check, I want you to get in touch with our partners at Christian Credit Counselors. They specialize in helping people pay off their overwhelming credit card debt and can walk you through the process of becoming debt-free.

We also have debt-help resources available for you to create an efficient payoff plan. Go through the 5 Steps to Debt-Free Living video course (it’s free) to get access.

3. Give.

Giving is a material expression of our spiritual obedience to Christ. It’s our way of acknowledging that God is the owner and provider of all we have and that we are His stewards. It’s described in the Bible as a practice that will bring overwhelming blessings and gifts to our lives. Yet we are out of practice and undisciplined when it comes to obeying the Scripture.

Jesus said, “It’s more blessed to give than to receive.” (Acts 20:35)

He also said, “Give, and it will be given to you. A good measure, pressed down, shaken together and running over, will be poured into your lap. For with the measure you use, it will be measured to you.” (Luke 6:38)

Giving requires an emotional sacrifice of forfeiting ownership. It propels us into a freedom found in exercising faith, by believing God will use our gift and supply our need. Be sacrificial and commit your refund check to your church or a reputable ministry that has impacted your life.

4. Build a Nest Egg.

Not saving enough for retirement soon enough is the number one regret of older Americans. As more and more people realize that their dreams of a Floridian retirement are decades of saving short, remember that you are saving to be used by God, not to live a life of leisure.

A detailed, disciplined retirement savings plan is important to have financial freedom. Research what kind of retirement account and investing strategy best suits your age, family, career, and future needs and then be disciplined to save. Adding your entire refund check to your nest egg will help ensure a stable financial future for you and your family so you will be free to be used by God.

5. Invest.

If you have at least 3-6 months of your living expenses saved, no debt, a habit of disciplined and generous giving, and a growing retirement account, then consider using your refund check to invest.

The Bible does not condemn investing and Christians should see it as an opportunity to increase their impact for the Kingdom. The stock market’s volatility this year has been in recent headlines, so be cautious and patient to do your research and seek wise counsel. With the right strategy and patient timing, a $3,000 refund check could yield you much greater returns later.

6. Prepay Your Mortgage.

Avoid wasting money on interest on your home’s principal by using your tax refund to prepay your mortgage. Throw a portion of or your entire refund check directly towards your principal balance on your house and shave months off of your loan! (Be sure to specify that you want to pay towards your principal when you make the deposit. Otherwise, a large portion could still go to interest payments.)

7. Spend to Save.

There are some things that you should spend money on to save money. For example, my wife and I are diligent about keeping our cars well-maintained and routinely spend money to rotate our tires, change our oil on time, and care for our vehicles.

Take care of your home, your vehicles, and your appliances by using your refund check to pay for updates and maintenance. It may not be an exciting use of your money, but it will pay off in the long run.

By Chuck Bentley, Crown Financial Ministries

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Cybercriminals File Fraudulent Tax Returns

It’s that time of year again – tax season. Hopefully, you’ll get a nice refund. As you work with your accountant or submit your return through do-it-yourself software, what happens if you learn that a return has already been filed under your name and your refund has been stolen?

Tax-return fraud has become such a significant problem that the government has coined a term for it: Stolen Identity Refund Fraud (SIRF), and the Internal Revenue Service (IRS) has a team of more than 3,000 people designated to handle fraudulent tax filings. According to an article published by LifeLock, employment or tax-related fraud accounts for 34% of the six types of identity theft. A recent article in Forbes indicates that cybercriminals are “ramping up their attempts to steal information through tax filings and preparers.” According to the Government Accountability Office (GAO), “The IRS estimated online robbers attempted to steal at least $12.2 billion, if not more, through identity theft tax refund fraud in 2016. IRS vigilance thwarted most of those attempts, but the fakers got away with at least $1.6 billion.” Cybercrime experts anticipate this type of crime will not only persist but expand.

Cybercriminals often pose as the IRS, a tax-filing agency, or other tax-related organization to steal personal information through phishing, which is an attempt to steal personal information through email, smishing (SMS/text phishing), vishing (voice phishing) phone calls, or fake mailings. Beware of any unexpected communications that request personal information such as your Social Security number, banking information, or other personal data.

