2014: Another Big Year For Housing?

by Gerri Willis

By Gerri Willis 

 

2014 could be the year for housing. Sure, 2013, was good, but this year could be even better. That’s because market activity may be dominated – not by investors – but by first-time buyers who’ve been sidelined and the trade up market. And, trading up means selling. Unloading your home is never easy, but his year could be the best in a while if mortgage rates remain under control and inventory stabilizes. The National Association of Realtors forecasts that home sales will be similar to last year’s blistering pace of 5.1 million while prices will  rise 5.3 percent.

So, if you’ve been waiting to sell your home because you owed more than the house was worth or you believed that purchase demand just wasn’t strong enough, now is the time to start running the numbers, checking your equity and putting a toe in the water. Check your local realtors’ association website to get a sense of how well the market is doing. Zillow.com can and Trulia.com can give you a sense of pricing in your neighborhood.

If you decide to take the plunge, you’ll want to be sure your abode is in tip top condition. Here are four suggestions for sellers:

  • Consider staging the home if you lived in it for more than 10 years. We collect so much stuff over time that it is nearly impossible to see your home with fresh eyes and that is exactly what a buyer wants to see – your home without the golf trophy or bass photos. Take down the personal photos on the wall. Reduce the number of pieces of furniture in each room – less furniture makes the room look bigger. If there is a smoker in the house, have carpets cleaned and vacuum upholstered furniture.
  • Painting interior walls that have been neglected is a great idea. Just don’t go crazy with color. Deep hues may be the flavor of the moment, but a neutral cream or white will make your home look clean and well taken care of. Likewise, if your exterior is drab, consider painting your door a bright color like red. Prune the landscaping and make sure exterior fixtures work. Few things are as off putting as a buyer as trying to turn on a light and nothing happens.
  • If your home is older, consider upgrading the wiring. It’s not sexy, but young and technologically savvy buyers know that their demands for juice are high. A 200 amp panel is the minimum typically, but panel size is governed by the National Electrical Code. Hire a licensed electrician to do the work.
  • If you have time before you’re planning to put your home on the market to upgrade, check out Remodeling Magazine’s list of remodels with the biggest bang for the buck, here http://www.remodeling.hw.net/2013/costvsvalue/national.aspx. After years of major storms, installing a backup power generator is a top performer for mid-range projects.

 

Don’t miss The Willis Report starting 6pmET on FOX Business

 

Must-Have Financial Apps For 2014

by Gerri Willis

By Gerri Willis

 

I blame my overspending on modern life. Let's face it, who hasn't looked at a mysterious one or two dollar fee on our credit card statement, shrugged our shoulders and just paid it? Who has the time to fight every nickel and dime? Then, there's my health insurance provider. After every visit to my doctor, I get an itemized bill of costs for each service and test rendered. By the time the bill does come weeks or even months later, I've lost track of the charges I was sent.

Fortunately, there is a better way. And, it comes via modern life -- apps that can save you time and track your money. Here are some worth investigating:

  • Billguard: This iPhone app has the time and discipline to scour your credit card bill for unwanted "grey" charges, even if you don't. It watches for those recurring items that you never intended to order by consolidating the experiences of other consumers. The app connects with your credit card providers using the name and password you use to connect to your account online. One downside: You can add two cards for free, but any more and you'll pay a one-time fee.

 

  • Simplee: This app brings together data from your health insurance accounts. If you are spending a fair amount of time at the doctor's office, or even if you aren't, Simplee can help. The app tells you your total medical costs, tracks how much you've paid out of pocket, your deductible and total doctor visits. You can make your payments directly from the app. Many of the major insurers, Aetna, Anthem, Blue Cross Blue Shield and Delta Dental support the platform.

 

  • SigFig: It happens all too often -- you have retirement and investment accounts with a number of different brokers and investment managers and seeing the total pie is impossible. This app can bring it all together by connecting your accounts to this service. You can see your total asset allocation and performance with a single click. I hear mixed reviews on the investment recommendations. Having said that, though, the app's ability to alert you when you are paying high fees for funds compared to competitors in the same category is worth the price of admission.

 

  • Mint: This is the grandaddy of personal finance apps that integrates info from all major banks and institutions. It's easy to get started, and all your info -- every transaction -- automatically appears in the app. You can set financial goals and budget and explore ways to invest all from this single app. It calculates your net worth and updates your personal financial situation every single day.

