It's Easy to Get MisFocused

Today is when the events and acitivities for the past week or so have finally caught up with me.  My body is tired.  My stress level is present.  My time is fleeing by faster than I can blink.  My money is not as guarded as I'd like.  My family is feeling the out of routine.  It's a wonder no one isn't sick or have had something major occur because I don't think that I can take this anymore!  But God knows how much you and I can take and He is with us every step of the way.

"Let your conduct be without covetousness; be content with such things as you have. For He Himself has said "I will never leave you nor forsake you."  Hebrews 13: 5

If you stop and read this scripture, it gives a sense peace. Tranquility.... I love this word that Dr. Norman Vincent Peale used in his The Power of Positive Thinking. 

What is it that you and I are doing day to day if we can't be content or at peace knowing that He will NEVER leave you nor forsake you, precious child of God?

It is so easy to get carried away with the to do list.  Work pressures mount high as jobs are on the line.  Family needs heighten as little ones grow and need new clothes, shoes and such.  Not to mention health care costs, insurance, and education.  For those single, it is seeking love in many places but the one that gives contentment.  It's easy to become misfocused as you and I live our day to day life.

Being misfocused is easily done.  Technology is great at this.  Peer pressure and gettting caught up in the crowd mentality is easy to do.  Forgetting to pray as you chase after a child or sit in a serious meeting or whatever activity is occuring is not good.  Sometimes going to too much church or other related activities can easily misfocus you on worshiping the One we need most in our life.

How do we stop being misfocused and help ourselves get refocused?  For starters, getting your finances in order is a black and white answer to your behavior and what you are or are not doing right.  For example, if you are working a written plan and watching your spending behavior, then when you review it and realize how artificial it truly is, that is a reality check on where you are misfocused.

Our finances can tell us a lot about ourselves.  As much as we don't want to face ourselves in the mirror and admit our mistakes (and the fact that we are not perfect), it is a  necessary discipline to do so.  I along with many must constantly self-evaluate.  It's no easy task.  But let's not let this negative bring us down or destroy self-esteem.  Let's forgive ourselves and admit to do better.

To get refocused, it is wise to take a look at your monthly spending for the last 1-3 months.  From there, categorize your areas of spending.  Most folks overspend in the personal area as well as the food area.  Perhaps challenge yourself with a new goal.

Another area to get refocused is to do tax preparation work.  This is the time of year when you force yourself to organize your tax material as well as your financial paperwork.  Reviewing so many items will help.  While it's not fun and a little tedious, the outcome can be of great benefit.

Once you've refocused yourself and worked to get your finances back up and running in a better way, then it's time to check out other areas of your life such as TIME MANAGEMENT.  Time is just as important as money and perhaps more so because there's only so much of it that you can give.  Managing your time means you can direct your attention to the areas of your life that are important and not waste your time in other areas.

The financial perspective to learn about is how to correct where it is in your life that you are misfocused.  The number one area is have a relationship with God and then all else will follow.  I have found this to be true that if I invest my time into a relationship with God then all else gets better including the finances.  It's getting focused on the One who will never leave us nor forsake us!

By Stephanie Arredondo  (c) 2012 Alfa Sugar

Elderly Targeted for Fraud

A recent article in the local newspaper heightened my understanding that as the Baby Boom generation enters their retirement years, it's becoming more evident of fraudulent activity.  First of all, shame on the person taking advantage of an elderly person who has lived their life and is now dependant upon people for care as well as health matters.  These thieves are crafty in their tactics of intimidating the elderly whereby faking a call from the Social Security office or IRS.  One family received phone calls from a nurse at the nursing home where a relative was under their care....needless to say, this person was fired and no doubt served some jail time. Whatever the reason for the contact, it is important to be vigilent.  For some elderly, they screen their calls through the answering machine.  For others, they demand a letter in writing.  For many, they may have e-mail but are not likely to use it much.  One elderly person's e-mail address was stolen and used fraudulently for moneymaking purposes.  Luckily the telecommunicaitons company addressed the situation before it got out of hand.  In this modern era of smartphones, electronic items and texting, it is important to be kind to the elderly, facilitate the details when it comes to financial matters, and to look out for their financial well-being as well as overall well-being.

