Citi is offering another chance at some free money in the form of $200 to Restaurant.com.

How to Get Your $200 Gift Certificate

1. Sign up for the Citi Forward card and make at least $100 in purchases by 9/15/10.
2. A fulfillment package will arrive by mail in 6-8 weeks after you meet the minimum purchase requirement.
3. Redeem the gift certificate online at www.dine.restaurant.com before use.
4. Enjoy some nice dinners!

Citi Terms and Conditions

• Limit of one (1) gift certificate per restaurant per visit.
• No annual fee.
• For Thank You Points (see below), purchases not eligible to receive the 5x points include, but are not limited to, those made at warehouse clubs, discount stores, department stores & convenience stores.

More on Citi

Thank You Points. The Citi Forward card is part of the ThankYou program. Earn 5x ThankYou® Points for every $1 spent at restaurants, on books, movies and music. Get 1 reward point for every $1 you spend on all other purchases. Plus, earn up to 2,500 when you sign up for Paperless Statements.

Balance Transfer. Citi is offering a 0% Intro APR on Balance Transfers for 12 months and 0% Intro APR on Purchases for 7 months.

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The part that surprised me, was that it was an A grade loan. However even with an A grade, Jill may be onto something when she filters for loans under $10,000 in How to Earn High Returns with Lending Club.

The part I found fascinating is how much information Lending Club provides me with. The loan was taken out in February 2009. They paid on their loan for seven months before a late payment. Once they stopped paying the loan went to a collection agency in December 2009 and was charged off in February 2010. There’s an entire collection log that shows the contact between Lending Club and the borrower over the year.

The most interesting part, take a look at what happened to their credit score:

Obviously, something went terribly wrong and their kitchen and bath remodel wasn’t the only thing that got charged off, as you can see with their credit score plummeting by 250+ points.

Since it was my first charge off, I couldn’t help but feel a little scammed since I invested time reading about the borrowers personal statements and somehow felt connected to their beautiful new kitchen. Then, I wondered if there was even a kitchen and bath remodel.

However, when I come back to the numbers and remind myself that 2.20% of loans were in default when I took on this loan in my Lending Club review, charge offs were to be expected.

And let’s be honest, I lost $20. By the looks of their credit score, they’ve lost a lot more. And for that I feel bad for them. Hopefully they’ll recover from this.

I’m amazed at how powerful the connection with the borrower becomes when you have so much information! And since I took advantage of the Lending Club $25 Sign Up Bonus and the rest of my loans are current, I’m still ahead!

Have you had any defaults? Did you see anything interesting in their collection log or credit score time line?

Announcements

Yakezie. I joined a group of writers in the Yakezie network. I’m always on the lookout for ways to feature great articles for you to read; you’ll see some of them each week in the list of personal finance articles.

Saving & Frugality

• 5 Frugal Ways For You and Your Kids to Spend Summer Vacation
• Saving America’s Middle Class – The Return of Frugality
• We Never See the Money, So We Don’t Miss It
• Save Money on Razor Blades

Investing

• A Primer on Bonds – I (The Types of Bonds)
• Buying ETFs in Vanguard IRA Account Is Tricky
• What Is Better from a Tax Perspective: A Roth IRA or a 401k?

By the Numbers

• 6 Ways To Save Money At The Movies
• Best US Cities and Places to Live in 2010
• 3 Stories About Banking

And More!

• Home Loan Documentation Checklist
• Historical Mortgage Rates Chart (1986-2010)
• Carnival of Personal Finance

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Along with permanently increasing FDIC insurance limits, the financial reform bill regulates investment and trading practices, hoping to prevent the practices that led to bailouts and banks that are “too big to fail.”

The financial reform act also takes steps to regulate the way these institutions interact with consumers. Below, find some of the provisions with the biggest impacts on individuals.

Financial Reform Consumer Impacts

• New Consumer Protection Agency: The Federal Reserve will create a new independent Bureau of Consumer Financial Protection, which will consolidate oversight previously conducted by various agencies across the government.

  What it means for you: One body will oversee products such as mortgages, credit cards, and payday loans, making them easier for consumers to understand.

• Free Credit Scores: If you are turned down for any kind of credit or loan, or offered an interest rate that is higher than the best-available, you are entitled to view your credit score. This is an addition to a current law that allows you to see your credit report in these situations. If you just want to do regular checkups on your credit score, you will still have to pay for a service like My Fico or turn to a free alternative such as Credit Karma.