This type of crime does not discriminate. While criminals target banking and other highly compensated professions, they also go after patients in hospitals and residents in nursing homes, victimizing the elderly, sick, and their grieving families when they are most vulnerable. They work early in the year before you have received the documents required to submit returns. By the time you realize that you’re a victim, the criminals have disappeared with your money.

It is always important to protect your personal information, but heightened diligence is critical during tax season. Learn to recognize the most common social engineering schemes and follow these helpful tips both at work and at home:

  1. Protect Personal and Financial Records: Do not carry your Social Security card in your wallet or purse and only provide the number if it is necessary. Secure personal information at home and protect personal computers with anti-spam and anti-virus software. Routinely change passwords for online accounts.
  2. Don’t Fall for Scams: Criminals often try to impersonate banks, credit card companies, and even the IRS hoping to steal personal data. Review all communications carefully. NOTE: The IRS will not call a taxpayer threatening a lawsuit, arrest, or demand immediate payment.
    1. If you receive an email claiming to be from the IRS that requests personal information, immediately forward it to phishing@irs.gov, then delete the message without clicking any links or responding.
    2. If you receive an email or telephone call claiming to be from the IRS, call the IRS directly at 800-829-1040 to confirm the legitimacy of the request, especially if the message is threatening or demands immediate payment.
  3. Report Tax-Related ID Theft: If you learn that someone has filed a tax return using your Social Security number, take the following actions:
    1. File a tax return by paper and pay any taxes owed.
    2. File an IRS Form 14039, Identity Theft Affidavit. Print the form and mail or fax it according to the instructions. Include it with the paper tax return and/or attach a police report describing the theft if available.
    3. File a report with the Federal Trade Commission using the FTC Complaint Assistant.
    4. Contact Social Security Administration and type in “identity theft” in the search box.
    5. Contact financial institutions to report the alleged identity theft.
    6. Contact one of the three credit bureaus so they can place a fraud alert or credit freeze on the affected account.
    7. Check with the applicable state tax agency to see if there are additional steps to take at the state level.
  4. IRS Letters. If the IRS identifies a suspicious tax return with a taxpayer’s stolen Social Security number, that taxpayer may receive a letter asking them to verify their identity by calling a special number or visiting an IRS Taxpayer Assistance Center.
  5. IP PIN. If a taxpayer is a confirmed ID theft victim, the IRS may issue them an IP PIN. The IP PIN is a unique six-digit number that the taxpayer uses to e-file their tax return. Each year, they will receive an IRS letter with a new IP PIN.
  6. Report Suspicious Activity. If you suspect or know of an individual or business that is committing tax fraud, visit IRS.gov and follow the instructions on How to Report Suspected Tax Fraud Activity.
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CFPB: Make a Plan to Save Some of Your Tax Refund

Making a plan to save at tax time

The start of the New Year means its tax season again. As you gather your tax records and prepare to file, why not use this annual responsibility to take another step towards building financial security for yourself or your family? For many Americans, a tax refund is the largest check they will receive all year. Saving all or part of that refund can help you prepare for unforeseen expenses throughout the year or perhaps reach a larger savings goal.

Research has shown that setting aside just $500 can cover a lot of the emergency expenses people often experience. Perhaps, though, you want to catch up on some bills, save for a major purchase, or even treat yourself to something special. Whatever you have in mind, tax time is a great opportunity to put money aside.

Here are some basic steps to take:

