I am not sure if she’ll read the blog on a daily basis, make comments or simply ignore it, but whatever her choice/participation is – it is appreciated and more than welcomed. Maybe I’ll let her do a guest post
Archives for August 2008
In conjunction with providing great and useful information, I created this blog is to keep me accountable for my debts. As of this update I am focusing on my wife and I’s Credit Cards (as indicated by my status bar to the left).
This is an update as to our progress:
|Bank of America (VISA)||1,344.97||1,359.84|
We are consistently making payments throughout the month to each of the debts. I am trying my best to follow my combo debt snowball/avalanche, however, I am unable to mentally/physically just put the minimum. For instance, a couple of days ago I went to pay discover #2, and the minimum was clearly $26.00 but for reasons unknown to anyone but my subconscious I put in for 39.99. WEIRD.
Regardless, I am making my way down the debt later, slowly, but still it is decreasing, and you know what? It feels great that for the first time in my life (all 26 years of it, better late then never) I have an actual plan to reduce debt and beyond that…it excites me.
With all that being said, I will continue onward and hope to have an even better update next month!
It seems to be a common statement among parents, planners, financial aid people, some bloggers, etc. that
Don’t worry about education loans, they are tax deductible…
Like most tax advice given…it is a half truth.
Student Loans Are not Always Tax Deductible
Yes, your interest is tax deductible if you don’t pass certain threshold income limits. As you will see, these threshold limits are not very high! As indicated by IRS Publication 970 Chapter 4 (2007),
The amount of your student loan interest deduction for 2007 is gradually reduced (phased out) if your modified adjusted gross income (MAGI) is between $55,000 and $70,000 ($110,000 and $140,000 if you file a joint return). You cannot take a deduction if your MAGI is $70,000 or more ($140,000 or more if you file a joint return).
What does this mean in English? In general terms we are going to just call what you make Gross Income; we aren’t going to worry about standard deductions, itemized deductions, modified adjusted gross income, etc.
- You make less than $55,000 – your student loan interest is fully tax deductible;
- You make more than $55,000 but less than $70,000 your deduction will be phased out depending on high that income goes; or
- You make more than $70,000 – your student loans are no longer tax deductible.
It should be noted that these are 2007 numbers – 2008 schedule has not been released yet; it is likely that this number will increase for 2008, but how high? From 2006 to 2007 it went from $65K – $70K. I won’t even try to conjure a guess as to where they will go next year, maybe another $5K increase? Keep it the same? I guess it will matter how much debt America continues to incur and who our next president is.
So I have shared some public information with you, now what?
- Keep this in mind when someone tries to tell you to take out a bigger loan at a higher APR, because “Don’t worry the interest is tax deductible!”
- More importantly, and the reason I created this post, the information provided herein should be taken into account when creating your debt repayment schedule.
I am lucky to only have student loans capped under 5%, but I have friends from law school with double digit interest rates, while having CC debt underneath it, but making 6 digits…well guess what the debt avalanche says to do?
Check out the Carnival of Personal Finance #167 – “Highlights from the Beijing 2008 Olympics” hosted by Broke Grad Student! My first carnival post how exciting!
I spend an healthy amount of time on the Internet, so I figured I would share my favorite 5 free finance related sites. The reason I limited the list to free is not due to alliteration, but rather I am part of the generation that assumes everything on the Internet should be free, including great information. I decided to keep blogs out of it, because I can’t limit them down to just 5 and there are so many aggregators out there, that allow a person access to all of them so why limit ourselves. I am sure there are similar lists out there, and if anyone has any websites that I don’t mention PLEASE leave a comment.
Top 5 Finance Sites
- DinkyTown – OVER 300 financial calculators! There are 29 retirement calculators, 28 Mortgage related calculators, etc. etc. I refer to this site multiple times a week. In 10 mins you can look up the Required Minimum Distribution on an 80 year old, and find out what you can save if you refinanced your auto loan from 8.9% to 0% (Information I needed for making a reasonable car purchase).
- Google Finance – Like most products from Google, they took an old thing (Yahoo Finance #5 below) and made it better. It provides free streaming (and in some cases real time) quotes, the message boards aren’t filled with spammers and pumpers, and the charts are fun to play with.
- Wall Street Journal – Who hasn’t heard of the Wall Street Journal? I had a subscription until I found myself only reading the personal finance section. Well most of it is found, for free, under “Personal Finance” tab on the left hand side. The information ranges from how to save on bank fees all the way up to the newest estate tax changes.
- IRS – I know it sounds weird, but I love their site. The IRS site has so many answers to so many questions. Whether you are dealing with simple questions about income tax all the way up to business coordination and corporate taxes…they have the answer because they write the rules! Their search feature could be a little more accurate, but who am I to tell the IRS what to do?
- Yahoo Finance – Great articles from some of the top people in finance, great articles/headlines, and good options quotes. As mentioned, I do not like their stock quotes or message boards. Also note I do not count Suze Orman in the top people in finance – hate her with a passion.
Finance Sites I Don’t Like
A finance site that I don’t like, but is popular is BankRate; WAY too monetized, it is hard to figure out when I am looking something up or getting a quote for a mortgage. To boot, most of their calculators can be found at DinkyTown.
I would love to hear some other suggestions!