Friday, June 15, 2012

Restoring credit after filing for bankruptcy





I guess it should come as to no surprise that since starting this blog back in 2010 the most popular post I have had so far (based on comments and page views) was a post about the steps of filing for bankruptcy.

It was very flattering to read some of the comments from people all over the country talking about questions they had about the B.K. process being answered on my post. It was also a very disconcerting sign of the times.

So as an attempt to balance out the bad with the good, here is a step-by-step process of rebuilding your credit after filing for bankruptcy. Most people who file for bankruptcy are at least $20,000 in unsecured or credit card debt, and have no real way of catching up. Filing for bankruptcy can be a gigantic load off your back and offer a fresh start (well almost).

As a basic example someone with an excellent FICO score of 800 with $25,000 of debt who files for bankruptcy due to a job loss or medical emergency can see their credit score dip all the way down to the high 500 to low 600 range, which now makes them a much riskier borrower than they used to be. Here are the things you need to do to get your credit scores back up after wiping your debt slate clean.

1.     Put yourself on a very strict budget and do absolutely everything you have to do not to put yourself in the same position again.  Remember you can only file for Chapter 7 Bankruptcy (the most common kind) once every 8 years. It’s meant to be a last resort not a free pass on paying your bills.
2.     Pay for a credit report 3-6 months after filing for bankruptcy to see where your scores stand. Myfico.com offers a very accurate report along with FICO scores for around 20 bucks.
3.     Know the difference between FICO scores and Vantage Scores. FICO scores are what 90% of creditors look at while Vantage Scores are looked at by second and third tear lenders looking for a quick approval with inaccurate and inflated scores. FICO scores range from 300-850 and Vantage Scores range from 500-990.
4.     Believe or not, you will be barraged with credit card offers and solicitations after filing for bankruptcy. Creditors know that people with a bankruptcy are desperate to obtain credit cards and circle those who have filed for BK like Vultures armed with pre-approval offers with insanely high interest rates. Apply for a card with a very low limit ($500 or less) and pay off your bills on time and in full every month. This is the number one way to rebuild your credit scores and credit worthiness.
5.     Be patient. There is no quick way to rebuild your credit. It will take a good 2 to 3 years to get your credit scores back to a respectable level after filing for BK. Just focus on living within your means and not repeating the same mistakes twice.

Sunday, May 27, 2012

Puppy Love





For those of you dog lovers out there who are familiar with the agony of losing your best friend know all too well how paralyzing and difficult the grieving process can be like.  When I lost my beloved German Shepherd to cancer almost 2 months ago, I literally thought I was going crazy.

I did everything I could to keep myself busy in an attempt to stave off the tears, whether it was detailing my kitchen and bathroom, painting my dining room, working on my truck or in my particular case all of the above.  All the simple things that I enjoyed most felt like a chore without Harley by my side. I barely ate, yet continued to push my running regimen beyond the limits I set earlier this year, because I knew that I had to continue on with my routine, simply out of fear of what would happen to me if I didn’t. 

Harley was my first dog, and she was also the first major loss I experienced in my life.  She taught me so many virtues that I thought I was immune to during our time together and she continues to do so from up above.  My inexperience with losing such an important piece of my life carried over to the question of: When is the right time to think about welcoming in a new dog?  The few people I let console me, who were more seasoned dog lovers themselves gave me the same 2 pieces of advice. 1) It’s one of the oldest cliché’s in the book, but it will get easier over time. 2) Think about getting a new dog.

I don’t know whether it was the desperate need to take care of something, or the timing of a friend of a friend’s text message about someone giving away 2 German Shepherd puppies while I was watching “I Am Legend” which also stars a German Shepherd that led me to visit a complete strangers house one Sunday afternoon. 

I barely knew how to get there, I had no idea what to expect when I got there and came home with a 4-month-old puppy, which I had no idea how to take care of. I found Harley when she was already 3 or 4 years old, so the things I had to learn with a dog that was fully grown and house broken was a far cry from taking care of a 4-month-old puppy for the first time.  After the first night I actually dialed the number of the home I got her from, in hopes of begging them to take her back. I went as far as contemplating paying for her food and a much needed vet trip as a way to convince them to let me bring her back, but I didn’t have the heart to hit the SEND button on my phone.