Of course, it's not all about a comprehensive look at your personal financial situation. Some apps have much more modest goals. GasBuddy is a go-to app for consumers trying to find the cheapest gas in their neighborhood and relies on consumer reporting to get its info. We often recommend RedLaser, a barcode scanning app for price comparisons. The app helps you find out whether there is a cheaper price for the item you are shopping for at nearby retailers.

 In the end, though, even apps require some effort to stay updated. You'll need to monitor what's going on and enter new information. Alas, they haven't completed automated your financial life. Not yet, anyway.  

 

Don’t miss The Willis Report starting 6pmET on FOX Business

The Downsides of Using Gift Cards

by Gerri Willis

By Gerri Willis

 

Chances are, you are entering the new year with one or two gift cards in your wallet. That’s because for the seventh year in a row the No. 1 requested gift was gift cards, according to the National Retail Federation. In fact, more money than ever before -- $118 billion dollars -- was loaded onto gift cards, nearly 8 percent more than last year. Unfortunately, gift cards have downsides that many of the givers never even know about.

Although Congress tried to introduce consumer protections to the industry with the Credit CARD Act of 2009, there are still some limitations you need to know about. First off, they aren’t good forever. The value of a gift card you buy or receive today could fall by as much as $2.50 or more every month that the card sits unused. It’s called a dormancy fee or a charge for not using your card. (That fee can’t be levied until you’ve held the card for 12 months). What’s more, if you throw it in a drawer and forget about the card for five years, you could lose the entire value of the card.

Some vendors are trying to get out ahead of the pack. American Express, for example, announced last fall they would drop fees associated with all of their gift cards, including, dormancy fees, balance-checking fees and card replacement fees.

Still, there may be another problem with the card that could prevent you from using your card. If the vendor is a retailer you never frequent, you may let the card languish. Fortunately, there is a marketplace for selling cards online that may help you get at least some of that cash back. Giftcardgranny.com, for example, will help you compare sites that offer exchanges for your gift card. The company vets players and picks a handful to promote. Alula.com directs consumers to kiosks that take gift cards. These specialty kiosks take scores of cards from different retailers and pay 65 to 85 percent of the face value. You can set your own price for a gift card at Raise.com, but the site takes a 15 percent cut when you sell it. As with any service offered online, you’ll want to check out the company providing gift card services. Look for online reviews and read the site’s policies.

In short, you have to manage a gift card just like regular money. Know how long it is good for and use it before you lose value.   

 

Don't miss The Willis Report 6pmET on FOX Business!

Impacts to Your Wallet in 2014

by Gerri Willis

By Gerri Willis

2014 promises to be a busy year for news that hits your wallet. The biggest consumer story this year – the rollout of Obamacare – has legs. Glitches, problems and out-right failures on the website have persisted. And, that means the government has had to delay deadlines for signup. Previously, Health and Human Services delayed the deadline for enrolling in coverage that starts Jan. 1 from Dec. 15 to Dec. 23. But now the agency has also made it clear that not only will shoppers have until Dec. 31 to pay their first month’s premium, they are also encouraging insurers to allow people who sign up after the Dec. 23 deadline to start coverage as of Jan. 1. What’s more, the Obama administration is also extending coverage under the health care law’s state high-risk pool to the end of the year. That program covers about 84,000 people.

One way to find out what you might pay for Obamacare coverage and what sorts of subsidies you might be eligible for is to go to www.kff.org, where you can get details on coverage and costs.

Watch for more difficulties with the Obamacare program to emerge in the coming months. Health care experts say that the coverage of people under corporate plans will likely change late next year as companies get ready for more changes under Obamacare. Taxes on so-called Cadillac plans will likely result in higher costs for workers and less extensive coverage. We may see even more companies opt to put employees into part-time roles to get around Obamacare requirements.

Another big story that will play out next year, are tax changes. High earners and people with large portfolios will find their taxes rising dramatically next year. Experts say that high earners will find their taxes tipping 50 percent of their earnings in many parts of the country, not just the big cities on the coasts. If you earn more than $200,000 filing singly or $250,000 married, filing jointly, you’ll pay a new additional tax on earned income of 0.9 percent. If you earn above $400,000 as a single filer or $450,000 married filing jointly, you’ll find yourself subject to a new income tax bracket of 39.6 percent.  A new Medicare tax on investment income of 3.8 percent will also sting investors.

Cherished deductions, like mortgage interest, state income and sales taxes and home office deductions, are on phase-out schedules for high earners. We’ll also be keeping an eye on housing to determine whether rising mortgage rates puts the housing recovery on hold or simply fires up eager buyers.