Organizing for Tax Season

Tax season is upon us, and for those of us in the financial field, it's a busy time of gathering paperwork, finalizing some numbers and awaiting the distribution of certain forms necessary to complete certain returns. 

There is no easy way to complete the workload so below are a few pointers to help the average individual to complete their taxes.  For military personnel, it is wise to complete your tax return earlier than April 15th just because of international mail.  Filing your return online is becoming the recommended way to expedite your tax return being processed.

• Gather all financial statements for tax year 2011 including bank statements, brokerage statements, 401k, IRA, Mortgage, business expenses & receipts, and all other relevant financial data. 
• J.K. Lasser's How to Prepare Your Tax Return is a great reference source if you plan to DO IT YOURSELF.  Tax laws change, and what was true one year changes the next.  Having this wonderful resource is a wise investment.  Also, it is wise to invest time into reading it (as much as folks dislike reading up on the topic) because you may determine a claim on your taxes that you had not learned about previously.
• HRBlock offers tax classes and some are free or at a reduced rate for military and their spouses.  If you would rather get more comfortable in a group or class setting, this may be a great option.
• Tools for tax preparation include a table, chair, lamp, calculator, pencil with an eraser, your files (preferably in a accordian or box or whatever filing system you utilize), your computer, a drink of water and a clock.  It is wise to setup a card table or a room solely dedicated to tax preparation work....that way if life happens and you have to walk away, you can return and start right back up with work rather than waste time setting it all back up again.   (I don't think that people realize what timewasters they allow in their life so I will comment on this next).
• TIMEWASTERS - yes, folks are all guilty of wasting their time especially when it comes to tax preparation work.  The phone rang.  The children needed me.  The dog had to be walked.  I have to be at church 3 to 7 hours a week.  The weather impacted me.  I was tired.  I don't want to do this.  No wonder no one likes to do this job because they allow everything else to get in the way of the priority.  Focus on achieving this goal and a sense of relief will fulfill you more so.....if it's any consoldation, being a good steward of your finances and home life is an investment of time that I am quite certain any true Christian church will appreciate and reinterate.
• Step one is gathering all paperwork and sorting it all.
• Step two is sorting the financial information into the various categories.
• Step three is completing the application...this can be done online and saved.
• Step four is to review and double-check your calculations as well as your 2011 tax year information.
• Step five is to send it certified mail to the IRS and/or e-file it making double sure that you get a printed confirmation.
• For those who must use an accountant or CPA, it is recommended that you copy certain documents that you must retain for your records.  Some CPAs lose material and you will not get it back.
• Even if you have a CPA complete your tax return, you must review it, sign it and deal with it. 
• Paying the CPA their fee is a wise investment so a timely payment is recommended.
• When corresponding with a CPA, it is wise to be ready with your questions, do not take up much of their time and realize that they are pulling LONG hours up until April 15th.  Emailing is easier on everyone, and you may get a reply back at 4 a.m.
• Once your return is completed and sent, it is wise to file the returns in a fire-proof filing cabinet as well as retain an electronic copy. 
• Keeping your documents for up to seven years is recommended.  I know of some folks who keep their returns longer than that and some who don't.  Again, it depends upon your gameplan and business as to what you need to keep.
• When talking with people at the IRS, it is wise to listen and listen carefully.  I have talked with disgruntled, powerplaying people who will not talk or reason with you.  I have talked with very kind people who are willing to be of help.  It's wise to keep calling back and reach one of the nice ones and discard the bad ones.  Always be kind and courteous on the phone as this is a professional setting.  The government red tape is present and it is overwhelming to many so it is best to be ready with your form question (and yes, they are that precise).
• Keep in mind that all US citizens with earned income must file a tax return. 
• Due diligence is key to getting it all done.