  What it means for you: If you are denied credit, you can access your credit score for free. This will in turn help you recognize and correct mistakes on your credit report and understand how you can qualify for the best interest rates in the future.

• Cash Discounts: Businesses are now legally allowed to offer discounts to customers who pay with cash rather than credit or debit cards. This has already become widespread at gas stations but you may start to see it other places as well. Businesses will also be able to offer discounts for using certain brands (e.g., Visa instead of Mastercard).

  What it means for you: If you’ve gone all-plastic in recent years, you might want to start carrying cash again to help you get the best prices on everyday items. But if the discount is 1-2%, you may break even by using a cash rewards credit card.

• Minimum Charges: In a similar provision, businesses will be allowed to require a minimum credit card charge of up to $10.00. This was previously forbidden.

  What it means for you: You will have to start carrying cash if you usually put your $2.00 coffee on a credit or debit card. Theoretically prices could fall as businesses avoid fees, but the reality of that happening remains to be seen.

• Mortgage Regulations: The new law makes a variety of changes to mortgages, but one of the biggest requires lenders to accept additional payments on adjustable rate mortgages without charging prepayment penalties. In addition, banks cannot pay bonuses based on the type of mortgage a broker sells you. Finally, mortgage lenders must fully document your income and your ability to pay back the loan.

  What it means for you: A mortgage you can understand and afford and the right to pay it off or refinance it with no penalty. On the other hand, it may be harder to qualify for a mortgage since they will be less profitable for banks.

Other Finance Reform Changes

In addition to the personal impacts listed above, you might also be interested in the following:

• Financial Literacy: A new Office of Financial Literacy will come up with a plan to teach Americans the basics of personal finance topics such as savings, loans, retirement and investments.
• Lower Interchange Fees: The Fed can now cap the rate that companies such as Visa and Mastercard are allowed to charge businesses for processing credit and debit card payments. This will mean lower costs for businesses, which theoretically could (but probably won’t) mean lower prices for you. It will help small businesses who have higher costs than their major corporation counterparts.

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Recession Brings Changes to FDIC Limits

Since 1980, the FDIC insurance limits on insurable bank accounts were $100,000. But when the stock market crash occurred in the fall of 2008 and 25 banks became insolvent, fears among customers and small business owners started to rise and for good reason: only 63% of deposit accounts were protected with the $100,000 limit.

The FDIC insurance coverage amount was raised temporarily in 2008 to $250,000 in order to calm fears in the wake of the largest bank failure of all time, Washington Mutual, followed by 140 other bank failures in 2009 (to date there are 100 banks on the bank failure list in 2010).

The financial reform bill, officially named the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law on July 21, 2010, made this $250,000 FDIC coverage limit permanent. The FDIC 2010 limits are retroactive to January 1, 2008, and because of this the FDIC is in the process of reimbursing money from the accounts of 9,500 people who held more than $100,000 in a single account.

FDIC Insurance Coverage

Not all types of bank accounts are insured, and not all banks carry FDIC insurance. Make sure your bank is covered by FDIC (typically there is a sticker on their door or teller window, or you can call the FDIC to check at 1-877-ASK-FDIC). Also, you should know that investments are not covered by FDIC insurance, even if they are through an FDIC-insured bank. FDIC-insured bank accounts for individuals include single accounts, joint accounts, POD/ITF accounts, living trust account and irrevocable trust accounts (for a complete list of accounts that are covered, check out the FDIC Information Page). For an estimate on how much of your accounts is covered check out the FDIC EDIE calculator.

Money Exceeding FDIC Limits

If you have more than $250,000 to deposit, you need to pay special attention to how you deposit this amount in order to minimize your risk should your bank become insolvent. The FDIC explains that “All of your single accounts at the same insured bank are added together and the total is insured up to $250,000.

For example, if you have a checking account and a CD at the same insured bank, and both accounts are in your name only, the two accounts are added together and the total is insured up to $250,000.” However, “you may qualify for more than $250,000 in coverage at one insured bank or savings association if you own deposit accounts in different ownership categories.

The most common account ownership categories for individual and family deposits are single accounts, joint accounts, revocable trust accounts and certain retirement accounts.”

You can also open separate accounts at different banks to get more than $250,000 in FDIC insurance coverage.

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However, I’m willing to bet that you are too! Let’s see where the government money is padding your wallet this summer.

