Not to be a downer, but if you get a refund to come tax time, it means one thing: you had too much money withheld from your paycheck throughout the year and you gave the government an interest-free loan.
Not that that’s a bad thing. The debate will surely rage on about whether it’s a good idea to set yourself up for a refund, with many experts loudly proclaiming it a bad idea.
Regardless, the average taxpayer received a refund of roughly $3,000 each of the last few years, according to NerdWallet. And if you’re one of the many people who look forward to that windfall every April, here are some ideas to be fiscally smart when your money comes back around to you:
* Pay off or pay down high-interest credit cards, or, if the refund won’t pay them down completely, consider rolling the balance over onto cards with lower interest rates. (Note: consider the interest you pay during the course of a year and whether it’s better to have less money withheld from your paycheck so you can pay that debt off sooner.)
* Add funds to your emergency account. Or set one up if you don’t have it already.
* Invest it. From the NerdWallet article: A taxpayer who received a $3,000 refund in 2010, invested it and earned a 6% average annualized return would have more than $5,000 in that investment today. If they did the same for each of the past 10 years, they’d have more than $47,000 today.
* Put it toward retirement. Whether that’s your 401(k) or some version of an IRA, you can use the refund in a tax-free investment for your golden years.
* Put it toward an education fund or a 529 plan, each of which offers tax benefits as well. (Always consult your CPA.)
* Buy life insurance.
* Donate to your favorite charity.
Relief for 401(k) withdrawals
The new coronavirus relief bill relaxes rules on 401(k) withdrawals for those affected by the virus.
Savers would be able to take a hardship distribution of up to $100,000 from their 401(k) accounts without a 10 percent early withdrawal penalty. That works for those who are laid off and want the money for mortgage payments, for example. Warning: withdrawals are not tax-free.
Retirees who don’t need distributions from their accounts can suspend the required minimum for all of 2020.
Many retirees have found that the value of their accounts has dropped dramatically. Leaving money in place allows their investments to recover as the virus crisis eases and the economy recovers.
The withdrawals are not tax-free, however, the bill gives you three years to pay the taxes on the withdrawals, according to CNBC.
Everything mice need to thrive
Mice make great pets. They’re small, quiet and fun to watch. If you’re thinking about adopting one or two, you’ll need to make sure they have everything they need to be comfortable and happy. Here’s what mice need to thrive.
A comfortable habitat
Mice can live in aquariums or cages. If you choose a cage, ensure that the wires are close enough together that your new pet can’t squeeze through them. A cage with horizontal bars is a good idea because it provides the mice with a structure to climb.
Mice should be fed commercial mouse pellets, which are formulated specifically for rodents. They can also be fed small amounts of grains, fruits, and vegetables. Be sure to also provide a source of cool, freshwater.
Once you have every¬thing your mice need, they’ll mostly take care of themselves. Just be sure to thoroughly clean their cage once a week and regularly change their bedding.
How to update wood panels
Does your home have wood paneling that needs to be updated? If so, here are some great ways to modernize it.
• Paint it. This is the quickest and easiest way to update your wood paneling. White or bright colors will look fresh and clean, while darker ones will feel moody and somber. Or, consider whitewashing the wood using watered-down paint. This will lighten the panels while preserving the grain.
• Camouflage it. Use the drywall compound to fill in the grooves between panels. Follow this with a coat of primer and your choice of paint. No one will be able to tell that the walls are paneled.
• Refinish it. Solid wood panels can be sanded and stained like any other wood surface. Choose a lighter tone for a Scandinavian feel or opt for a stain that mimics mahogany for a more luxurious look.
If you love wood paneling and want it in your home, be sure to choose wide panels over thin ones and stay away from orangey tones, as these tend to look dated. Also, consider mounting your panels horizontally or diagonally instead of vertically for a more modern design.
Relief Bill: How should I use the money?
In late March, the U.S. Congress passed a $2 trillion economic rescue plan, dubbed the CARES Act, to provide relief to Americans impacted by the COVID-19 pandemic.
The bill included cash payments to individuals, increased unemployment insurance benefits, changes to student loans, and to retirement account rules, among others.
The amount of the payments varied by income, but most people fell into these categories: single adults with an adjusted gross income of $75,000 or less would receive $1,200, while married couples with no children who are earning $150,000 or less would receive $2,400. An additional $500 per dependent was also included. You do not have to pay income tax on the payment.
If you’re in a situation where you have a choice how to spend it (i.e. you’re able to use it for discretionary purposes instead of rent/mortgage/food), what should you do? Market Watch had some ideas after polling financial experts:
* Put it into an emergency fund account. A rainy day account should cover three to six months of expenses and some online savings accounts can offer annual percentage yields of 1.5 to 1.7 percent.
* Pay down debt. Experts recommend putting it toward high-interest debt like credit cards and waiting on student loans to see what might come of other relief efforts.
* Invest – but cautiously. True, some people can benefit from a quick flip. No one but a trusted investment advisor should recommend stocks. But, some ideas are equities, a long-term strategy; investing in companies like virtual learning, grocery stores, and Esports; or even an exchange-traded fund (ETF), which is a basket of securities that you can buy and sell through a broker.
* Donate. If you’re in a position to donate some of your payment, food banks, and other charities will need an influx for some time. Animal charities expect to be hard hit as their donors scramble to shore up their finances.
The one group that loves people forced to work at home: Hackers
Someone at your workplace no doubt makes sure the networks are secure and safeguards are in place to block bad guys.
And who does that at your house? Right. You or no one.
During the current crisis, with employees working at home, many companies have issued employees guidance on how to establish home internet security.
It’s guidance worth following.
1 – Change the locks.
That means update your software. You might have noticed that software frequently has security updates. That’s because smart hackers figured out how to break the software. But what you may not know is that there is a second wave of dumb hackers who just read the security update for tips on how to get the folks who don’t update. It’s like they have a key. Your mission is to change the locks and update.
2 – Use a secret code.
Implement two-factor identification. Yes, it is a second step. You will have to put in a new secret code every time you do certain tasks. But it is better than a hacker walking out with your briefcase.
3 – Use a mask.
Meaning, mask your internet activity with a personal VPN. It protects your privacy. It doesn’t protect you from phishing, malicious software, or digital viruses, but at least you aren’t accessing your company website in cyber-public.
Deferred mortgage payments
Mortgage financiers Fannie Mae and Freddie Mac in March unveiled a new payment deferral program that allows borrowers facing hardship to defer two months of their mortgage payments. The deferred payments would not be due until the end of the mortgage, according to housingwire.com.
The hardship does not have to be related to the coronavirus crisis.
The program is aimed at people who are experiencing short-term hardship and have the ability to restart their payments in full without modifying their loans.
The borrower becomes current and no additional interest is charged.
If the virus crisis has affected you, talk to your lender.