  While many dislike doing the work, it is good character building.  Organizing for tax preparation is not easy especially for those businesspeople who have a lot of paperwork to review.  If anything, it is a great time to review what went right and what went wrong in your financial life.  It is an opportunity to revise your financial plan so that next year's tax season you can see what improvements or setback you've made. 

Social Security to pay 3.6% Increase while increasing tax on workers

Inflation is on the rise as is confirmed with the COLA computation that the Social Security Administration utilizes for assessing cost of living measures.  A 3.6 % increase will commence in January 2012.  For the 55 million benefiting from these payments, it will help but not as much as many hope.  The monthly payments will now average $1,221. 

This is the first increase in a few years since 2010 and 2011 saw little to no inflation. 

The average worker is seeing an increase in wages earned.  Over 10 million workers will pay higher taxes as a direct result.  Higher wages and higher taxes means few are getting ahead.  Regarding the the limit as to who pays the Social Security Tax, it is being raised from up $106,800 earned to $110,100 next year (2012) at a 6.2% rate (reduced to 4.2% only for 2011 tax year). 

"Social Security payments increased by 5.8 percent in 2009, the largest increase in 27 years, after energy prices spiked in 2008. But energy prices quickly dropped and home prices became soft in markets across the country, contributing to lower inflation in the past two years." Source

Unfortunately, unemployment numbers remain high so the potential for more social security tax revenue would be higher if the economy picks back up. The question remains if it will, and with the United States entering an election year, it will be a rocky road.  The REAL question is can Americans sustain themselves given the grim economic environment?

Realistic Tips on Today's Social Security Benefits

Social Security is a program instituted under President Roosevelt in the 1930s (many immigrants believe it to have always existed but that is not the case).  It is in dire need of reform as it's Trust Fund is predicted to go bust.  While my grandparents benefited from it and were able to enjoy a better lifestyle while in retirement than working, today's retirees are not enjoying the same benefits from 30 years ago. 

This Smart Money article Things Social Security Won't Tell You is very interesting and is why I've added this information to Alfa Sugar for your information gathering purposes.   As always, please conduct your own research because laws and legislation change frequently. 

For those currently in retirement, it may prove wise to return to work and increase your income.  I understand that employers are not hiring older workers (even with all the laws in place to protect this class of worker).  By increasing your income, you could increase your social security benefit. 

Same goes for those who are close to retiring but not there....it is wise to continue to work another year or two before retiring.  Financially speaking, you would benefit in the longer run from Social Security should it not go bust.

For those younger and working in the workforce, it is wise to save for your retirement.  Relying on the government to take care of you is foolish financial thinking.  For those Americans who are collecting on Social Security Disability (yes, that number is higher this year than in years past), it is imperative to note that you are only hurting yourself in the long run if you truly are capable of working. 

You can be unemployed and retired.  There is a class of people age 60 and older who are collecting unemployment checks because of the sour economic times.  If it's any consolation, the government is not gaining more revenue because of poor econimic times.

Bottom line is an increasing financial divide between hardworking producers and folks not working but getting handouts from the government.  This mathematically will not sustain itself in the long run. 

While past generations were able to reap a double digit percentage return on money paid to Social Security, today's worker is looking at double digit percentage loss on funds paid to Social Security.  It is government so we by law must pay this tax.  However, many Americans will not appreciate this problem, and for some, it comes at a time of too little, too late.  Reforming Social Security is a major item for anyone in government to undertake.  While President George W. Bush attempted to reform it as well as other politicians, it is that 90,000 pound gorilla problem that will take lots of sweat and agony to address.  Until then, it is wise to be realistic when it comes to your retirement and your present day financial situation. 

