Category Archives: Personal Finance

Five Financial Mistakes to Avoid in 2018

With the advent of the new year comes the opportunity to reinvent yourself, and reinvest in your business ventures. It also comes with the potential for massive, horrible, earth-shatteringly bad decisions that even the most astute entrepreneur can commit if they’re not careful. And while we can’t guarantee that 2018 will be a flawless year financially, we can at least point out the five economic gaffs you should definitely avoid this new year:

Overspending

Easy right? Except it can be difficult to know when you’re overspending. You might think you have enough cash tucked away to afford a new car or to build the dream deck for your backyard, but ask yourself about how you’d deal with an emergency? Do you have three or more months of money to live off of at your access? If the answer is no, reconsider the Corvette, and put off the home remodel for a time when you really can afford it.

Not Doing your Homework

Was 2017 a successful year for year? If so great, but don’t go spending your hard-earned capital willy-nilly. If you plan on making a big investment, give it your time and attention. You wouldn’t buy a cafe without first discussing restaurant financing options, would you? Nor should you dive into a major financial purchase without first giving it due diligence. This is basic stuff, but overconfidence can lead to silly decision making –– even among the calmest heads.

Nearsightedness

Just because things have gone well lately, doesn’t mean they’ll always be so fiscally productive. Don’t assume your assets will always retain their value. The only constant in the financial world is change. And just because one stock, business, or investment is riding high now, doesn’t mean it always will.

Disregarding Retirement

When is too early to start saving for retirement? It’s a trick question, because it’s never too early. But it can definitely prove too late. If you eschew setting money aside in a savings account or, in a 401k, to try and capitalize on short-term opportunities, you’ll likely be leaving yourself exposed years down the line.

Clamming Up

The worst mistake is to let one mistake snowball into a cache of errors. If you’ve made a bad investment, or spread yourself too thin with your spending, don’t play the denial game. Don’t shut yourself away, and pretend to yourself –– and your loved ones –– that everything is “okay.” It might be a tough conversation to have, but facing your financial situation is the only way to improve it.

Interest is your biggest obstacle to becoming debt free

A lot of people get bogged down with the little stuff when it comes to budgeting. If you’re like me, you recognize that while a small hole can sink a big ship, a large hole can sink it faster. Instead of worrying about avocado toast and a daily latte, tackle pricey interest costs to save big bucks today.

Why bother?

Most people don’t worry about interest charges – the finance company, or car company or credit card company can charge whatever they want and, if the payment is low enough, people will simply sign on the dotted line without worrying about the total interest cost.

That can be a huge mistake. Take a $10,000 car loan at 13%, for example. Sure, the payments might be affordable month-to-month but, if you take out a 5 year loan, that $10,000 car will end up costing you almost $20,000!

The big picture

The solution to any debt problem is to lower the interest rate. However, almost no finance companies will allow you to lower your rate once you’ve taken out the loan. Instead, you’ll have to do something called refinancing, usually through personal loans.

With a personal loan, you can negotiate a lower interest rate on your credit cards, car loan or store cards. Instead of having five loan payments to make each month with various interest rates and payment amounts, a personal consolidation loan will combine everything into one payment with a lower rate. Depending on the company, this consolidation payment could even be lower than the combined amount of all your payments before. Talk about a deal!

Let’s look at an example. Remember that $10,000 loan from before? Let’s imagine the interest rate has fallen, from 13% to 4%. Instead of paying almost $20,000 over 5 years, you’ll only pay $12,200. Same amount of time, lower monthly payment, less interest paid. Win-win.

A lot of people look at budgeting the wrong way. Instead of cutting out all the fun luxuries of life, look at places where you can save big bucks. For many people, that means lowering the interest rate on your debt.

What Does the IRS Have to Do With an EIN?

The IRS is responsible for providing businesses with an employer identification number. Most companies will need this nine-digit Federal tax ID number to operate legally. Even if your business is one of the few that doesn’t require an EIN, they still offer plenty of benefits that may have you decide to apply for one anyway.

Benefits of Applying for an EIN

Obtaining a tax ID number for your company has several benefits. In addition to allowing you to apply for necessary licenses and permits to operate legally, an EIN also allows you to apply for bank accounts, credit cards or other types of credit in your company’s name. It may also protect your personal assets from being seized if your business were to endure financial stress.

Who Needs an EIN?

Some companies must apply for a tax ID number. If your business has employees, is a partnership or corporation, or sells tobacco, firearms or alcohol, you must apply for an EIN. Other reasons you are required to apply include if your business uses a Keogh plan, withholds taxes on income it pays to non-resident aliens, or works with the following types of organizations:

  • Plan administrators
  • Non-profit organizations
  • Estates
  • Trusts
  • Mortgage invest conduits
  • Farmers’ cooperatives

How to Obtain an EIN for Your Business

Applying for your tax ID number is simple on IRS-EIN-Tax-ID. The application, which is available 24 hours a day, is easy to fill out and takes just a few minutes. Submit it immediately and you will likely receive a response in just a day or two. You can use an IRS EIN lookup to track your number. For more information about applying for an employer identification number, talk to the professionals at IRS EIN Tax ID Filing Service. They can assist you with the process whether you live in Portland, Maine, Portland, Oregon, or anywhere between.