I took this little puppy away from her sister, and away from some deplorable living conditions with the promise of a better life, and a promise like that is something that needs to be carried out.

As the days passed and the more advice I got, the more comfortable we became with each other.  I quickly learned how to “puppy proof” (if there is such a thing) my apartment and read up online on how to train a puppy.  I never had a dog before, until I found Harley and that turned out to be one of the best things I ever did. I can only hope that my never having a puppy, until finding Stevie can lead to similar experiences.  It’s impossible not to compare the two no matter how unfair it is to do so.  Having another dog hasn’t stopped the pain or the tears for those are symptoms that can only be treated not cured.

I have to admit, it truly is a treat to see Stevie quite literally growing up before my very eyes and knowing her history and providence in a way that I didn't know with Harley. I swear there are days when I leave in the morning, I come home to a dog that is bigger than she was when I left. I wouldn’t be surprised if she’s grown, just in the time it took for me to finish this blog post.

She does so many of the same things Harley used to do. She has a tendency to lay down in all the same spots and picks up pretty quickly in spite of her boundless puppy energy. I don’t know if it’s just a German Shepherd thing, or maybe Harley is somehow helping her to help me.  The comparisons between the two of them will never go away, I can only hope to accept and celebrate them over time. 

All I know is, in order to make this work, I have to open my heart and let her in.

At The Bend 
-W.S. Merwin U.S. Poet Laurete, written about his departed dogs, his beloved Chows.

I look for you my curl of sleep
my breathing wave on the night shore
my star in the fog of morning
I think you can always find me

I call to you under my breath
I whisper to you through the hours
all your names my ear of shadow
I think you can always hear me

I wait for you my promised day
my time again my homecoming
my being where you wait for me
I think always of you waiting


Sunday, May 6, 2012

Surging rents raise a new housing hurdle



Just on the heels of receiving a notice of a 3% rent increase from my landlord, along with a disclaimer saying that they will no longer be paying for the Sanitation charges on my DWP bill which averages to be about $45 every two months, I come across an article in today’s LA Times that tempers any frustrations I might have had.

Rents are on the rise and vacancies are being snatched up within hours of putting up listings, especially in desirable neighborhoods.  Once again the scales of the economy that have been tipped in favor of the qualified home buyer since the crash in 2008 are leveled off by those who have had to struggle with foreclosures, job loss and damaged credit. 

For those of you out there who have been renting for a while and like your place and neighborhood but felt like there might be some better deals out there, think again.  After reading this article by Alejandro Lazo of LA Times, I went from “really liking” my 1 bedroom apartment in an 8 unit complex with friendly neighbors and a shared courtyard to “absolutely loving it”, regardless of the 3% increase.

A nation still struggling to clear up one housing debacle has run smack into another — soaring rents.

The foreclosure mess has pushed millions of former homeowners with tarnished credit into a competitive apartment market across the U.S. Add fresh demand from young workers, few new units and tight standards for home loans, and the result is rental sticker shock not seen in years.

Rents are surging from New York to Los Angeles. The average monthly U.S. rent for apartments hit $1,008 in the first quarter, pushing past the all-time high set in the third quarter of 2008, according to the data firm RealFacts. USC's Lusk Center for Real Estate forecasts a 10% jump in Los Angeles County rents over the next two years. In certain markets, it is now cheaper to own a home than rent.

Menachem Krinsky of Hancock Park recalls how in late 2008 every street seemed ornamented with "for rent" signs when he first moved to Los Angeles from the East Coast. Back then, his landlord was so desperate to keep him as a tenant that he slashed his rent of about $2,000 by $800 after Krinsky's first roommate bailed on the lease.

These days, however, Krinsky's search for a one-bedroom apartment costing around $1,500 is shaping up to be a major headache.

"I am looking for something clean and new, and unless you want to spend a fortune, it's hard," said Krinsky, a 22-year-old art director and graphic designer.