Free Money from the Government

1. Making Work Pay Tax Credit Eligibility. There was a lot of hype last year about this tax credit, but did you know it covers 2010 too? Don’t forget you’re getting lower withholding this year; it’s not yet included in the tax brackets for 2011.
2. Social Security Donut hole. The $250 donut hole checks are in the mail this summer. Good news for seniors on a fixed income.
3. 0% Capital Gains Tax. If the Bush tax cuts expire at the end of this year, the 0% capital gains tax will be gone. I’m planning to execute quite a few strategic sell-offs throughout the year to seize this opportunity. It’s one of many tactics in How to Take Charge of the Bush Tax Cuts.
4. Free Money for Kids Untaxed. Kids get a unique opportunity to earn money tax free. Encourage them to take advantage of it, or do some creative family planning to shift some of your income to your kids.
5. Governement Unclaimed Money. Be sure to check the unclaimed money databases to see if you have missing money. I did.
6. Cash Rewards Credit Cards. Did you know that credit card cash rewards are not taxable? The IRS generally considers the cash back as rebates on your purchases and allows you to earn them tax free.
7. Student Loan Forgiveness. A new program for college kids, future student loan forgiveness could amount to a nice chunk of free money.
8. Mutual Fund Settlements. The money won’t come from the government, but since it was a federal court decision, it’s making the list!
9. Flexible Spending Account Changes for 2011. With the FSA changes next year, your account will be more limited. However, there is still an opportunity to stock up on over the counter medicines tax free in 2010.
10. Tax Credit for Existing Homeowners. For those who qualified for the $6500 tax credit or the $8000 first time home buyer tax credit, it’s expanded until Sept. 30.
11. 2010 Roth Conversion. We can’t forget to include the Roth conversion this year. While you won’t see the free money this year, you’ll definitely reap the rewards for years to come when you start your tax free withdrawals!

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How to Get Your $50 Bonus

1. Apply for the Citi mtvU Platinum Select, Dividend Platinum Select or Forward card by September 30, 2010.
2. Make at least $50 in purchases that are not returned within the first 3 months of account opening.
3. A $50 statement credit will appear on your billing statement after the purchases have posted to your account (usually about 8 weeks after).

Citi Terms and Conditions

• The statement credit can only be earned by new cardmembers approved through this offer.
• No annual fee.
• No cosigner required.

More on Citi

Rewards. The Citi mtvU and the Citi Forward cards offer rewards points and bonuses on things like a strong GPA and going paperless. The Citi Platinum card offers some great opportunities for cash back.

Intro APR. If your credit approval qualifies you, you may get an 0% intro APR on purchases for 7 months.

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I’m a big fan of the Lending Club business model to eliminate the bank, (which reminds me – don’t forget to get your Lending Club $25 Sign Up Bonus if you haven’t already).

However, while social lending has eliminated the bank, they’ve essentially created another middleman, adding another layer of fees.

In addition, I’m constantly scouring the internet looking for places for you to safely stash your money, which is probably SmartyPig or an Ally Bank CD right now, even though they’re in the 2% range.

At the same time, I’m always looking for sources of money to leverage our mortgage, investments, and business developments.

Then it occurred to me, why not just offer readers private investments or loans with me directly?

Brilliant, right? Or have I totally lost my mind? I realize the concept could be far fetched, but the more I thought about it, the more it seemed like a possibility.

Here’s how I think it might work. I offer readers a fixed rate loan that pays higher than the current bank rates, but lower than I can get access to commercial lending. It’s a win-win. Higher rates for you; lower leverage costs for me. And I provide a valuable service for readers.

I realize that it wouldn’t be FDIC insured, so that might be a deal-breaker for you. I’d probably have our lawyer draw up the contracts to make sure both parties are protected.

Is this legal? I have no idea. Will the administration of it from my end be a pain. Maybe. Are you interested? That’s what I’d like to know.

So tell me. Would you do it? What would influence your decision? What kind of terms would you like to see?

Announcements

Speaking of business developments, I’m happy to announce that Scott has officially partnered with Blog Crafted doing blog consulting. As you all know, he does a fantastic job here and does consulting work for many of you already. Congrats Scott!

