TheBrandsClub.com

Welcome to this week’s edition of our Tuesday Top 5, Econ4U’s weekly tips post to help you manage your money in five easy steps.

You’re probably not thinking about tax season right now, but fall is a great time to revisit your tax planning strategies. Here are a few tips to make the most of your money before December 31 creeps up on you.

1. Stock up on health supplies. If you participate in a company-sponsored flexible spending account (FSA) for tax-free health expenses, start thinking about ways to avoid leaving money on the table. Stumped about what to get with your dough? Glasses or contacts, cold medicine, first-aid kits, ice packs for treating injuries, and heart-rate monitors all qualify. Drugstore.com even stocks a FSA store full of qualifying goodies. But do it fast: Starting in 2011, you won’t be able to run up a drugstore bill with your FSA dollars. The new health-care law prohibits spending FSA money on anything you don’t have a prescription for (with insulin as the exception).
2. Make your home more energy efficient. Holiday weekends (like the one three days from now) are a great time to buy new appliances at a steep discount. And through the end of the year, you can qualify for a 30 percent credit (up to $1,500) on approved doors, windows, and roofs as well as high-efficiency furnaces, water heaters, stoves, and heating and air conditioning units installed in your primary residence.
3. Save tax dollars when you refinance your home. If you’ve taken advantage of low mortgage rates this year to refinance your home, don’t forget that you can deduct all unamortized points on an old refinancing as well as points on the new loan.
4. Identify charities you want to support. Charitable donations are deductible through December 31 for the current tax year, but pouring money into worthy coffers can be a low priority at year end when you’re busy playing Santa. Make your annual donations now before your wallet starts feeling pinched by the holidays.
5. Begin to max out your retirement savings. If you qualify for an IRA or Roth IRA and haven’t begun making contributions for 2010 yet, start by socking away a little right now. The contribution limit is $5,000 if you’re under age 50, and you have until April 15, 2011 to get it all in there. So put away $625 a month for the next eight months to max the fund out — it will hurt a lot less than trying to come up with $5,000 on Tax Day.

But if you’re saddled with a huge car payment, struggling to pay your rent or mortgage, or throwing money away on high-interest debt, then those savings don’t seem to matter as much to your bottom line.

In other words, if you can’t make ends meet month after month, clipping coupons isn’t going to be enough to bridge that gap.

The solution? Find ways to slash your biggest expenses first — before cutting back on smaller budgetary line items. Here are a few tips to get you started:

• Maximize your tax deductions throughout the year to avoid scrambling to remember them all when it’s time to file your annual return. Keep files on all your charitable donations, deductible interest on student loans, medical care, and other qualifying expenses.
• Aim to spend no more than 30 percent of your income on housing, whether that’s rent or mortgage (and don’t forget to factor in property tax and insurance). If you can spend less on housing and still live in a safe area, do it.
• A rule of thumb: If you have to take out a car loan you can’t pay back in under three years, you can’t afford your ride.
• Most savings accounts right now are paying around 1 percent APR in interest. If you have credit card balances or student loans to pay off, you’re likely paying more than 1 percent on that debt, so your emergency fund is actually costing you money in the long run. Make a dent in it today.

Forget fine-tuning — overhaul your budget to see the biggest savings.

This year, vampire patriarch Carlisle Cullen from the Twilight book series tops the list with an estimated net worth of $34.5 billion. It helps that he’s had 370 years to build up his bank account, but Forbes chalks up Dr. Cullen’s theoretical success to very, very, very long-term investments.