Units that years ago would have languished for weeks are snapped up in days. The Santa Monica-based listing service Westsiderentals.com is operating 14 hours a day to meet demand from renters. The company has even seen a bump in interest for its "platinum" relocation service, which offers to chauffeur clients to various Southern California listings.

Ellie Balderrama, who lists properties in Los Feliz, Silver Lake and Atwater Village for TheRenterGirl.com, said that as many as 20 people have showed up at some of her open houses. The ones who win arrive with completed rental applications and deposits in hand.

"In L.A., people have gotten so used to how relaxed it was, they are not aware how competitive it's become," Balderrama said. "Some people have got it, and some people don't, and the ones that don't suffer."

Rob Magnotta, a real estate agent, recently listed his two-bedroom Irvine condominium for rent on Craigslist for $2,300. He had six applicants within 24 hours, including one who wrote a poignant letter about losing a home to foreclosure.

"It was almost too easy," said Magnotta, who chose another renter. "I know the rental market was strong. But until you are actually renting the place, I think you are surprised it is that strong."

A big driver of rent increases has been demand from young workers who are striking out on their own after doubling up with family members during the worst of the economic downturn.

Alaia Williams, 27, recently moved out of her mother's Inglewood apartment to be nearer to her job at a Santa Monica tech start-up. She and a roommate are splitting the $1,400 rent on a two-bedroom apartment in Palms.

"We can't afford to live" closer to work, she said.

People who've lost their homes to foreclosure or short sales are also feeling the sting. Damaged credit means many must pay a premium or put down a bigger deposit to secure a place.

Robert Corlette pays about $1,700 a month for a two-bedroom town house in Anaheim Hills that he shares with his wife and five children. The family lost their home to foreclosure in 2009 after Corlette lost his $75,000-a-year job selling insurance. His current job, also in the insurance industry, pays about half that.

"There is a lot of pressure," said Corlette, 56. "It wears you down."

The crash has made owning a home more affordable than renting in some markets. An index by the research firm Green Street Advisors compares buying with renting in 79 metro markets; that index hit its most attractive point last year for buying since 1991, when the firm began tracking the data. Researchers calculate that the after-tax cost of a mortgage is only 10% higher than what it costs to rent nationally after taking into account mortgage rates, property taxes and other factors.

Orange and Los Angeles counties remain more expensive for buyers than renters, though that gap has narrowed, according to the index, while owning a home in the Inland Empire is now more affordable than renting.

Rising rents have converted some renters into buyers. Scott Matulis, 48, recently purchased a town home in Oak Park after enduring two consecutive years of rental increases. His mortgage, taxes and homeowner association fees now total $2,200, just $100 more than what he was paying his former landlord.

"I finally just pulled the trigger and figured I'd be throwing money away on rent," Matulis said.

Although rising rents may be motivating home purchases by people who are in good shape financially, those increases are walloping working class families and the poor — groups already hard hit by job losses, lost income and stagnant wages.

Marisela Alfaro has lived in the same one-bedroom Santa Ana apartment for 28 years. A large bed sits in her living room, where she and her husband sleep; their teenage daughters share the bedroom.

Modest religious art adorns her carefully kept home, but outside Alfaro's door the building is in disrepair, with tattered screens, broken lights and graffiti. Alfaro said the family pays $820 a month and feels lucky to have the apartment.

"There are other places that cost much more," she said in Spanish. "It's been difficult because my husband works in the fields, and that's the lowest salary that there is, and if there is no rain, there is no work."
 
Even for those with better jobs, paying rent can be difficult.

Virginia Villa of Brea, a single mother of four who works as a manager at Disneyland, has doubled up with her adult daughter, who contributes $400 to the monthly household budget. Still, Villa said, about half her take-home pay goes toward rent and utilities.

"I have a decent job and I would love to buy a house, but I don't think that's possible to do," Villa said. "In O.C., it's even difficult to find a substantial apartment or especially a house to rent — the rental cost for houses is really high."

