Ready for Your New Baby Tax Breaks?

A baby with her mother

Having a baby puts you on the hook for years of expenses, but the good news is that several new baby tax breaks are coming your way! Be sure to explore everything that’s available to you and take advantage of whatever you can. Here’s the lowdown:

Child Tax Credit

You’ll receive a $1,000 child tax credit the year your baby is born, and you’re eligible for this credit every year until the child turns 17. The credit is subject to income restrictions, and it starts phasing out at $75,000 for single and head of household filers and $110,000 for joint filers.

Child Care Credit

The IRS offers a child care credit to help offset the expenses, and it ranges from $600 to $1,050. In order to qualify, you must pay for child care in order to work and earn taxable income. If you’re paying for more than one child under 13, the credit doubles to between $1,200 and $2,100. What you’ll have to pay is based on your income and how much your child care costs, but you can claim up to $3,000 in child care expenses for one child and $6,000 for two or more.

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The High Cost of Divorce

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Getting divorced is very expensive, and it has a ripple effect on your finances that can last a long, long time. The cost of divorce includes everything from the actual filing of paperwork and attorney fees to the way assets are divided. The more amicable you can keep the proceedings, the less it will cost you.

The Cheapest Option

If you represent yourself in your divorce, you’re responsible for filing all the legal forms and pay for only the filing fees and court costs. You can do this when the divorce is uncontested, and both spouses are willing to settle. This is called pro se litigation divorce, and as long as you and your spouse agree on the specifics ahead of time, it’s just a matter of the judge signing the documents. This method is the simplest and cheapest way to handle a divorce.

Use a Mediator

If you’re not comfortable representing yourself or have disagreements to iron out, mediation is a good option. As an objective third party, the mediator can help negotiate your issues and reach a settlement that’s agreeable to both of you. Mediation is not nearly as expensive as hiring attorneys, and it’s a good way for couples to iron out problems fairly and without a long, protracted court battle.

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What is Prime Credit?

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Credit terminology can seem confusing. Super-prime. Prime. What is prime credit anyway? As you might be able to guess by its name, prime credit is a good thing, and it’s a goal to shoot for when it comes to establishing and maintaining your credit score. Educate yourself on prime credit, so you’re ready to take advantage of the right borrowing opportunities.

Definition of Prime Credit

Simply put, prime credit means your credit score falls within a range that’s attractive to lenders and creditors. They want to lend to borrowers with prime credit because they can be reasonably sure you’re going to pay it back. While it’s not as high of a category as super prime, people with prime credit are low-risk. Each credit bureau has its own definition of prime credit, which can range from as low as 150 and as high as 950, and includes the very high-end super-prime category.

Prime Credit Ratings

  • Equifax 280-850
  • Experian 330-830
  • TransUnion 150-950

Benefits of Having Prime Credit

Because of the reduced risk that comes from lending to people with better credit, credit card companies and other lenders offer some of their most competitive interest rates and terms when you have a prime credit rating. Now, borrowers with super-prime credit will still pay a lower interest rate because they’re an even lower risk, but a prime credit rating will allow you to access loans and lines of credit, even in a more competitive market.

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How to Lower Moving Costs

big truck

Moving is the worst, right? And it’s not cheap, either. If you’re planning to move soon, check out these tips for how to lower moving costs. Moving is a hassle, but at least you can save some money in the process!

Get Organized

Start with a super-organized game plan. Assign tasks to dates and allow reasonable time to get stuff done. This makes moving less stressful and helps keep your expenses low. Plan ahead of time for cash flow, and find resources for getting cash if you need it.

Don’t Move When Everyone Else Does

Schedule a move date during a non-peak period if you can. Everyone moves on the first and last days of the month and in the summer. Weekends and holidays are popular, too, so try do move mid-week if possible. These strategies will help you avoid paying premium rates.

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Cost-Cutting Tips for Freelancers

Freelancer

If you do freelance work, you already know that being self-employed gives you incredible flexibility and freedom, but you’ve got to operate like a well-oiled machine if you want to be successful. You’re running your own business, so use these cost-cutting tips to keep expenses low and your profits healthy.

Free is Key

The beauty of freelancing is that you don’t need an office. Working from home, the coffee shop, the park, or the library - they’re all options for you. Find free wi-fi and a good cell, and you’re all set. Every dollar that goes out is one less dollar that stays in your pocket as profit. This is the mindset you need to have all the time when you work for yourself.

Start Tracking

Unless you’re a freelance accountant, you probably try to spend as little time on financials as possible. But this is the lifeblood of your business, so you need a system that will help you track expenses, invoicing, and receivables. It’s easy to waste money, especially if it’s going out in small amounts. Get a grip on how much you really spend, and it’ll be easy to identify costs that aren’t worth it.

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Finance Tips for Millennials

Millennials

Millennials approach life very differently than generations before them. And while that’s true of every young, up-and-coming generation, finance tips for millennials have changed dramatically compared to only a few years ago because of how they want to live their lives. Sometimes they get a bad rap, but new ways of solving problems are always a good thing.

