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Financial Conversations with Fitz #87 - Shopping With Cash for Good Deals - 11/30/2010

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Looks like the Irish solved their banking problems for now anyway.   Just had a $89 Billion bailout.  Stock market expected to show a little gain with that settled.   Still nervous with the Koreas.   Grain markets will stay volatile.

Well we had a good Thanksgiving weekend for weather, food and it sounds like shopping.    I didn’t do the early morning Black Friday but it was fun to read about it.    Visited with several of our local stores and they had a good day later on.    I would like to know with all those shoppers, how many were cash or credit card.   If one is going to charge for Christmas, do they have a plan on how much and when/how are you going to pay off.     The first thing people should do is to make a list like we used to for Santa.   This one is for financial control.   I know this is always   my construction paper and scissors talk.   If one doesn’t have the cash flow to cover basic living costs, they shouldn’t charge $1,000 of Christmas presents and still have good financial planning.    Your payments on $1,000 credit card at 18% are $175/month if you want it paid off by midyear.   Where are you going to get that payment in your budget?   That does add $90 to your purchases in six months.   So what are practical alternatives:   The best is a savings account set up early in the year.    The next is to be prudent in who and what you buy for in the first place.   What about working some weekend job for the holidays or earlier to put into a Christmas fund?    If you would work 4 ten hour weekends at 8 or 10/hour would add up to a week of pay.   It seems like most places start advertising for extra help before Thanksgiving.   The other is to actually make some of your gifts.    Another is gift certificates for doing some project that your friend would enjoy having.    A great one for grandparents is to spend a day or two with them doing lunch or going somewhere with them.   If you give Grandmother a slip or several be sure you carry thru.   I know my mother always enjoyed a coupon book of TIME or projects over the year.    That will work for lots of people.   Most grandparents don’t need another knick knack on their shelves.    They love spending time with children or grandchildren.   Give it some thought and make your life after Christmas most joyful without a payment of $175 to $200.

Time to give some yearend tax work some thought.   If you were listed with FSA as an individual unit along with your spouse for benefits, you will need to file as an individual operator with a separate schedule F or on a partnership return.  Check with you tax person if you think it applies.  Is it going into the right checking account for tax planning? You can still file a joint return but just need to do your own Schedule SE for social security.    A large audit item with IRS.   With the higher year for income this year as we mentioned compared to what we think next year will be you may want to also look at a couple of items.  You might want to ask your tax person about selling some of your low value stock to offset any high capital gains from land sales.   You can buy back your stock to maintain your position within a reasonable time next year.  Another area might be in itemized deductions.  Maximize them this year and use standard exemption next year.  It would be good for you to check on which account you want them to go in the bank—personal vs. business account.  Call or stop in to see us if you have any questions in any of our three offices.  Be sure to stop in on Friday December 3rd for treats and conversation at all of our three offices for treats for our customers and new customers from 9:00 to 4:00.     Lots of Christmas shows this weekend at Waldorf.

Remember that you should deal with people in community banks and organizations.  When you work with them, you know that you will also see them sitting with you at ball games, church or community events.  So, if in doubt give us a call.