  1. Estimate your refund. Think about how much you might get back in a refund, based on what you received last year. Keep in mind, there were several changes to the tax laws in 2018. Find out how these changes could impact your refund this year.
  2. Identify and prioritize your bills. This includes essentials like rent and utilities, as well as bills you would like to pay off or pay down. If you need help, the Bureau has several helpful worksheets to track your spending and get a handle on your debt. Contact your CCC Account Specialist to put your refund toward your Debt Management Program.
  3. Plan for special purchases. Consider if there are any larger purchases you would like to make with part of your refund.
  4. Calculate what remains. Add up your expenses, payments, and purchases to see what you might have left over from your refund.
  5. Make a plan to save. Set a goal to save a portion of what’s left over from your refund. Perhaps it’s $500 or 25% of your refund. Whatever you choose is OK — just make a plan so you have a savings goal. Use our tax time worksheet to help you design your plan.
  6. Finally, decide where you want to put your savings. Do you have a separate account or another way to set money aside? Or perhaps you have a prepaid card with a set-aside feature. If you have an account or a card you want to use for saving, make sure to have both your account and routing numbers available when you file your return. Rather than waiting for a check, the IRS can often directly deposit your refund into this account.

Getting ready to file

Depending on your situation, there may be a number of free or low-cost options for filing your tax return. It’s important to choose a reputable tax preparer that will file an accurate return. Any mistakes could result in additional costs and complications in the future.

You can generally get free tax preparation assistance by IRS-certified volunteers at a Volunteer Income Tax Assistance (VITA) or a Tax Counseling for the Elderly (TCE) location if:

  • Your income is $54,000 or less
  • You are 60 years old or older
  • You have a disability or speak limited English

The IRS locator tool will help you find a VITA site near you.

If you are not eligible to file at a VITA site or if there is not a VITA site nearby, there are also other free resources available for filing your tax return. Here are some options:

  • If your income is $64,000 or less, you can use a major tax-preparation software product, offered through the IRS Free File Alliance, to prepare and file your return for free.
  • If your income is more than $64,000, you can still download free tax filing forms through the IRS.
  • If you’re a member of the military or a military dependent, you can get free tax help from the military VITA program. On or off base, VITA programs are easy to find — even overseas.

Other things to consider at tax time

  1. Protect your tax data from being stolen. The IRS provides a number of simple steps you can take to protect your data.
  2. Be aware of tax scams. The IRS provides some helpful information on what to watch out for and how the IRS will communicate with you if they have questions about your return.
  3. Know your rights if you live in an area affected by disaster. In some disaster situations, the IRS provides relief from tax filing requirements. Find out whether you qualify.

Putting it all together

Planning ahead can help you to take advantage of tax time to make the most of your tax refund. Take some simple steps to make a savings plan. If you are eligible, save on filing fees by using one of the free or low-cost filing options. Finally, make sure you protect your tax information so that you can feel confident that your return is filed properly and you get the refund you have earned.

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Gift Giving on a Budget

By Connecticut Saves

As the holiday season approaches, do you find yourself looking forward to the festivities, but concerned about the impact on your wallet? You are not alone. By doing some planning now, you can simplify your gift giving. Here are ten ways you can enjoy this special time of year and keep spending in check:

  1. Food. Consumable items are very popular during the holidays. The recipients may enjoy the product themselves or share it with others when entertaining. Consider special bread, beverages, fruit baskets, snack items, regional favorites, and gourmet coffees and teas.
  2. Go green. Find locally grown plants, flowers, and dried wreaths. Another option might be to purchase colorful washable napkins, placemats, dishcloths, reusable bags, and lunch bags with individual containers for sandwiches and snacks.
  3. Set limits. This could be done by establishing a dollar amount per gift, completing your shopping in only one or two trips, purchasing one gift per family, or committing to doing all your shopping locally.
  4. Made by you. Make your own food specialty. Knit a scarf. Handcraft an item. Create an annual holiday ornament. Give a framed photo.
  5. Hobby-related gift or gift certificates. Consider the recipient’s hobbies and interests. Are there gardeners, chefs, woodworkers, knitters, readers and gamers on your list? Gift accordingly by providing them with the tools or materials to do what they enjoy.
  6. Agree on a gift challenge. Discuss this idea well in advance of the holidays with those whom you regularly exchange gifts, but make it fun. You might suggest handmade items only, gifts under $10, one gift for a whole family, limit shopping to consignment or thrift store finds or pick a theme such as useful or consumable items only.
  7. Purchase the same type of gift for everyone. It could be umbrellas, scarfs, journals, board games, puzzles, nice pens, throws, books, or flashlights and batteries.
  8. Recipe Book. You could make up a recipe book with family favorites or provide a blank recipe book for the great cooks in your life.
  9. Coupons for your services. Offer your time and abilities. You can create coupons related to your skills. Perhaps it is cooking a favorite meal, snow shoveling, home repair or an oil change, mending, guitar lessons and so on.
  10. Create a special memory. Look in newspapers or online for special events this holiday that are free or low cost. Instead of purchasing gifts, make a date with your family and friends to enjoy an event together and get together for desserts and coffee.

