When you decide to pull-up your big girl panties and take charge of your finances like a grown woman, you may begin to realize that everyone will not be happy with your new frugal lifestyle. Your shopaholic friends will become your new financial frenemies and say things to keep you chained to the door of revolving credit, conspicuous consumption and living beyond your means. But they will never outwardly admit that they want what’s financially worse for you. They are like wolves in sheep’s clothing–they will sugar coat what they have to say the way a true financial enemy would do—with flattery and platitudes.
Discerning between you financial frenemy and financial friend is a cornerstone to developing a healthy financial backbone. But be strong and of good courage when you come across the forked tongue of your financial frenemy. Your wallet and your financial future depend on it.
Here are five things that financial frenemies love to say to appeal to keep your financial situation in critical condition:
1. “You only live once (YOLO)”: It’s true; you only live once, but here is something else to remember: each of your credit card bills, mortgage payments and car notes has their own life cycle OAM (once a month.)
2. “But it is on sale…” If you are desperately trying to adhere to a budget, a financial frenemy will gladly try to throw you off your course to debt-free living by saying, “but it’s on sale” to justify something that is not scheduled in your budget. What your financial frenemy fails to understand is that buying unnecessary items whether for a little or a lot is wasted money if it is not a need.
3. “You work hard, you deserve it.” This statement really kills me. When your financial frenemy starts whispering this yadda-yadda, ask them to be more specific about what “it” really means. Because when it comes to spending money that you do not have on things that you already own, “it” really means the following: less money, more debt, more crap, and more clutter. I doubt that that is something that you work hard for or deserve.
4. “It’s an investment…” Your financial frenemy really has a warped understanding of the definition of “investment” when she views spending your tax refund or rent on clothes, hair, electronics, or a car—all items that lose value over time.
Quick reminder, as one of my financial-friends-in-my-head Michelle Singletary loves to say, “If it is on your ass, then it is not an asset.”
5. “But that’s what credit cards are for…” Your financial frenemy will say this when she is trying to convince you to buy something that is WAY out of your financial comfort zone. I mean, way out. Here’s the thing: credit card money IS NOT yours. If you could not afford to buy an item without the credit card, how do you expect to repay that amount of money PLUS the interest that is slapped on for borrowing someone else’s money?
Kara is a life coach, motivational speaker, author, and founder of The Frugal Feminista. She has been featured on Black and Married with Kids, The Root, The Grio, Ebony.com, Ebony Magazine, Black Enterprise, and Clutch Magazine. She also pens a personal finance column at The Huffington Post. Connect with Kara @frugalfeminista.
Check Out This Gallery Of Income Tax Tips:
Income Tax Facts: 7 Need-To-Know Tips From My Tax Adviser To You
1. Your Income Tax Cheat Sheet
Even if you decide to handle the filing of your taxes solo, it is always important to know and seek the advice of a tax advisor/accountant, who can offer valuable information and point you in the right direction for optimum returns during tax time. This includes proper deductions, organizing year-round and reducing your tax stress. You're welcome.
2. Be Mindful Of Holiday Bonuses
It's always a great feeling to have that bonus check in hand, but sometimes it may not be the optimal scenario for your tax accountant. Boosting your income by a slight margin could shift you to a higher tax bracket for the year, offsetting your bonus and then some. Consider if it's better to realize your bonus in 2013 or 2014 and inform your employer accordingly.
3. Consider Charitable Donations
Giving to charities can carry tax deductions, helping you save on your IRS payment. If you need to get in a gift during the year of 2013, you can count the donation via credit card as long as you sign up for the payment by December 31. Just be careful of fraudulent charities, which the IRS has been warning people about for years.
4. Prepare For Tax Season
If you have a few extra minutes away from work and the family, maybe you can unwind over some tax documents. While it isn't most peoples' idea of a good time, creating a tax checklist and gathering together all relevant documents for the year before next year's become scattered everywhere can be a serious time saver come April.
5. Keep Track Of Deadlines
Deadlines can creep up at any time and in any shape or form. Some deadlines for income considerations can be at the year's end, so there's certainly plenty coming up in the near future. While the official filing deadline is April 15, the work doesn't start then — and shouldn't start the day before that — so plan out your time to meet the different deadlines of various parts of the tax code.
6. Don't Forget Retirement Savings
A great way to save money on taxes is by having a properly structured retirement plan. Both 401K and Roth IRA plans carry tax implications of various shapes and sizes, and planning ahead for retirement isn't the worst thing to do, either. By balancing contributions, the savings can really add up once tax bracketing is considered.
7. Consider The Child Care Credit
The IRS published an entire post about the child care credit earlier this year, in which the agency explained exactly how to use the credit and under what circumstances it is appropriate to file for it. Since it runs year-round, there's no better time to jump on board than now, and you just might save a dollar or two. Child care credit: http://1.usa.gov/1gKgeFf
8. Lump Medical Bills
There are thresholds for which medical bills become deductible if they total a certain percentage of your gross income (10% for most people is standard; however, it varies depending on circumstances). If you can lump your medical bills into this year or the next, you may become eligible for the effective tax deduction. This could involve prescriptions, getting new eyewear, extra checkups and prepaying plans.
9. Rashida Maples, Esq.
Rashida Maples, Esq. is Founder and Managing Partner of J. Maples & Associates (www.jmaplesandassociates.com). She has practiced Entertainment, Real Estate and Small Business Law for 9 years, handling both transactional and litigation matters. Her clients include R&B Artists Bilal and Olivia, NFL Superstar Ray Lewis, Fashion Powerhouse Harlem’s Fashion Row and Hirschfeld Properties, LLC.