Saturday, April 21, 2012

Harley Girl May 8, 2008-April 19, 2012



 My Dearest Baby Girl,

As I sit here to write about you, I just realized that this is going to be my first blog post without you by my side or under my feet. All I can do is look around my place and see all of your favorite spots empty.  I knew that this day would eventually come, but I had no idea it would come so soon. Even when you were first diagnosed with Lymphoma I was reminded of your precious mortality but found comfort in your unbelievable courage and resolve.

You were such a big part of my life Baby Girl, everything I did revolved around you. My schedule, what kind of car I bought or the place I lived in was built around us not just me.  My only regret is that we didn’t find each other sooner. Our four-year anniversary was just a couple of weeks away but you had other places that you needed to go to. A place where you can find peace, free of pain, free of chemotherapy, free to run around in knee high grass that you can push your nose and face through. You always loved the way overgrown grass would brush up against your face.


We went through so much in such a short period of time. You were my first dog and you were so very patient with me as we got to know each other, I am so sorry for the times when I was mean to you, I simply did not know any better.  I always hear people say that dogs have short-term memories and don’t hold grudges. I disagree, I think dogs have perfect memories; they never forget they simply always forgive.

In all of the thousands of walks we must have been on, never, ever was it a chore for me. No matter how early or how late, walking with you was something I always looked forward to.  I am trying to keep myself busy, love… but it’s so hard. Just yesterday I finally got some curtains for our room so the lights from the parking garage wouldn’t shine so brightly through the windows at night…I installed them as soon as I got home and wished that I had taken longer. My mornings and nights are so empty without you.  Coming home and sliding my key in the front door without hearing you on the other side is a silence that crushes my spirit. Every move I make I await your reaction, every time I grab my car keys I wait for you to run to me, every time I go to the kitchen to get something to eat, when I turn around you are not there anymore and I miss you so very much.

All I can do is try to look back on how greatly you touched my life and how you have forever changed me. As of right now any laugh or smile that I can muster is anchored by the weight of losing you.  I have to let myself grieve and hope for the time when my days are no longer filled with your absence. Your paw prints are all over my heart and I will never forget you. Thank you for blessing me with our time together, however brief. I love you so much Harley Girl, until we walk together again.

I will love you always,

Dad

Monday, April 16, 2012

Great time to buy, bad time to qualify.


I am convinced that, 5 years from now I, along with a lot of other folks out there will look back at 2011 thru 2012 and want to give myself a swift kick in the (you know what) for not taking advantage of today’s still semi-distressed housing market.

Houses that ballooned to near 7 figure prices in very modest neighborhoods can now be purchased for less than half of what they commanded during the boom years. I’ve heard and read many times over of investment firms pooling together hundreds of millions of dollars in special funds designed to buy up residential properties by the hundreds, and why not? If you’ve got the cash you can purchase a “move –in” ready home and rent it out at a profit every month.

To give you an example: I recently came across a bank owned 1 bedroom townhome in a decent area in the northwest San Fernando Valley with a garage, balcony and in unit washer/dryer for sale for $69,000. Do the math with the minimum FHA requirement of 3.5% down along with a $199/mos in home owners association dues your mortgage would be in the $700 a month range with a cash outlay of only $3000. A place like that can easily garner between $900-$1100 a month giving you instant positive cash flow, while capturing appreciation in value and getting the mortgage interest tax deduction on your tax return.

Sounds easy, if you’re lucky enough to be sitting on piles of cash or if your credit score and history are pristine. Once upon a time all you needed was a pulse to qualify for a home loan, now it seems like the only thing banks haven’t done to measure your credit worthiness is to draw blood and urine samples. Getting a home loan approved nowadays takes not only having all of your ducks in a row; you need to have the right kind of ducks as well. Here are some important factors you need to know before you start looking for that 3-bedroom diamond in the rough.

•A FICO credit score of 764. Not only is this higher than the average score for approved loans as recently as November, it's far beyond the 620-640 FICOs that Fannie Mae and Freddie Mac once considered the minimum for a conventional prime mortgage. It's also well above the median FICO score nationwide, which is currently 711, according to the Fair Isaac Corp, developer of the score.

