Credit Card Series - Part I

"What's a good credit card?" I've definitely had this question asked more than once.  The truth is, it depends on your spending habits and what you want in benefits.  So, I'm going to list out some things that you might want to consider and some of the most popular cards I've seen amongst people our age.

Things to consider:
1) Why do you want a credit card?  What do you want to use with your credit card benefits?  For example, do you want cash or do you want flight points? Do you want gift cards or do you want statement credits?  Depending on your answers to these questions, your credit card options may change because the rewards are different among the different credit card companies.

2) Where do you spend the most money?  Where are you going to gather the most points?  It's a game, really.  The more you spend, the more points you get and the more points you gather, the more rewards you get.  Some credit cards will give you 5% points on restaurants, while others will give you 1%.  If you only ever use your card on food, it would be wise to get the former.

3) Are you making money? Can you pay off your credit card bills on time? I guess this is the most important and I probably should have put this as the #1 consideration, but this should really effect what credit card you go with.  If for some reason, you only pay the minimum payment each month (which I highly, HIGHLY discourage), you will have to pay interest on the remaining balance, as well.  Depending on the card, this interest rate will vary pretty significantly. 

4) Are you spending enough/gathering enough rewards such that a yearly fee is worth it?  The "better" credit cards (or the cards where you can receive a lot more benefits) usually have a yearly fee.  This can be worth it if you spend enough throughout the year so that the fee is actually cancelled out in benefits.  This is kind of hard to determine until you've actually had the card, but it's just something to consider.

Popular cards amongst our friends:

1) American Express - Everyday Blue Cash
I actually have this card, and to be honest, the rewards really aren't that great. 3% groceries, 2% gas, 1% everything else. I've had a hard time building my rewards with this card, but the card itself looks really cool. 

2) Bank of America - Power Rewards
I also have this card and have seen much better rewards with it compared to my Amex.  I usually use it for statement credit, which is really great.

3) Chase Freedom
A lot of my friends have this one.  It has a neat 5% back on certain items feature and the item changes every few months.  They also usually have a deal when you initially open up the card... i.e. spend $500 in the first 3 months, get $100 back.  I've heard only good things about this one.

4) Chase Sapphire
This is also a popular card in NYC as it gives you double the points on restaurants.  One of my close friends bought a plane ticket to Europe with all of with her credit card points. Note this is a "better" card and there is a yearly fee.

5) GAP/Banana Republic, J.Crew, or other clothing cards
Most of my friends have at least one of these clothing store cards.  I was always told not to get one, but I can see where it can have its perks, especially if you only ever shop at that specific store. I think it would just encourage me to shop more, which is why I've never gotten a store credit card.

Next, we'll be covering how to use the credit card!

Ali

Greetings from Hershey!

Hi to all my readers - all 5 of you. 

If we are real friends or friends on Facebook, you should know by now that I have officially moved out of NYC.  Over the weekend, I moved to the sweet town of Hershey to be closer to a boy.  People in Hershey think I'm nuts, but boyfriend and I have been together for almost 7 1/2 years and have spent 6 of those years apart.  Are we stupid or what?  Anyway, I was sick of it and he was sick of it, so I made the move.  And here I am.  In Hershey. Actually, Hummelstown.  But let's just stick with Hershey.

I'm not sure how great this whole budgeting/finance/accounting themed blog will stay afloat here, so the direction of this blog (as discussed with some friends) may change. I'll have a lot more time to cook and design and go on dates and shop for plants, but who knows?  Budgeting is something that everyone has to do, not just those folks who live in NYC.  Hershey is obviously drastically different from NYC in terms of cost.  I've been here exactly 3 days, and I'm just gonna go through a few things that are "normal" here.

1) Grocery stores have real sales.  Like legit sales.  Stupid Trader Joes (they don't believe in sales) and Wholefoods (what's a sale when 3 leaves of kale is still $10) led me to believe that grocery stores don't offer decent sales, but boy was I wrong.  I got 4 bell peppers for $4! A can of chickpeas for $0.89! Who knew?

