Thoughtful Thursday: Tax Time

It’s that time of year again, when a young man’s fancy turns to thoughts of… taxes. Yes, the only certain thing in life (besides death, of course) is the inevitable pinch of taxes, whether on our income, on our sales, or on our own heads (the per capita taxes). And almost as certain is attempts by tax payers to cut down on what they owe. Fortunately, there are plenty of resources out there for the diligent tax cutters; one particularly good example is that J.D. of Get Rich Slowly wrote a post about Bankrate’s 2009 Tax Guide.

There’s so much information there, it’s going to take a day or so just to get through it all. I usually just take the standard deduction when filing my taxes; since I live at home, don’t have my own business, and until last year, wasn’t doing any investing, there didn’t seem to be much I could do to get a bigger deduction. This year, though, I’m going to attempt to itemize, and see if that method will yield a higher refund.

Onto some other interesting links:

Real Estate: Asset or Liability?Mighty Bargain Hunter takes a look at the difference between the financial community’s definition of an asset (something that is owned and has value) and Robert Kiyosaki’s recasting (as asset is something the brings in money).

My Thoughts: While both definitions are good points to keep in mind, attempts to redefine a word tend to lead to confusion. It’s better to think of Kiyosaki-style assets by a different name, like ‘passive income sources,’ and understand the mindset behind thinking of them as assets. Particularly during tax time, knowing what the IRS considers an asset is important, however much you might disagree with their definition.

Investing with Minimal Risk – Trent at The Simple Dollar answers a reader’s question about ways to invest without the chance of losing the investment (even if it means very low returns). He recommends investing in yourself and becoming self-sufficient, as well as putting your money in Treasury notes and high-yield savings accounts.

My Thoughts: I think it’s not generally a good idea to focus on capital preservation to such an extent that you give up all chance of growth; Treasury notes and high-yield accounts will barely be able to keep up with inflation. Still, better a steady hand with low yields than shooting for the moon and pulling out after your investments have decreased in value. I also recommended investing in a stable value or money market fund via a 401(k); if your company gives you a match on your contributions, it’s about the only safe way to get a 100% return on your money.

How to Save Money on Cell Phone Insurance – Cody Hebden writes a guest post on Queercents, relaying an interesting way to get around high-cost, high-deductible insurance plans on personal items like cell phones and laptops. The method involves taking out a “inland marine policy” for the replacement costs of the item, whether as a separate policy or as a rider on an existing home policy.

My Thoughts: It sounds like a really interesting, and frugal, method of cutting down on replacement costs for personal electronics. I’m going to look into it a bit more, though, as the math described seems to favor the policy holder way too much. (The complete cost of replacement insurance for a $400 iPhone? $35 a year; which enables you to be fully reimbursed should the iPhone be lost, damaged or stolen. I think one (or more) of these events is quite likely to happen within the 12 years it would take the insurer to recoup the expense of the replacement coss, so I’m a bit suspicious about these policies…)

How to earn an extra $1000Studenomics is currently taking a short vacation, but before he left, he wrote a post about how earned some money for the trip. His methods included dividends, blogging proceeds, selling some of your stuff on eBay and reselling tickets for popular events.

My Thoughts: It’s a good list, with plenty of useful suggestions (although, as mentioned by others in his comment section, you have to be careful and aware of local laws if you are trying to buy and resell tickets, as you may end up pegged for a scalper). Most require a significant amount of time to set-up, though, so you shouldn’t rely on them for money to make a last minute trip.

Top 6 Reasons High School Students Think You Should Invest
– Jeff Ross of GoodFinancialCents lists reasons students gave for investing at a local high school . Most are forward thinking (retirement, college expenses), a few are more straight forward (making money) and at least one I hadn’t even considered (bragging rights; which are few and far between in this market).

My Thoughts: I’m impressed with some of the reasons that came up during Jeff’s talks with these kids, as well with the kids themselves for thinking about their future like this. (How many 17-year olds do you know who are thinking about retirement, even in passing?) I just wish I had more of this sort of financial exposure when I was a high-school student, so I could have gotten an earlier jump on controlling my money and planning for the future.

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