Prioritize Your Life

Saving for retirement is not the goal for many millennials. It’s way off in the future, pensions are a pipe dream of the past, and there’s disillusionment in the air about what will be waiting after 50 or 60 years of hard work. Millennials want to enjoy life now, and they like the good life. But that doesn’t mean they’re financially irresponsible. You need money to accomplish these goals, and millennials are finding alternative ways to fund a lifestyle of fun and travel.

Create Passive Income

The idea of your money making money or earning money without much effort isn’t new. That’s why investing in the stock market or real estate has always had appeal. But the reality for most people is that they pick up extra work or side hustles when they need cash. That helps, but you’re limited by your time and skills. Millennials are finding new ways to create passive income streams.

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Can You Refinance Student Loans When You’re Self-Employed?

Savings Finances Economy

Freedom, flexibility, and control are some of the biggest reasons people to choose to work for themselves. But if you’re self-employed, how does it affect approval if you want to refinance your student loans? Good question. You can do it, but it’s not always easy.

Unpredictable Income

One of the hardest things to get used to when you work for yourself is fluctuating income. It’s the perfect time to reduce your student loan payments or pay off your debt more quickly by refinancing. The problem is that it’s not always easy to find a lender who works with self-employed individuals. That’s why short-term loans are so common with entrepreneurs.

Understand the Process

Be sure you understand your loan situation. Refinancing may or may not be a good idea. Federal student loans have some unique benefits attached, like special income-driven repayment plans, so you could lose out on those by refinancing with a private lender. You should also know that many don’t work with self-employed clients.

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Investing Mistakes to Avoid

Savings Finances Economy

The key to building wealth is to follow a strategy and avoid making investment mistakes wherever you can. You may not think of yourself as rich, but putting your money to work for you is the secret to amassing the wealth and savings you’ve only dreamed about. If you can avoid these mistakes and misconceptions, you’ll be well on your way:

Not Saving Money

While investing is a surefire way to increase your wealth, it’s also vital to have a savings strategy that not only puts money aside for your investment accounts, but provides a cash flow cushion. If you consciously save a set amount each month, that means you’re on top of your expenditures and budget, and that’s a good place to be. Your goal is to avoid the stress of credit card debt while putting money away for investing at the same time.

Maintaining Social Media Status

With people constantly oversharing their latest luxury purchases and grand vacations on social media, it’s easy to want to keep up. If you develop the habit of buying certain brands, spending more than you can afford, and acting like you have more money than you actually do, it will wreak havoc on your budget and cripple your investment ability. Don’t compare your results to anyone except yourself.

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How to Organize Your Wallet

Man With a Wallet

Let’s talk about how to organize your wallet. What does yours look like? Is it bulging with receipts and scraps? Does it need a little TLC? These questions are designed to get you thinking. Your wallet is an excellent metaphor for the way you handle your personal finances and an expression of your respect for money. Let’s get down to business and get it organized, so you can take a renewed approach to the way you control and spend your cash.

Empty Your Wallet

Open up your wallet, and pull everything out. Chances are, it’s pretty dirty and filled with things you no longer need. If you need a new wallet, now’s the time to replace it with something fresh and new. As for what was inside, file any receipts you might need to save, such as medical or business expenses. Cut up any credit cards that you don’t truly need. Trash anything that’s out of date, like expired identification cards or business cards you don’t want.

Categorize Your Stuff

Next, group your items so you can find them easily. Put credit cards together, cash sorted by denomination and facing the same direction, and gift cards in one place. Medical insurance cards, business cards, library cards, and other things like that can go in a separate area so they don’t get mixed up. Create a designated place to hold business receipts to be expensed, if those are something you need to track.

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What is a CPA?

Certified Public Accountant

If you’ve heard of a CPA, you probably know it means some type of accountant. But what is a CPA, really? Why is it an important distinction from your average accountant at the office? Let’s take a look at who CPAs are and what they do.

Certified Public Accountants

CPAs, or Certified Public Accountants, are more than just traditional accountants. They exist to help businesses of all sizes grow and flourish. CPAs are knowledgeable in all aspects of business finance, so they can help with everything from analysis and financial statements, to complicated forensic accounting and tax planning. Between their education, credentials, and experience, they’re qualified to do a lot more than run reports and balance checking accounts.

CPA Requirements

It’s not easy to become a CPA. Besides a college degree in accounting, they have the real-world business and financial experience it takes to put concepts to work. In order to get a CPA certification, candidates must pass the Uniform CPA Examination, which is an exhaustive test managed by the American Institute of CPAs. Believe it or not, it’s been around since 1896! The exam includes multiple choice questions, written communication tasks, and simulations of real scenarios on a variety of subjects. Needless to say, it’s highly challenging. The average passing rate in 2015 was a little less than 50%, so it’s a grueling undertaking. The CPA exam takes a lot of preparation, along with the experience and mindset that’s needed to be able to perform in the field. The last step in becoming a CPA is to get licensed by the Boards of Accountancy for the particular geographic location.

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