In short, next year is shaping up as a complicated one for consumers and The Willis Report will be there every step of the way to help you figure out how you can negotiate these changes that impact your wallet. Don't miss The Willis Report starting tonight 6pmET on FOX Business.

The Truth About Taxes

by Gerri Willis

By Gerri Willis

Have you ever noticed that taxes move in one direction: Up. And, so it is with property taxes. During the housing bubble, taxes rose as values climbed and in many parts of the country they are still stuck in the stratosphere, even after prices have plunged. Fortunately, you can do something about it.

In fact, Pete Sepp of the National Taxpayers Union says that high property taxes are a rare example of levies that taxpayers can reduce this year as investment and income grow like topsy.

Contesting your home’s assessment is a tried and true method of cutting your property taxes if those taxes are stuck at nosebleed levels. Start by reviewing your home assessment for errors. The dirty little secret is that many local governments use real estate software to assess properties. In other words, local tax officials may never have as much as driven by your house. Errors are common. Your first stop is the property assessor’s office where you’ll ask for the “property card” that describes your home in detail, including square footage, bathrooms and the like. Look for errors. Then pull your neighbors’ property cards, especially those with houses that are similar in features and age as yours. Look at as many as a dozen to find out whether your home’s assessment is significantly higher than the others. Even a 10 percent difference can be the basis for a case. Online resources are like Zillow.com can be valuable as well.

Typically you can appeal your bill 30 to 60 days after receiving it. Ask for an administrative review and gather evidence to support your claim that your home isn’t worth as much as the local government says it is. If you don’t get a resolution you like, you can typically appeal. If you don’t have time to go through the process yourself, you can typically hire a local expert to help, but don’t pay too much for the service. After all, you don’t want to give away all your tax savings to somebody else.

Don’t miss our special User’s Guide to Taxes on The Willis Report tonight 6pmET on FOX Business.

 

 

Things to Do Right Now to Save on Taxes Next Year

by Gerri Willis

By Gerri Willis

If you're smart about your money, you've probably already started thinking about what you can do before the year ends to reduce your tax bill. There are lots of changes awaiting taxpayers April 15 thanks to the Affordable Care Act and the American Taxpayer Relief Act of 2012, not much of it good.

First things, first. If you have a large portfolio or earnings above $200,000, now is the time to run a simulation of what your taxes may look like for next year. That way, you can at least get a sense of what you'll be on the hook for come April 15, 2014.

Next, if you're expecting a bonus or year-end income that will push you into a higher bracket, consider deferring that money into next year. Hold off selling assets that will produce a capital gain. If you're self employed, don't send out invoices for year-end jobs until early next year. Keep in mind, high earners are facing a new top tax bracket of 39.6 percent on taxable income of $400,000 for single earners and $450,000 for married couples.

Even if you aren't in the top tax bracket, it makes sense to salt more money into your 401(k). That will reduce your income reported to the IRS since most plan contributions are made before taxes are taken out. Remember if you are 50 or older, you can put in an extra $5,500 over the $17,500 limit.

Now is also a good time to review the limits on your flexible spending accounts. Under Obamacare, the limit on the amount you can set aside pretax was set at $2,500. (Before the ACA, there was no statutory limit on contributions.) Some companies allow a grace period to use untouched FSA funds, but not all. Plus, the Treasury recently announced changes to the use-it-or-lose-it rule. Now, account holders can carry over up to $500 in excess money into the next benefit year, as long as your company adopts that plan.

Also important to consider: The chances of mutual funds passing on long-term capital gains distributions are high. Fund companies release estimates of distributions this month. If you're planning on selling a fund do it before distributions.

Now is also the time of year to consider charitable contributions. Make sure your contributions go to an eligible 501(c)(3) organization so that you can take the deduction.

Don’t miss a special User's Guide to Taxes on The Wills Report starting 6 PM ET tonight on FOX Business!

Consumer's Guide to Year-End Tax Moves

by Gerri Willis

By Gerri Willis

 

Get ready to be socked if you’re wealthy. Or maybe the better word is soaked. Tax changes for the 2013 tax year are huge and if there was ever a year to run projections on your tax bill ahead of April 15, this is it. The nation’s top earners are likely to see their tax rates rise above a whopping 50 percent.

At risk for the biggest changes, are Americans earning over $200,000, says Melissa Labant, director of tax advocacy for the American Institute of Certified Public Accountants.  To be sure, though, earners above $400,000 for single filers and $450,000 for married filers filing jointly will get the biggest bite. And, it’s not just wages that will get more heavily taxed; investment income taxes are rising, and tax benefits that you might have taken for granted like personal exemptions and itemized deductions are under assault too. These changes come thanks to Obamacare and the American Taxpayer Relief Act of 2012.