•A loan-to-value (LTV) ratio of 78%, signifying a down payment of 22%. This is higher than even the controversial minimum of 20% proposed last year by Obama administration financial regulatory officials who were seeking a standard for "safe" loans offering the lowest available rates and best terms.

•Debt-to-income ratios of 21% for housing expenses, 34% for total household monthly debt.

How about the profiles of people who applied for conventional loans to buy a house but were rejected or didn't get to closing? By historical standards, they were a fairly impressive group on average as well, with 732 FICO scores, 19% down payments and debt-to-income ratios of 24% (housing costs) and 41% (total debt).
Homeowners who refinanced existing conventional loans had the best profiles of all: average 770 FICOs, 65% LTVs indicating 35% equity stakes, and debt-to-income ratios of 22% housing and 32% total debt.

There is an alternative thought process out there. One could always try to qualify for the previously mentioned FHA (Federal Housing Administration government sponsored loan) which lowers its standards in an effort to make “The American Dream” more equitable. And, remember these are just averages, if you are in the ballpark of some of these impressive figures and standards you still have a good chance of qualifying since each bank or lending institution has their own standards to adhere to as well.

Sunday, April 8, 2012

3 really cool cars for under 20 grand

For years now myself along with a couple of fellow gear heads have been exchanging, mostly via text-message... random “Which would you rather have?” car questions in an attempt to pass time during the day or when prompted by seeing a car on the road that catches our eye. The comparisons would run the gamut from the more obvious exotics like "What would you rather have a Porsche 911 Turbo or an Audi R8 V10?" to "A Ford Focus SVT or a Honda Civic SI?

With every comparison the same 3 standards would typically apply:

1.Cool Factor- how the car looks, the originality of the styling and how well it ages. There are certain models that come out every now and again that have the rare ability to capture both present day design along with combining pedigree and classic sensibility that can make the look of a particular car timeless.

2.Performance- it’s not just a number. Too much horsepower is rarely something to complain about, but there’s a lot more to the overall performance of a car than just raw power. How a car harnesses that power is just as important, if not more so.

3.Emotion- forgive me if this comes off as overly dramatic, but for the true “car guys” out there who can identify a make and model of a car at night by only looking at how the headlights are configured knows that having an emotional attachment to a car is no exaggeration. Drive a particular car for a long enough time, especially in L.A. and it becomes a part of your identity. You develop an attachment to it, how you feel when you are in it, and how you feel when you are seen in it are emotions that don’t apply to other things we use everyday. A car, in some instances can be our first impression. Here are 3 used, but very cool cars that cover all 3 standards in spades and are obtainable without having to be part of America’s top 1%.

2006 Audi S4 Sedan or Avant Station Wagon 4.2L V8 340 BHP All-wheel drive, available 6-speed manual gearbox: price range $18,834-$21,000(depending on mileage) – I have always been a big fan of Audi’s and especially the S-line models. 2006 being one of the first years when the new re-designed single A-frame grill was introduced. Audi’s famed Quattro technology that dominated the Rally circuit back in the day makes the Audi S4 the perfect car for the Junior Executive seeking performance and style, but doesn’t want to join the herd of the 3 Series Bimmer sect. It feels at home pulling up to the valet at the latest tapas bar, or for the weekend warrior driving pass cars on the side of the highway putting on chains on snow covered terrain. I personally would opt for the Avant model, which gives you more room for Rover, because what’s the point of a weekend adventure if you can’t take your dog with you?


PROS: Great performance and luxury both inside and out. Audi’s interior is second to none when it comes to luxury cars, and it shows, even on lower end models. A more subtle and grown-up feel to its BMW M3 counterpart.
CONS: V8 performance comes at a cost at the pump. Maintenance can be on the pricey side.

2002-2004 BMW M5 Sedan 4.9L V8 394 BHP rear wheel drive 6 speed manual gearbox: price range $14,700-$20,900 (depending on mileage). This car was the standard of full-sized sports sedans when it came out and still commands the same kind of respect to this day. This car was not designed for soccer moms or boy racers. It’s as serious of a sports sedan as they come, so serious in fact that it was only available in manual transmission between 2002 and 2004 and unless your last name was Schumacher you were implored by the dealership to never ever disable the traction control out of fear of hurting yourself or others.