Standard & Poor's Lowers USA Long Term Rating to AA+ For First Time in 70 Years

On August 5, 2011, the Standard & Poor's Rating lowered the United States of America's long-term sovereign credit rating from AAA to AA+ for the first time in 70 years.  Regarding its short-term rating, the S&P affirmed the A-1+ rating.

Why is this significant news?

The USA is officially entering a new financial era that reflects upon the current behavior and cultural trend that has been evolvling perhaps since the 1960s.  Given the August 2, 2011 passage of the Budget Control Act Amendment of 2011, the US fiscal policy has assuaged immediate concerns about any immediate threat of payment default as the US government continues to encounter political governance that is less stable, less practical and less cooperative between political parties to resolve matters of most importance.  In other words, the United States is heavily debt-laden, and the question of the currency and its valuation to repay the debt is of grave concern.

Standard & Poor's report presents sound financial rationale and perspective on the current outlook.  It is well worth anyone's time or effort to read these unbiased facts.

Concerning military personnel, it is going to be a rocky road between now and 2012 as the government debt burden will go higher and as the baby boom generation marks its draw on social security, medicare and such.  Cuts and reductions are on the horizon for civilian discretionary spending, defense and Medicare. 

Donald Marron presents more interesting financial perspective.  Moody's and Fitch have affirmed the USA's crediting rating at AAA while China's Datong credit rating agency lowered it earlier this week to negative.  Donald is right to expect more US downgrades regarding debt.  There are five countries in the past 30 years who have regained an S&P AAA rating so there is hope for the US to regain this rating but it will come at political crossroad that many are very VERY concerned about.

There will be more news reporting (as well as hype).  Political parties will blame the other.  The American consumer is awakening to a reality that has been evolving for quite sometime.  Question is Will our elected officials in Congress and the Administration be able to work something out?  I am pessimistic at this juncture and am discouraged for my husband and all the men and women who work in the military as well as those hardworking Americans who do work, who do do the right thing and who do NOT sit on their buts and let someone literally feed them with every materialistic item out there.  We may even see taxes rise on both incomes and investments in ways we've not seen for awhile. 

For many who serve in the military, it is likely that many cutbacks will occur as the defense department will downsize the military (now I do not know this for a fact....this is only my opinion).  Perhaps it is raising the military to be more sophisticated and effective by doing more with less.  If you read the Forbes article on where our next corporate America managers are coming from, it is the military.  I believe that serving in the military will rise in prestige as Americans begin to appreciate the high level of quality, education and training these men and women have received.  Life for the military spouse will become more isolating.  Reliance on social networking and certain other networks will increase with importance for the military families. 

Regarding finances and military pay, it is challenging for many to make it without dual income, and for many military spouses, that's challenging to have a career as the military relocates you and your family every 2-4 years. 

In a previous blog, I posted information for disabled veterans and those who have served our country about the Concurrent Retirement and Disability Pay (CRDP). Qualified disabled military retirees will get paid both their full military retirement pay and their VA disability compensation as stated earlier this year.  I believe that there is elevated risk as to how our disabled veterans will be compensated.  There is not much research or information surfacing about this all important financial issue (something that frustrates me for our fallen comrades).  I find it strange that the US government would not provided proper financial support; however, those who were most skeptical about the War in Iraq do not view favorably our disabled veterans and admonish this liability that could potentially increase in costs for many years to come.  I hope that there is a rise in foundations, non-profit groups or grants for disabled veterans that will lend financial assistance and offset an increasing negative sentiment from those who served.  (Currently I am working on another blog article about CRDP).

The best gift that any and all of us can do is to pay off your debt.

Perhaps by starting with the little details that don't seem to really matter we can make a difference and alert Congress and the Administration to the importance of paying off our debt.  Eventually, the S&P credit rating for this wonderful country will rise back to AAA status (or as Warren Buffet eloquently stated....we've been at a AAAA+ rating only to see the slight pullback to AAA).

Cyber Criminal Activity is On the Rise

When you get secured e-mails from your local bank about a serious announcement such as the one below, it ought to grab your attention.


