Archive for New Year’s Resolution

Charitable Giving

Charitable Giving and Taxes 

It’s that time of the year again: a combination of New Year’s resolutions and the start of tax time has many of us looking for a place to donate money.  It can be difficult to figure out which charity is most deserving of your money and how to make your charitable donations work best for your financial situation.A cartoon image of a man handing money to other men.
 
You might have a favorite charity, like a local group or someone with whom you’ve worked for years.  If not, finding the right charity can be a difficult task, both because unethical individuals may want to exploit the best intentions of others and because running a nonprofit organization is a difficult task, making many well-intentioned charities ineffective at fulfilling their mission.

Check out the charity with an objective watchdog group

One of the difficulties with charitable giving is understanding where your money goes.  In recent memory, there might be no better example of the confusion surrounding a charity than Invisible Children, the organization behind Kony 2012.  It soared into the public consciousness a few years ago behind a viral marketing campaign, followed by a very public arrest of one of its central figures after an alleged act of public indecency.
 
In the wake of his arrest, various reports accused the organization of diverting attention from larger human rights abuses in the region and questioning the financial background of the organization.  It’s unclear, even this far removed, what happened with Invisible Children, and whether the public backlash was warranted, but various watchdog groups certainly paint the charity in a positive light. That’s why the best way to determine whether a charity is a good organization and worthy of your donation is to check with the three biggest charity watchdog organizations:  Charity Navigator (charitynavigator.org), Charity Watch (charitywatch.org), and the Better Business Bureau’s Wise Giving Alliance (give.org), all of which are also endorsed by Consumer Reports.
 
  1. Verify each charity’s tax-exempt status: Never assume an organization has tax-exempt status, even if it might seem like it does or should.  For example, some universities offer tax-exempt donations for their general scholarship funds and other donations, but giving to specific departments or organizations, such as the debate team or theatre department, is not tax-exempt.  Even if your donation was tax-exempt last year, even if someone involved in the organization tells you that they’re tax-exempt, even if you’re 99% sure the organization is tax-exempt, check with the IRS website athttps://www.irs.gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check
  2. Always give money directly: One way that scammers will use the goodwill of charities for their own benefit is to call people and ask for donations over the phone.  Don’t assume that someone who calls you actually works for the organization.  Instead, finish your conversation and then donate directly to the organization.  Even legitimate fundraisers often take 40 percent of the proceeds, keeping your money from the people you really want to help. Donating directly also gives you more control over the paperwork, ensuring you get all the documents you need for a tax deduction. You can also confirm the quality of the organization and that the organization is tax-exempt.
  3. Make sure to request privacy: Once you’ve given money to a charity, it’s easy to end up on countless lists with people calling constantly from other charities.  If you’ve ever given money to a political campaign, you’ve probably already experienced this.  Some of our members report that they’ve received correspondence from political parties for decades, even after switching political parties.  So be careful! Make sure you care enough about the charity that it won’t bother you to have your dinner interrupted or get junk mail.
 
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New Year’s Resolutions

New Year’s Resolutions? We Have Some Easy Suggestions!

fireplace with candles around itBy the end of January, many of us will have forgotten all about our New Year’s resolutions. It can be difficult to change our lives, even when it’s for the better.  Knowing this, we want you to know that, in your financial life, there are changes you can make today that will last the entire year.  Here are three resolutions you can set today and some follow-up goals for the rest of the year. 

Today:  Save money automatically.  If you want to improve your net worth, build financial security or make a big purchase at this time next year, the easiest way to do so is simply to automate your savings.  You can set up an automatic transfer to savings so you won’t be tempted to spend it.  With many of our savings products, you can even access the money if an emergency arises.  Check out our savings accounts and automatic transfer options for those savings accounts.

Later:  Set up an emergency fund.  How much do you have set aside for a rainy day or to cover the unexpected?  If an emergency came up, would you have to sell investments, cash in your retirement or borrow from family?  Make this the year for setting up your emergency fund.  You’ll eventually want to have at least six months of income put aside where you can get to it. for now, start with $1,000, a month’s income, or whatever feels realistic.  It might be difficult to get in the habit of saving money, but this is the resolution you’ll be really happy you kept if something unexpected happens.

Today:  Pay down your debt.  If you’re struggling with debt, there are three basic solutions for paying it down, getting your payments under control and getting ahead of debt.  You can make more frequent payments, pay more each month or lower your interest rates.

Paying more frequently makes sense if you get paid every two weeks: You might already know about the advantage of bi-weekly payments, which let you make the equivalent of an extra monthly payment every year.  If you’re already doing that or you don’t get paid on a weekly schedule, you can also increase the amount you pay every month.  Even an extra $25 per month is $300 per year, and you can set up those payments automatically.  Make sure you increase your payments the most on the bills with the highest interest rates first, even if they don’t have the largest balances.

Finally, you can get ahead of your debt by lowering your interest rates.  You can call the creditors who are charging you the highest interest rates and pay the bill, transfer the balance to a credit card or loan with a lower interest rate, or see if they’ll offer you a lower rate due to improved credit.  One way to make this work is to arrange a home equity loan at a lower fixed rate, then move your balances with the highest interest rates to the loan.  You can apply for a loan here!

Later:  Get control of your spending.  It’s time to make a budget and stick to it.  Build rewards into the budget so you’ll actually be happy to follow it.  Take a look at what you use your credit cards to buy, then budget at least some money for those items or activities.  You’ll never keep a resolution like “stop eating out,” but you have a good chance of keeping a resolution like “don’t go over the eating out budget.”  This also gives you 12 chances to succeed:  Every month you can do better than the month before.

Today:  Make a drawer.  Many of us who have had the misfortune to act as the executor on a loved one’s estate have had the terrible task of finding all the savings, debts, insurance policies and other financial parts of their lives.  Don’t do this to whomever is taking over your life.  Empty a drawer in your kitchen or study and put as many relevant documents in it as you can find.  Make a list of everything in the drawer and everything that’s missing.  Put a copy in the drawer and another with your will so it’s as easy as possible for the grieving individual in charge.  As with any sensitive, personal data, keep this information in a safe place that only you and the likely executor(s) of your estate will have knowledge.

Later:  Fill the drawer.  What’s missing from the drawer?  Do you have a will?  How much life insurance do you have?  Do you have enough savings to take care of your children?  What about a plan for how they will receive that money?  

Talk to a financial planner and insurance specialist to make sure you’re set.  With any luck, 2016 won’t be the year you need it, but if it is, it’ll be better for everyone involved if there’s a plan.

And that’s it … three things to do today and three projects to complete during the year.  None of them are out of reach, so you’re setting yourself up for success by making resolutions you can keep.

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