Even if you aren’t immortal, you can borrow some of his wealth-building strategies to watch your own money grow, like these tips:

• Live frugally. Despite an arguable need for one, the family does not own a private jet, preferring instead to fly commercial. And while they have collected several expensive sports cars, the bulk of their flashiest gas-guzzling vehicles spend most of their time in the garage while the family galavants in a much less conspicuous Volvo.
• Avoid the trap of being house rich and cash poor. The Cullen family home is valued at $3 million — less than .009% of the family’s holdings. While it would be difficult for most people to find suitable housing on that kind of budget, buying less house than you can afford is a great way to free up money for other uses.
• Plan ahead. Not all families are lucky enough to have a daughter who can see into the future. But developing a solid investment plan can help your own money accumulate faster than if you stuff it in a mattress. Remember: Few people get rich by accident.
• Look long term. The Cullens use their unending lifespan to let compound interest on their investments work its magic. However, even if you have only 30 years until retirement, that’s enough time in the stock market to see some serious gains.

What’s a housing lottery? In major cities that have large income disparities and limited desirable neighborhoods, the government has set aside a small number of affordable housing options for people who fit strict eligibility requirements (often prioritizing disabled, elderly, or low-income residents). Apartment dwellers pay rent based on a sliding scale — usually one-third of their income — and the housing authority picks up the rest. But because demand far exceeds supply, you can only get in on this deal through a lottery.

The result is known as an economic shortage.

In New Orleans, for example, 4,000 vouchers were awarded among 28,865 applicants, so lots of people walked away empty-handed based on nothing more than bad luck. And in New York, city workers are also included in that priority pool, leading to accusations of nepotism (a common side effect of shortages).

The smart economic solution would be to do away with housing lotteries and let rent prices achieve an equilibrium where the number of willing buyers equals the number of coveted apartments available. It may not be the feel-good solution, but why should getting the apartment of your dreams be a matter of having your name picked out of a hat?

In the wake of the earthquake in Haiti, it seems more important than ever to prepare yourself and your family for the possibility of an unforeseen natural disaster like a hurricane, blizzard, wildfire, or tornado. The American Red Cross offers its advice for the basics of preparedness, but what else do you need to be ready for anything? Read on for our take:

1. Update your homeowner’s or renter’s insurance. If you haven’t done so lately, take a minute to review your policy to make sure any new major purchases — like jewelry or a plasma TV — are covered under your existing policy. And remember that in some areas, flood, wildfire, or earthquake coverage can be extra.
2. Make an inventory of your assets. This is as important for natural disasters as it would be in the case of theft. Take photos of your most valuable possessions and keep records of serial numbers and appraisals in your safe deposit box.
3. Send copies of important documents to someone you trust. Preferably you’ll pick a friend or relative who lives in another state that wouldn’t be affected by the same natural disaster. Include copies of your bank account numbers, birth and marriage certificates, Social Security card, and a CD with a back-up of your most essential computer files.
4. Keep some cash on hand. If you already have an emergency kit (like the kind California recommends in case of earthquakes), make sure it contains enough cash to buy supplies in the event that ATMs are out due to a power outage — $500 should do the trick.
5. Set up an automatic payment plan for your regular bills. When disaster strikes, the last thing you want to worry about is when your bills are due and whether you’ll incur late fees for missing the due date. Set up BillPay for your mortgage, car loans, and other major bills and link it to a bank account that has enough to cover them for a couple of months (that’s what your emergency fund is there for, after all).

The New York Post recently profiled the 175-square foot “micro-studio” apartment of the Prokop family, located in the Morningside Heights neighborhood of New York City. It has the distinction of being the smallest apartment in New York, at a size that’s smaller than many people’s guest bedrooms.

At 14.9 feet long and 10 feet wide, it’s about as narrow as a subway car and as claustrophobic as a jail cell. […]

It has two small windows with views of upper Manhattan; hardwood floors; a tiny kitchen with a mini-fridge and hotplate; and a closet-sized bathroom with a shower, sink and toilet.

They couple only paid $150,000 for the apartment, which may seem a steal in comparison to the high-priced city condos in neighboring buildings. But a closer look reveals that -though the Prokop family seems thrilled with their new purchase – they didn’t get quite as good a deal as it seems.