Real Estate

• How Much House Can You Afford?
• Can You Get A Mortgage Loan With Bad Credit?
• Our Mortgage Was Sold After Only One Month

Saving

• Taking Vacations Can Make You Money?
• 30 Ways To Save Money On A Cruise
• 8 Ways to Save Money on Your Cell Phone Bill

By the Numbers

• The 12 Most Important Decisions You Must Make Before You Retire
• 44 Priceless Moments Money Can’t Buy
• Eleven Effective Ways to Reduce Your Laundry Costs

And More!

• Looking for a New Job? Networking Tips That Can Help
• Wake Up on the Right Side of the Bed Every Day
• My New Career: Stealing Cars in Oakland
• The Secret to Getting Out of Debt: Forget Snowballs and Interest Rates
• Carnival of Personal Finance

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I had no idea long term capital gains are presently 0%. Are you sure?

Yes, Colin, I’m sure! Let’s take a closer look at capital gains and the capital gains tax rates for 2010.

Capital Assets

The IRS has a pretty broad view on capital gains, which come from capital assets. Their definition is:

Almost everything you own and use for personal purposes, pleasure or investment is a capital asset.

Capital Gains Tax

Capital gains taxes are figured when you sell your capital assets. Here’s how it works:

Capital Gains and Losses. When you sell capital assets, if you sell it for more than you paid for it, you have a capital gain; if you sell it for less, you have a capital loss.

Reporting Capital Gains. You must report all capital gains on Schedule D, including investment or personal use property.

Deducting Capital Losses. Capital losses can be deducted on investment property, but not personal use propery. Capital losses first offset gains, then are deducted from income. The limit is $3,000 per year; you can carry forward any additional amounts to the future.

Long Term Capital Gains. Capital gains can be classified as long term capital gains if the property is held for more than one year. Long term gains will get preferential tax treatment, including the 0%.

Capital Gains Tax Exclusions. There are some exclusions, one of the most popular is your home. You can exclude $250,000 ($500,000 for couples) in capital gains on the sale of your home if you lived in it for 2 of the last 5 years.

2010 Capital Gains Tax Rate

The capital gains tax rates for 2008-2010 are:

0% Capital Gains Tax Rate

Obviously, you do need to be in the bottom two tax brackets to take advantage of the 0% capital gains tax rate. However, if you are close, you may want to do some careful planning and maximize some income shifting and retirement contributions to take advantage of it. Even if you don’t qualify for the 0% capital gains tax, you will still get the lower 15% capital gains tax during 2010.

2011 Capital Gains Tax Rate

The 2011 capital gains tax rates will go up if the Bush tax cuts expire in 2010. Just in case, I’m planning to take advantage of the 0% capital gains tax rate in 2010.

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And their influence and determination has paid off for a segment of Americans: how many of us now can shout out “we’re debt-free”, confidently reach our early retirement or on-time retirement goals, and pay cash for all of our expenses? However, the majority of America has still remained enslaved to debt, living paycheck to paycheck from incomes of $200,000+ all the way down to the poverty line, and saving only a pittance towards retirement.

That is, until the recession hit in 2008. Suddenly when the economy tanked, many of the Americans on the other side of the ledger began to act like those of us who have listened to the advice of the financial gurus all along. And quite honestly, I could not be more excited! But will this trend last? Let’s take a look.

Debt Repayment Has Become More of a Priority

As the country’s debt continues to soar at levels of over $13 trillion along with the unusually high unemployment rate, Americans have taken it upon themselves to pay down their own debts with more urgency than before. The amount of non-mortgage debt is now at $2.44 trillion, whereas in March of 2009 it was $2.54 trillion. According to Money Magazine, this is due largely to the fact that consumers are paying down credit card debt, and have paid off approximately $82 billion of it over the last year.  

Personal Savings Rate is Up

Another thing Americans are doing instead of spending is saving money. According to the Bureau of Economic Analysis, the personal savings rate in January of 2008 was just 1.3%, but in January of 2009 it was a promising 4.4%. While the current personal savings rate in May 2010 is down a bit at 4.0%, it is still much better than the pre-recession 1.3%.

Frugal is Fashionable

There are promising signs all around us that people are being more frugal with their money. In general, people are more often opting to spend cash rather than to charge on their credit cards.

Even layaways have become more popular again as people look for a way to buy what they want without putting it on plastic. Major news sources have daily frugal and saving money articles such as Good Morning America’s “Mom Feeds Family of Six on $4 a Week” and MSN Money’s “Need an Odd Job? Give Blood or Watch Porn”, which appeared as front page stories.