2) Parking is $1 for 15 minutes in Manhattan. Parking is 25 cents for 5 hours in Elizabethtown (a town just outside of Hershey where I found the most adorable coffee shop and spent 3 hours reading and chatting it up with a grandpa on how to connect to wifi.)  A quarter for 5 hours.  And I didn't have to worry about coming back to a dented and keyed car.

3) Outlets are the greatest thing known to mankind.  Why did I ever buy anything at a normal store when outlets have the same exact thing but at 50% of the price and then have an additional 50% off on top.  I don't get me sometimes.  I wish I could tell 20 year old me to put down that full priced blouse at J.Crew, suck it up, and just go to the damn outlet.

That's all for now.

Love,

Ali

Filing Your Taxes: The Basics

Hi there!

Since no one answered my poll (sigh) I decided the next topic on my own.  Filing your taxes (or Form 1040)!  How fun!  The deadline is April 15, so you still have a decent amount of time to gather everything you need, plop yourself down on a couch, and do the dreaded task that no one wants to do.  I actually think filing taxes are really fun, mainly because I know that I'll likely be getting cash at the end of it. 

Why do I have to file in the first place?  The government wants a little piece of every dollar that you make.  They need that money to give us highways and public schools and parks and unemployment benefits and everything else to run this country.  They also want this money consistently throughout the year, which is why every time you get a paycheck you should see federal and state and perhaps city withholdings.  Your employer takes out the amount of taxes from your paycheck that it thinks you owe, but it's an estimate.  It doesn't account for any deductions that you may have or credits that you may have earned.  So, when you file your taxes, you are taking that estimate and adjusting it to what it really should be.  It may be the case that you have underpaid your taxes throughout the year, so you will owe money, or it may be the case that you have overpaid your taxes throughout the year, so you will receive a refund.

What do I need to file? Before you even think about filing your tax return, you need to have your W-2.  Your employer should either mail it to you or allow you to access it electronically at your workplace, but this is the most important (and sometimes only) document you need.  It's the backbone of your tax return.  It lists out your earnings, federal and state withholdings, and other taxes that are all entered into the tax form.  The company also sends your W-2 to the IRS, so the IRS will be able to see any discrepancies between what you file and what is on the W-2 that they receive.  If you have multiple employers, you should receive a W-2 from each employer, and you'll have to enter all of this information separately into your tax return.

What else do I need? Depending on the deductions/credits that you plan to take, you'll need a few more documents.  If you gave any money to a church, synagogue, or charity, those organizations should provide you with documentation listing the total amounts you've donated throughout the year. Donations to charities and nonprofits are deductible.  If you made student loan payments, your servicer should provide you with the form 1098-E, which lists out the amounts paid on the interest portion of your loan. Only the amount paid on interest is deductible.

Did you do Standard vs Itemized? I hear this a lot.  These are the 2 types of deductions.  The standard deduction is the deduction that the government gives everyone, regardless of the deductions that they actually have.  It varies a little each year and is different if you are married or single, but for individuals, the standard deduction is $6,100 for the taxable year 2013.  The itemized deduction is  calculated on your own, and you will obviously only itemize if your deduction is greater than the standard.  How do you calculate it?  You use the various tax forms that you've received and just add up what your potential deduction would be.  If you use any programs (like the ones mentioned below), the program will calculate the deduction and determine whether you should use the standard or itemized deduction.

There are a bunch of sites that offer free filings of the federal return (states are a different story). You can file through the IRS, TurboTax, TaxACT, or H&R Block all for free. Because we are pretty simple people with only a few simple deductions, it's really not necessary to buy a TurboTax Deluxe program or hire an accountant.  Remember that you also have to file a state return for every state in which you have earned income, and you usually have to shell out some money for these returns (no more than $30).

Happy tax filing!

Ali