If you take the condo’s price of $150,000, and divide it by the square footage, you find that Mr. and Mrs. Prokop paid about $858 per square foot.

Compare that to this 750 square foot apartment with 1 bedroom and 1 bathroom. It’s located on the same block, has more amenities, and four times the space. And yet, with an asking price of $560,000, it’s selling for over $100 less per square foot than the Prokop’s micro-studio.

Higher cost for the convenience of a smaller quantity is nothing new. Restaurants charge $10 a glass for wine that costs $40 a bottle (which usually contains 5 glasses). Grocery stores charge $1.50 for 20 ounces of purified water or soda near the cash register, and $.99 if you buy a gallon or 2 liter of the stuff.

There are different reasons for each of these price differentials. And although there may be a higher price associated with smaller size, sometimes the trade-off is worthwhile. For instance, some restaurant patrons may only want a single glass of wine. In this case, the Prokop family felt the small space fit their lifestyle, and $150,000 was in their price range.

The point is this – just because the sticker price seems low, it doesn’t necessarily mean you’re getting a good deal.  Before you pull the trigger on any purchase, make sure you know all your options, and whether there’s a better bargain out there.

The terms of the tax credit have been expanded to include current homeowners who meet the income requirements (up to $125,000 for singles and $225,000 for marrieds) and have lived in their residence for five consecutive years out of the past eight. And the credit can’t be used to buy property that costs more than $800,000 — not that many homebuyers in this income bracket are eyeing that kind of real estate.

If you’re a low-income house hunter, there’s even more good news about programs that make homeownership more attractive. Bank programs like HSBC’s First Home Club are currently offering to match every dollar an eligible participant saves on a whopping 4-to-1 basis, up to a grant of $7,500. So that means if you saved the maximum of $1,875 over a 10- to 24-month period, you’d walk away with a sweet housing grant of $9,375.

That particularly generous program is valid only in New Jersey and New York, but you can search for other matched savings programs (also known as individual development accounts) by state in this database.

The deadline for that juicy $8,000 new homebuyer’s credit is rapidly approaching, but how do you know if you’re ready to own a home? Ask yourself the following five questions to help make that decision:

And as everyone knows by now, if you qualify only for a subprime mortgage, you cannot afford to buy — no matter how attractive that $8,000 credit looks.

We have received complaints of noise disturbances and guests wandering the hallway and Observation Deck. This is a direct violation of your Lease Agreement…Additionally, we were notified that you had over 10 cars parked in guest parking on the evening of September 25th. This is a violation of your lease … which states, “You may have no more than two overnight guests at a time unless we provide specific approval.”

He also owes his Los Angeles luxury apartment landlord almost $10,000 in unpaid rent and late fees.  Soulja maturely responded by posting a video on Twitter showcasing his jewelry and designer bag collection and the piles of cash he keeps in an unprotected shoe box in his apartment.

Flub #1: Unpaid rent and rental agreement violations.  A lot of young adults rent property either while in college or when they start their first job.  Rental agreements can come in many different forms from many different sources.  You might have a landlord, or maybe you’re subletting from a friend or renting through a lease in a big corporate run apartment building.  Whatever the case, make sure you read your rental agreement carefully.  Any violation of property rules, tenant guidelines, or deadlines can lead to expensive fees or even eviction.  There are certainly benefits to renting, especially when you’re young, but make sure you pay your rent on time and avoid violating your contract (cranking your music isn’t always a good idea).

Flub #2: Keeping cash and valuable items out in the open.  Protecting and insuring your valuables is a basic and important step especially when living on your own.  Keeping large amounts of cash is never a good idea.  Put your money in a savings account and important documents like birth certificates and savings bonds in a safe or safe deposit box.  Throwing around your valuables often leads to theft or misplacing things.

Take a few lessons from Soulja Boy:  Don’t crank your music. Pay your rent on time.  And keep your valuables safe – in a safe.