Email continues to be a favorite target for cyber criminals to compromise sensitive information of businesses and individuals. In fact, emails have recently been sent purporting to be from such large organizations as the IRS and NACHA, the national electronic payments association, encouraging users to click on web links and download malicious software. These emails are fraudulent. Should you receive an email like this from the IRS, NACHA, or any unknown source, we encourage you to delete it immediately (don’t open, click links, or accept downloads).

For military families, it is an uncomfortable feeling to deal with this issue. 

It is important to beaware of this activity, report any suspicious items to your bank or other, and do NOT respond to these e-mails. Delete them.  Do not open them.  Do not click links.  Do not accept unknown downloads.  Most important, do not give out any personal information. 

It is being vigilent with these criminals that will curtail their success rate and cause them to see other means, preferably the legal way.

Military Families Affected by Government Shutdown

As politicians disagree on government spending (gee, we have to watch our spending...why can't government?  Hmmmm), military families face a financial stress that none deserve, especially added to those families whose servicemember is deployed.  Chris Lawrence of CNN comments about this threat to military families. 

None of this makes for a fun time for military families.  Hype such as It's Time for A Government Shutdown where it's questionable about military tasks serving US security doesn't help ease the rhetoric and talk about the Department of Defense or the Pentagon.  Claiming our wounded veterans as "unfunded liabilities" is harsh.  Granted, tough economic times calls for this long overdue assessment of the Federal Government, but please, it's important to our country to NOT denigrate those wounded in combat.

CNBC does a great job of breaking down areas of the potential government shutdown. 

• For this to occur during Tax Season, it is not the best timing, and disruption regarding you filing your tax return is a factor. 
• Benefits for military veterans may very well be affected,  and while I've reviewed CRDP in a previous blog, it may not be a fun time for those dependant upong those benefits.  Alfa Sugar article on CRDP   
• Since 1980, all federal agencies are required to have plans for who gets affected or not when the potential government shutdown occurs. 

Caution flags are high especially amongst the upper ranking personnel who know who will and will not be affected by this potential government shutdown. 

For many military families, it is recommended that you not get upset and be patient as politics plays out. 

In No Pay if Fed Shutdown Occurs, I comment about this probable interruption in military pay.

For those harboring debt or lacking an emergency fund, it is important to try the following:

1. Please do not panic or stress
2. For debt or monthly payments, it is wise to call the business and make other payment options.   By calling or contacting the business especially if it's related to a medical bill, the party owed will work out a payment plan that will help with your short term needs.
3. Immediately curtail all unnecessary spending such as eating out, having your nails done, etc...  This is a time for beans and rice, brown bag lunches, and other cost cutters.
4. Review your finances to see what you must cover and what you can postpone for the next month.
5. There will be a lot of hype amongst the media, politicians and other venues so it is wise to tune it out and tune in to your personal finances.
6. For those dealing with a deployed family member, I strongly recommend that you contact your church or chaplain.  Legitimately, should you require help and your church home agrees, the church may seek ways to financially assist you during this time period.  Anything to reduce stress on a military family that is already stressed is a great way to say thanks, and though humbling, it is good to say yes and accept this gift.

Copyrighted (c) 2011 by Stephanie Arredondo, aka Alfa Sugar

Disclaimer:  This article is the opinion of the person writing it, and any financial decisions made as a result does not make the writer liable for any action taken.  Please consult your personal financial advisor for more information.

New Tax Law regarding Coverdell Education Savings

Congress recently extended the provisions for the Economic Growth Tax Relief Reconciliation Act of 2001 to December 31, 2012 under the new Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010.  For those with savings accounts such as the Coverdell Education, it is important to note that tax free withdrawals are possible for elementary and secondary education expenses while contribution levels remanin at $2,000.  If you have children and are seeking a way to invest in their future  education, it is wise to consider a Coverdell and/or revisit it with your personal financial advisor.