This Week In Your Wallet – April 12, 2011
From A Town Known As Wheeling, West Virginia.
That’s where I started pulling this week’s newsletter together. I grew up here. My family moved away after high school. I’m back – sadly – for the funeral of a close friend. Wheeling is one of those towns that has felt as if it’s been in and out of recession even when the country was booming, because the industries (steel, coal) responsible for its go-go times have suffered over the years. Of all things, the arrival of a Cabela’s (the massive outdoor sports store) seems to have breathed new life into the place.
I was thinking of it recently as I did some reporting in Towanda, Pennsylvania. Towanda, like Wheeling, was a town with more downs than ups. And then, just in the last few years, mining companies figured out how to get at the massive quantities of natural gas the town was sitting on. Now the place is booming. Real estate prices have soared. Businesses, small and large, are raking it in.
Whether you live in a Wheeling, a Towanda, a Detroit, or a place like Austin, Texas that seems immune to the financial rollercoaster, what I’ve learned from the time spent in towns like this is that you have to make money – and sock it away – while you can. There’s no guarantee that tomorrow will be as good as today. We can hope for that. We can invest to give ourselves the best possible odds of making it come true. But there’s no guarantee. So while you’re feeling flush, do yourself a favor and make the most of it.
My Baby, She Wrote Me A Letter
The kind of letter that comes from the aforementioned baby, is of course, the kind you want to receive. The kind you don’t? One from the IRS. Yet, if this year follows last year’s trends, the number of audits will climb by about 10 percent and most of those audits (because the IRS is being told to keep costs down just like the rest of the government) will happen through the mail.
This week, consumerismcommentary.com , a blog I read frequently, posted a list of 10 things that will get you that undesired second look from the IRS. They include filing a loss on your schedule C year after year, giving much more to charity than you look like you can reasonably afford, hiring your kids and other family members (then writing off their salaries as deductions), and deductions and income where the numbers are too round. To see the rest of the helpful list go here.
What if you want to bend over backward to avoid being audited? Use tax software (or a tax preparer who will use tax software) to do your returns. It’s a great way to minimize careless errors. Come clean about how much of your living space you’re really using as a home office (and keep detailed pictures and records to prove it just in case). And be just as diligent and honest about any business expenses you choose to deduct. They raise the IRS’s eyebrows as well.
These are good suggestions whether you’re done with this year’s return – or doing some last minute tap-dancing. Just remember, it’s fine to go on extension. But though you’re automatically granted an extension to file that is not the same as an extension to pay.
Girl, You Really Got Me Now
If you were considering an all-boys school for your son, here’s a reason not to. A new study out this week took a look at the performance of students in 264 high schools, 395 middle schools and 1000 elementary schools across Israel from the years 1993 to 2005. It found that having more girls in the classroom boosted test scores – for both boys and for other girls – significantly. A 20 percentage point bump in total girls hiked the scores of 10th grade boys by 1.6 percent and those of 10th grade girls by 1.3 percent. What’s up with this? As is so often true (and frustrating) about research, the authors of the study are left to hypothesize about the why. They believe more girls lead to a calmer, less disrupted classroom and better relations between students and their teachers and students and their peers.
Money, Money, Money, Money
Lastly, this week brought news that some big banks are going to start testing $4 and $5 ATM transaction fee (ouch). I guess not enough of us are walking away from the $3 a pop I’ve been noticing for months now. Just a reminder that if avoiding ATM fees is high on your to-do list (and you should at least be cognizant of them: A $3 fee, twice a week, adds up to $312 a year. That’s a car payment, a plane ticket, in other words – it’s real money). You can avoid them by a) choosing to bank at the place with the most convenient machines for you or b) choosing to bank with a place that doesn’t have machines at all and thus refunds ATM fees. Among them: Charles Schwab Bank, State Farm Bank, Ally Bank and USAA.
Have a great week!
Jean