“I think high earners may be surprised that multiple increases are hitting them,” says Rich Coppa, of Wealth Health LLC. “If they didn't pay attention to these changes from last year they are going to find a bigger bill to Uncle Sam.”

Here’s what you can expect: You likely already know about the increase in the Medicare payroll tax. In 2012, the tax was 2.9 percent and employee’s share of the tax, 1.45 percent, was automatically deducted from your paycheck. Effective this calendar year, however, high-wage earners owed an additional 0.9 percent tax on earned income above $200,000 for single filers and $250,000 for those married and filing jointly. This year also starts a new income tax bracket for people earning $400,000 for single filers and $450,000 for joint filers – a top tax rate of 39.6 percent up from 35 percent last year. That’s the easy stuff to understand. Some of the other changes are more complicated.

Your personal exemption of $3,900 last year is phased out. The amount of the reduction is 2 percent for each $2,500 in excess of adjusted gross income amounts of $250,000 for single filers and $250,000 for those married, filing jointly. The result is a complete elimination of the exemption for single filers with an adjusted gross income above $372,501, and for couples filing jointly over $422,501. What’s more, itemized deductions, such as mortgage interest, state income and sales tax and home office deductions, will be on phase-out schedules as well. (These are sometimes Pease deductions). This change will reduce the value of itemized deductions by 3 percent of adjusted gross income above $300,000 for couples and $250,000 for single filers to a maximum reduction of 80 percent of its value.

Even more pernicious are higher taxes on investment income. If your income is greater than $200,000 as a single filer or $250,000 married and filing jointly, a 3.8 percent Medicare surtax on investment income will be due. (The tax applies to the lesser of your net investment income for the year or the amount by which your modified adjusted gross income exceeds the income thresholds). Note that a taxpayer could be subject to both the additional 0.9 percent tax on earned income and the 3.8 percent tax.

In addition, Obamacare makes it more difficult to deduct unreimbursed medical expenses. Before the Affordable Care Act was passed, unreimbursed medical expenses could be deducted after they exceed 7.5 percent of adjusted gross income. The threshold is now 10 percent.

One single ray of sunshine for middle-class taxpayers: the Alternative Minimum Tax has been permanently indexed for inflation. In previous years, Congress would pass a patch each year to limit the number of people who might fall victim to this alternative to traditional income taxes. People subject to AMT paid more than they might have under the traditional system.

 

Don’t miss a special User's Guide to Taxes on The Wills Report starting 6pmET tonight on FOX Business.

 

Holiday Shopping: How Much Are The Markdowns Really Worth?

by Gerri Willis

By Gerri Willis

I’m one of the few who stayed home this holiday weekend and didn’t shop the Black Friday sales (and certainly not the Thanksgiving Day sales). I am always a little skeptical about how much these markdowns are really worth. When you consider that retailers mark down their prices over and over again during the holiday season, well, it stands to reason that jumping on the first sale may not be worth it.

And, analysis from the Wall Street Journal confirms my suspicions. A recent report broke down the numbers for a single item – a cashmere sweater and followed it through its many price configurations over the holiday season. The sweater starts with a suggested retail price of $50.00. Although, it’s worth asking who really buys the sweater at that price. My guess is not too many, if any. At the first markdown, the price gets cut 10 percent to $44.99. But hold the phone, the final discount price is $21.99, less than half the original price. Sounds like a good deal, until you realize that the retailer only paid $14.50 for the sweater. The average price consumers paid for the sweater is $28. And, that means that the retailer’s gross margin, despite two big discounts, is 45 percent.

Unfortunately, most retailers don’t tell you how much they pay for their inventory, nor do they describe how they bake their margins into original pricing. So, it’s up to you to figure out whether you are really getting a good deal when you shop over the holidays. The good news is this: Smartphone apps can at least help you figure out where the cheapest price can be found for the item you are purchasing. RedLaser, ShopSavvy and Smoopa are three price comparison apps worth your time. RedLaser has now been integrated on Amazon.com.

Also consider shopping with a list. I know it sounds simple, but people who shop with a list and stick to it tend to spend less than others because they eliminate the impulse purchases and the “while I’m at it” mindset that can drive your credit card bill higher.

Don’t get me wrong. I’m not a Scrooge when it comes to the holidays. I just don’t want to pay any more than I have to for the gifts I buy. I bet you’re the same way.

Don’t miss The Willis Report starting 6pmET tonight on FOX Business.