Even higher-end brands have picked up on this new consumer mood and are advertising heavily with coupons, sales and clearances. Off the top of my head I can think of a few surprises I found in the Sunday coupon inserts or on television commercials over the last two years: $20 rebates for Bissell vacuum cleaners and Phillips Norelco Electric Razors, coupons for Vita Herring or Salmon, Godiva Chocolate, Oikos Greek Yogurt, Tom’s of Maine body products, Burt’s Bees body products…the list could go on. In fact, Oprah Winfrey has just come out with “The Big Deals Issue” for its new August O Magazine that is all about saving money.

Will This Last?

I think many of us who are frugal and financially savvy have been asking ourselves if this is all going to continue, or if after the economy comes back to life, so will America’s spending habits.

After analyzing the history of the personal savings rate from the Bureau of Economic Analysis, Dave Manual states the following:

In the early 70s, the average savings rate started to spike, hitting a peak of 14.6% in May of 1975. The spike in personal savings rates from 1973 to 1975 coincided with the deep recession that was ravaging the country over the same period of time. As you will see, recessions (usually) result in increased personal savings rates as people tend to dramatically scale back on their purchases in times of economic distress.

He goes on to discuss the personal savings rate during other recessions, and how after the recession is over, it generally plummets. Other financial analysts predict that the personal savings rate will remain in the measly range of a few percentage points, or even decrease back to pre-recession percentages due to low interest rates and because some people are having to use their savings to live on right now.

I would love to think that people are going to continue the trend of saving more of their money, spending less, and socking away extra towards their retirement—all things that excite me—but I am skeptical. I am sure there will be some who were so impacted by the recession that they will forever change their ways, such as those who had their homes foreclosed on or who declared bankruptcy. However, I predict that most will likely go back to their old habits once the economy comes around.

What are your thoughts?

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Good thing I didn’t toss the papers! The mutual funds were involved in market-timing and late trading in what was called the 2003 mutual fund scandal. I remember the scandal vaguely in the news, but at the time I didn’t realize we were affected by it since we were busy with our wedding at the time.

Mutual Fund Settlement

The court papers I received directed me to the mutual fund settlement website where it lists all of the mutual funds involved.

They mutual funds involved are:

• Alger
• AllianceBernstein
• Allianz
• Bank of America/Nations
• Columbia
• Federated
• Invesco
• Janus
• MFS
• One Group/Bank One
• Pilgrim Baxter (PBHG)
• Putnam
• RS
• Schwab/Excelsior
• Deutschebank/Scudder
• Strong

How to Get Your Mutual Fund Settlement Money

Here’s what you need to know about submitting a claim:

Mutual Fund Settlement Period: The time periods are different for each fund, but go as far back as October 1, 1998 through September 30, 2003.

Deadline to submit your claim: December 8, 2010.

Mutual Fund Settlement Process: If you got a notice in the mail, you can go to the website listed and file your claim form with the claimant number. If you didn’t get a form in the mail, you can still submit a claim directly on the website.

You will need to identify how many shares you held of each mutual fund at the end of each of the years involved. This is where I’m relieved that I have more than a decade of transactions in Microsoft Money. I can put together a report very quickly before I begin the tedious process of digging out all the statements.

Our Mutual Fund Settlements

Late last year we received a check from a Invesco mutual fund settlement, but I didn’t think much of it. Now that I’m looking into it, I realize we have a lot of affected mutual funds. Many of them are because our home state 529 plan was run by Strong.

But some of the mutual fund settlement times go back to when I was still in college. I was just learning about index fund investing, so I had money in many actively traded mutual funds included a handful on the list!

I guess I know what I will be working on for the next few weeks…

Time to check your investment histories! Are you involved in any of the mutual fund settlements?

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Amazon Prime just launched Amazon Student. One of the benefits is a free year of Amazon Prime. It’s Free Money Friday, so let’s check into the deal.

How to Get a Free Year of Amazon Prime

1. Sign up for Amazon Student and sign into your Amazon account.
2. Enter your .edu email address, state, school, academic level and major.
3. Confirm your email address.
4. Get your free 1 year subscription to Amazon Prime.

Free Amazon Prime for Others

Other .edu Emails. My husband works for the university and has a .edu email address. I signed him up and selected “other” for academic level. It worked perfectly! Anybody else try various .edu email addresses?