PROS: Very roomy, sits 4 adults comfortably and has a relatively pleasant ride at normal speeds. Being seen in one gives the driver a sense of pride without the Duchebag factor that came in subsequent models.
CONS: Can be hard to find and the Interior is a little dated. Opting for the polished aluminum rather than the wood trim helps.

2005 Subaru Impreza WRX-STi-sedan 2.5L 300 BHP 4 cylinder turbo all-wheel drive 6-speed manual gearbox: price range $14,299-$16,500 (depending on mileage). This car is by far and away the most practical choice of the 3. Its signature Boxer engine does more with less and is legendarily reliable. All models come with all-wheel drive making it the perfect sports-utility vehicle without being a gas guzzling SUV. Subaru was Eco-conscience before it was trendy and the WRX is like a bull in a China Shop that cleans up after itself.


PROS: Very affordable and reliable. Good gas mileage with A LOT of bang for the buck.
CONS: Boy racer looks reminds you that you’re way too old to be wearing skinny jeans and Chuck Taylors.

Saturday, March 3, 2012

Make saving fun!


Everyone knows that putting away money for a rainy day, no matter what the economic climate maybe, is never an easy thing to do. Factoring in one of the worst recessions most have us have seen in our lifetimes makes the very idea of having 3 months of living expenses set aside next to impossible.

But for those who managed to stay employed since the debacle of 2008 have a new outlook when it comes to saving. Actually, when the recession first started fear and uncertainty were driving forces for people to actually spend less and save more. In fact from the end of 2008 through 2011 Americans were socking away more into their savings accounts and reducing credit card debt than they have in years prior.

So what’s the best way to keep this trend going? Try making a game out of it. One of my New Year’s resolutions for 2012 was to run more often. I made a promise to myself that I would try to run at least 15 miles a week for the entire year just to see how consistent I can be. I started the goal in January and made it to February with relative ease. I was easily hitting my average and in some weeks even surpassing it depending on the weather. That is when I decided to up the ante a bit, by setting aside $2 for every mile I ran per week into a “running jar” that would be used to help pay for either a new pair of running shoes, marathons and other running events or a vacation at year end.

Once I started doing this, I looked forward to my runs more and it made me more accountable as well, to not only to stay dedicated to my running regimen but it actually made me excited to put away that $30 or more a week. Making it actually fun to save. The more I ran the more money I would have in my jar. Anytime I would feel lazy or unmotivated to run, I would just look at my jar as a carrot dangling in front of me. I saw it as a possibility to pay for a marathon in a place that I have never been to. I actually enjoyed having to go to the ATM machine to feed my running jar.

Another example would be, if you are trying to lose weight... why not put away $1 for every pound you lose per week? It’s not only a great way to put some cash away for something fun to do once you hit that magic number of lb's lost, it also motivates you to stay on track and be consistent with your diet and weight loss routine.

We all know that once we graduate from young adults to just plain adults that most of the tactics our parents used to get us to do things when we were younger such as giving us an allowance just for taking out the trash, or pretending that a spoon full of green beans was an airplane flying into our mouths in order to get us to eat our vegetables are no longer. But that doesn’t mean that we can't employ our own interesting twist that makes something as monotonous and mundane as putting money away more fun.

Sunday, February 19, 2012

Tax time, already?


There are few events in life that cause more sighs and eye rolls than being reminded that the looming deadline to file your taxes by April 15th is quickly approaching (which is actually April 17th for this year, since the 15th falls on a Sunday).

For those who are lucky enough to actually be a part of the positive, albeit slight economic recovery the country has gone through since 2009 this time of the year might be a little easier to digest. But for those who are still struggling to find work and make ends meet, filing your taxes can present a double edged sword of not only having to pay Uncle Sam with very limited disposable income, but having to pay a professional tax preparer to file their taxes as well.