Most importantly: enjoy your holidays!

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5 Holiday Mistakes That Could Cost You

By America Saves

The holidays are just around the corner, which means it’s time to enjoy vacations, catch up with family and old friends, and eat great food. While the holidays are about quality time and making memories, it’s easy to get caught up with spending money. Here are five holiday mistakes to avoid this year so you can enjoy the season with your finances intact:

1. You’re shopping without a budget or list.
It’s incredibly kind to get each of your relatives, colleagues, and in-laws thoughtful presents and cards to show them your appreciation, but your wallet might be crying for help after your first few purchases. One of the biggest financial mistakes you can make during the holidays is shopping without a spending plan.

When you’re shopping for loved ones, you’re imagining how happy they’ll be when they receive your gift. But remember, financial responsibilities don’t go on vacation during the holidays. Create a budget for your holiday spending. Once you know how much you can afford to spend, create a list that fits your budget.

This way, you’ll be able to purchase the items you plan for and know for sure that you didn’t bust your budget. Here’s a free holiday budget printable to get you started.

2. You’re volunteering your home, food, and car to everyone.
If you’re the person that always offers food, transportation, and lodging to everyone, you might want to try a new approach this year. It’s thoughtful to go the extra mile during the holidays, but don’t stretch yourself or your pockets too thin.

Consider splitting the responsibilities with your friends and family. You might not think you’re overspending by being so accommodating, but the more people there are in your home, the more likely you are to receive a high utility bill at the end of the month. You’ll also be surprised at how many trips you might have to make to the grocery store to restock on food, drinks, and toiletries.

You can suggest hosting a potluck style gathering this year. With a potluck, each guest is responsible for bringing at least one dish, beverage, or party supply. At a minimum, you’ll save money on food and drinks. If you need napkins or disposable utensils and plates, you can make one guest responsible for those items as well.

If you have a ton of relatives who need to be picked up from the airport or train station, see if you can rope in other family members to help with pick-ups and drop-offs. This will help you save on gas, time, and energy.

Splitting responsibilities will help you enjoy the holidays without being completely stressed out.

3. You’re shopping too late.
So you’ve created your list and a tight budget, that’s great! Don’t wait until the last minute to actually make your purchases. By then, sales may be over and supplies will be limited.

Start your shopping early so you can snag deals while they’re still available. When you have ample time to cross items off your list, you’ll have time to compare prices and bargain hunt. Some stores offer price matching, so keep that in mind as you start shopping and placing your online orders.

Time is of the essence. Shopping early will give you time to figure out what you actually need and get those items at the best price. When you wait until the last minute, you’re much more likely to bust your budget because you’ll just be rushing to cross people off your list instead of specific items that fall within your budget. Here are some tips to help you save while you shop.

4. You’re relying on your credit cards.
Do your best NOT to rely on your credit cards during the holidays. If you can’t afford to buy it now, don’t create a bill for yourself later. Once the holidays are over, you’ll be faced with a potential mountain of debt that you’ve built.

The holidays are a great time to enjoy the company of your loved ones, but you shouldn’t feel like the only way to show your love is through expensive presents and festive decor. Enjoy the holidays in a way that doesn’t destroy your finances. This year, make it a goal to spend quality time.

If an unplanned expense does occur during the holidays and you have to use your credit, here are some tips for using your credit card.

5. You’re trying to keep up with the Joneses.
Don’t make the holidays a competition about who can wear the most expensive clothes, buy the flashiest gifts, or serve the swankiest dinner. Make the holidays about creating lasting memories and enjoying time with your loved ones, or simply yourself.

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