Current Members. You can get a refund if you already have an Amazon Prime membership and sign up for Amazon Student.

Email List. When you sign up, you’ll get the student deals emailed to you. If you don’t want them, you have to give up the free Amazon Prime. I suggest setting up an email filter for them if you don’t want to read the deals.

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You can see how much your neighbor’s house is worth in Zillow, you can see what they ate for breakfast on Facebook, and find your co-workers favorite sites to visit on delicious.

But it goes way beyond that. By following the internet trail, you can often find out people’s salary at Glassdoor, zoom in on their house from all sides with Bing Birdseye view, see how much their energy bill costs at Microsoft Hohm, or review their bad driving skills at PlateWire.

It almost seems like it’s the norm to know more about people than we did before. People are sharing lots of details about their personal lives on the internet.

But what about financial details? Do you snoop around on the internet to find out financial details about your friends and neighbors?

I’d love to hear about your snooping habits and your favorite sites to find out the scoop!

Announcements

For the traders out there, MarketClub is offering a 2 week free trial. I put off checking out their service in the past, but now that it’s free, I’m going to play around with it and run my portfolio through the portfolio analysis tool.

Saving

• How To Find A Cheap Car Rental
• How to Budget Your Travel: 8 Ways to Save
• Buying a New Car May Actually Be Cheaper Than a Used Car
• Earning More vs. Saving Money

Investing

• An Investment Loan and Excess Cash
• Investing For Retirement: How To Retire In A Bad Economy
• OptionsXpress Cuts Commissions

By the Numbers

• 10 Ways To Count Your Chickens Before They Hatch
• 10 Cheap Kids Birthday Party Tips
• 5 Decisions That Will Improve Your Financial Future
• 3 Things You Must Know About Inheriting an IRA

And More!

• What Have You Done for YOU Lately?
• Average Career Salaries
• Are You Spending Intentionally?

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Whatever your goals are, you will inevitably face setbacks – you’ll give in to a moment of weakness, or just find that an unexpected event wreaks havoc on your plans. Life happens. But the important thing is not to let those setbacks impede future progress any more than absolutely necessary. Instead, follow these five steps to bounce back.

Bouncing Back

1. Assess how much damage was done. If you simply blew your food budget by $5 on the last day of the month, you can probably just relax and start anew the next month. If you spent triple your monthly shopping budget on the first day of the month, though, you might have a bigger problem. So figure out how big of a setback you are really facing.
2. Ask yourself why the problem happened. Was your setback a result of something that you could control? Were your goals unrealistic? For instance, you probably can’t save $1,000 a month if you bring home $3,000 and spend $1,500 on housing. Think about what lessons you can learn from this setback – how you can change your plans, behavior, outlook, or some combination of the three to set goals that are attainable without being easy.
3. Determine if the setback is easily fixable. If you were $150 over budget in one category, but $200 under across other categories, you can kind of “reassign” your dollars and end up ok. If you “overshopped,” see about returning some things you haven’t used yet. And if you have an emergency fund but suddenly find yourself needing new tires months before you thought you would, there’s no need to worry about where the money will come from – that’s what emergency funds are for. But if there’s really a one-time event that just leaves you a little short of reaching your goals, let it go – almost all goals can be postponed briefly.
4. Put steps in place to get back on track. If you fell $200 short of your monthly debt repayment goal, see if you can squeeze $50 per month from somewhere else for the next four months. A no-spend weekend can be just what you need to stave off disaster. If your problem was that you just didn’t have an adequate emergency fund, take steps to build one. If it truly turns out that your goals were just too hard to reach, see if your debt repayment can be stretched a month or two further, or that family vacation delayed to winter break instead of summer. And if the setback was something you should have foreseen and planned for, work on how you can do that next time.
5. Move on. Don’t dwell on this one setback. Chances are it’s not going to ruin you financially. But dwelling on it could have emotional and ultimately financial ramifications. So put it behind you, and resolve to do better next month.