Avoid the Holiday Shopping Hangover

by Gerri Willis

By Gerri Willis

It’s the most wonderful time of the year! Ah, the holidays. For those of us who like to shop, it doesn’t get any better than this. Massive discounts. Price matching. Shopping apps. This year in particular, retailers are going to all kinds of lengths to get your attention. Some are opening on Thanksgiving, others are starting their Black Friday offers a week in advance. But consumers’ zeal for the deal sometimes gives way to getting all your shopping chores crossed off your list at any price. And, that can leave you with a holiday shopping hangover come January when you get your credit card bill at the end of the month.

The truth is December is the single, most active month on the calendar for credit card usage.  On average, we load our cards with $131 billion in December, that’s 16.4 percent more than the average month. During November and December of last year, consumers spent more than $246 billion on their bank credit cards, according to TransUnion, the credit monitoring company. With $847 billion dollars ALREADY on our charge cards this year, according to the Federal Reserve, we could be facing a particularly debt-heavy Christmas season.

Holiday debt is bad enough, but when you consider that the average interest rate on a balance transfer card is 15.8 percent, well, you can begin to see just how dangerous this debt can be. In other words, your debt is going to grow like topsy until you pay it off.  Let’s say you charge the average amount of money that middle income homes are expected to spend this holiday season, or $1,035.00, according to a Gallup survey. If you make minimum monthly payments on that debt of interest plus 1 percent of your balance (or $23.29 to start), it will take you nine years to pay off. Worse, you will have paid a total of $773 in interest alone—nearly the amount that you borrowed. You’re probably too smart to pay only credit card minimums, but even so it makes sense to analyze how long it will take you to pay off your holiday debt. Let’s face it; nothing is worse than postponing your summer vacation because you are still paying off holiday debt. A good place to go to analyze your credit card debt is bankrate.com, where there are loads of calculators to help you determine the best way to reduce your debt.

Other ways to save this holiday season: Don’t succumb to the offers by department stores for discounts if you open a new charge card. That’s because while you bank the one-time discount, you’ll also be likely to spend more. Plus, department store charge cards typically carry higher interest rates. For that reason, I like to shop in the virtual world with a list in hand. I find it more difficult to overspend when I’m not in the mall fingering the merchandise. Plus, having a list can keep you focused on what you really need to buy. For the adults in my family, each of us buys a single, funny gift and we play a game in which they are traded and exchanged. It’s fun and nobody spends too much. I typically pay with a credit card with a rich rewards program and pay it off as fast as I can.  That means no holiday hangovers and no spending regrets.

Don't miss The Willis Report TONIGHT starting 6pmET on FOX Business.

The Harsh Realities of Online Shopping

by Gerri Willis

By Gerri Willis

I couldn’t blame you if you decided to do all of your holiday shopping online this year. After all, fighting the crowds seems a lot worse than wrestling the mouse. But the reality is this: There are pitfalls to online shopping as well and the most pernicious are not obvious.  This is the time of year that thieves are out in full force, hoping that you make a mistake so they can sell you counterfeit goods, steal your credit card number or even your identity.

Here’s what you need to know to avoid the downsides of online shopping:

  • Don’t rely on your own powers of observation to determine whether a website is shady or not. There was a time when you could spot fakers because the sites were loaded with bad spelling and grammar. Not anymore.  Consumer Reports’ Tod Marks says it is almost impossible to determine whether a site is legit or not by just looking at it. Instead, make sure that the URL contains “https:” that “s” stands for secure. Check our retailer ratings at Better Business Bureau, where you can also find consumer complaints and reviews. It doesn’t hurt to stick with retailers you already know, and avoid obscure vendors. And, by the way, pay by credit card rather than debit card. That way, if there is a problem with merchandise, you can get your money back.

2.) Watch out for the shyster moves. The fine print is what can get you online. Watch out for sites that say you can’t return defective items. That means the sites are revoking an implied warranty that is acknowledged in many states. If you are buying a high end item make sure that the site is an authorized dealer for the goods by reading the terms and conditions on line.

3.) Check out the online privacy policy. Many retailers give you the option to opt into special offers or promotions. My suggestion is to limit the information you provide to what is needed to actually make the purchase. I prefer dealing with retailers who allow me to decide whether they can share my information with others.

Ultimately, it looks like the majority of us will spend some time online shopping for holiday gifts. My suggestion: Don’t allow the pressure of getting that last minute gift compromise your security. Don't miss tonight's Willis Report starting 6pmET on FOX Business.

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