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In addition, many of the tax cuts that we’ve come to expect over the last decade are changing. I love to plan, so here’s what I’m currently working on:

2010 Planning Moves for Expiration of Bush Tax Cuts

1. Tax Rates. We’re planning to accelerate some of our income from 2011 to 2010. Instead of maximizing deferrals into our Solo 401k, we’ll take the income this year and plan to defer more next year.
2. Capital Gains. I’m selling the last of our individual stocks to take advantage of the lower long term capital gains rate. I also considered selling one of our rentals that appreciated significantly since we bought it at an auction, but we might hold off on that one right now since it has such a strong cash flow.
3. Itemized Deductions. We’re also planning to defer payments on some tax deductible items. Instead of paying our property taxes in December, we’ll plan to hold off on paying them until January. Same with our January mortgage payment, our year end charitable contributions, and any preschool expenses we normally pay at the end of the year. Think of it like normal tax planning in reverse!
4. Mortgage Premiums. Since you will no longer be able to deduct mortgage insurance premiums after December 31, 2010, you should call your lender and ask for the requirements to drop the coverage; most do so if your loan is at 80% or below of the value of your house. Otherwise it might be a good time to refinance, if doing so will bring you under the threshold to pay mortgage insurance.
5. Roth Conversions. We’re planning for some 2010 Roth conversions, but we’ll follow the Bush tax cuts closely before deciding when to pay taxes on the 2010 Roth conversions. You can wait until the tax deadline next year to make your decision; that’s what I’ll be doing.
6. Business Purchases. It’s time to make those large business purchases you were putting off. In 2010 you can deduct $250,000 in the year of the purchases. After the Bush tax cuts expire at the end of the year, the Section 179 expense deduction reverts back to $25,000 for 2011.
7. Estate Taxes. The estate tax exemption will go back to a $1 million next year. This ought to be a good reminder to update your beneficiaries and wills. I know that mine are out of date again, now that we have three kids.

At this point, I realize that we may get a new set of Obama tax cuts to keep our taxes down. However, I want to make sure that we’re in the drivers seat, no matter what Congress does.

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Now that you’ve done your mid-year financial checkup, is a financial fast up next?

What is a Financial Fast?

From Singletary’s article: “During this fast, you will not shop or use your credit cards. For three weeks you must refrain from buying anything that is not a necessity. And by necessity, I mean the bare essentials, such as food and medicine. You will refrain from going to the mall or retail stores…No restaurant meals…You can’t stop for coffee…You are not permitted to buy gifts or gift cards.”

The fast also includes eliminating all plastic from your life – including both credit and debit cards – and getting serious about creating a budget and paying off debt.

Taking Fasting to Extremes

Singletary’s idea of debt fast isn’t really anything new – after all, I myself preach the benefits of a “no-spend weekend” every now and then. But this pretty extreme, advocating staying nearly spend-free for almost ¾ of a month! What I find most difficult about this financial fast is the idea of no gifts – while it’s true that it’s easy to go overboard on spending, I don’t think we should be discouraged from giving appropriate gifts if we really can afford them.

For someone just starting on the path to good financial management, I question whether a financial fast is really the best approach. If you are in deep debt, or have no money saved for retirement, or simply spend every single penny of your paycheck every single month, getting your finances in order is truly a marathon. Sprinting out of the gate will get you ahead – but might make getting to the finish line that much harder.

I liken the idea of a financial fast to an actual fast – or at least a really strict diet. If a diet tells me I can only eat grapefruit for three weeks, I’m liable to do it for one day and then eat double the next day to make up for it – ditto cutting spending then making up for it by going on a shopping binge. If a diet tells me I can’t have a piece of bread, ever, I’m likely to just decide not to do the diet at all. I feel like the financial fast falls in the latter category – if I can’t buy a birthday or wedding gift, or even a single cup of coffee, I might decide to avoid the program altogether.

Should you fast?

I do think a financial fast would be good for some people. Specifically, a financial fast is for you if…

• You’re generally good at managing your finances, but feel like challenging yourself to go the extra mile.
• You need a little extra cash or want to generate extra income to meet a savings goal or pay off that last bit of debt.
• You are really committed to getting in financial shape this year, but you’ve already fallen short on your New Year’s resolutions and need that extra something to kick you into gear.

On the other hand, some people either just don’t need or are just not ready to take this drastic step. A financial fast might not be right for you if…

• You are just learning the basics of personal finance. Instead, check our our list of best personal finance books and start learning about budgeting, debt reduction, and savings, and take your transformation one step at a time.
• You are generally judicious with your money and avoid major financial mistakes.

If you decide to do the financial fast, or something like it, I’d love to hear from you in the comments! Just make sure that to reap the benefits by avoiding splurging once your fast is over. And if you decide not to do it just yet, that’s ok – there are plenty of other ways to jump on the path to prosperity!

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