Some tax laws have changed or have been amended since last year, but a lot of them have stayed the same. One does not have to be a CPA or have a degree in economics to understand the process of filing your return, what’s more important is, avoiding mistakes that can raise an IRS Auditor’s suspicious eyebrow and knowing how to maximize your deductions. Here is a guide to help you navigate your way through the forest of cryptic forms containing letters conjoined with numbers by hyphens and dashes, or, to put it more simply, a crib sheet to organize that shoe box or manila envelope overflowing with receipts, movie ticket stubs and who knows what else.

1. Gather your forms: Most of us will receive either a W-2 which is a year end breakdown of how much you made as an employee of a company which tallies up total income, minus all the taxes that were paid in throughout the year. A 1099 form for “Miscellaneous Income” is issued to those who freelance or consult and are not a payroll employee of a company. This form only presents one total number for income made. Take advantage of the year end statements that credit card companies are offering this time of year, they often break down your charges by category for all of 2011.

2. Get the facts: Think about the year you had and of any out of the ordinary events that might have occurred. For example did you sell your house or move? If so you maybe able to write off losses or you maybe liable for any settled debt from a short sale of a home. The Domestic Partner status seems to be pretty popular nowadays, with same sex marriages and couples living together longer without getting married. Professional or continuing education can also be deductible if it directly relates to your job, and don’t forget that interest paid from student loans is deductible.

3. Push the envelope, but don’t push too hard: Everyone knows that filing your taxes is about as fun as standing in line at the checkout counter and being forced to listen to a guy wearing a Bluetooth ear piece talking about his VIP passes at various clubs, while chugging an energy drink. Being audited however, can be even more excruciating than being on a road trip with that very same guy. Be careful, and know the areas that could potentially set off an audit. Some of the more common pit falls to avoid are: overstating charitable contributions, employee business expenses and vehicle expenses. And as obvious as this may sound, your expenses should seldom exceed your income. If it does, you better be able to show proof and explain why, if not you are rolling the dice in a game where the odds are stacked against you. The IRS may move at a snails pace, but they always eventually get to you.

4. Choose your preparer wisely: Gone are the days of paper tax forms and complicated formulas. Today, you can use tax-preparation software that will walk you through your return with simple questions. What's more, first-time filers probably can get this software for free.

The Free File Alliance, a public-private partnership between the Internal Revenue Service and tax software companies, offers free tax-preparation software and filing for individuals whose adjusted gross income was $57,000 or less in 2011. Visit irs.gov/freefile and click the link "Pick a Free File company."

Earn more than $57,000? The Free File site points out that everyone, regardless of income, can use Free File Fillable Forms, designed for those comfortable preparing their own tax returns without software help. Also, many tax companies offer free tax prep on their websites or through tablet apps, regardless of income. Check that the free option supports the forms piled on your desk (like those 1099s).

Run into a problem as you're filing? Many tax-prep companies will answer questions over the phone or by email at no cost. Just don't delay. The deadline for filing your return: April 17.

Here are some new and very relevant tax rules proposed by Rex W. Huppke of The Chicago Tribune, enjoy…

Latte Thermometer Tax.
This would be levied on any person who orders a latte made to an exact temperature. A "soy mocha latte, 150 degrees" would come with a 75 percent tax and a disapproving stare.

Colloquialism Tax. Any utterance of phrases like "Working hard or hardly working?" or "Hot enough in here for you?" would be taxed at 10 percent of daily wages.

Bluetooth Headset Flat Tax. Anyone wearing a Bluetooth headset would be charged $100,000 per day. (If worn while driving a convertible with the top down, the tax is doubled.)

Foodie Tax. Gourmands who fancy snapping iPhone photos of their pistachio-crusted chicken breast with coconut-ginger-chili sauce would have a 30 percent tax added to the bill.

Jerk Tax. Aimed at any person earning more than $1 million per year ordering a personalized license plate along the lines of "HOT DOC," "MY BENZO" or "STOX TRADER." Upon receipt of the license plate, the recipient will be vaporized, and the government will sell the car at auction.

Saturday, February 11, 2012

Survival of the fittest: How small businesses attract and keep talented employees.


Small to medium sized businesses (also known as the SME Market) are responsible for employing over three quarters of the U.S. population and play a crucial role in getting the economy back on track. Majority of the clients I have had since working as a consultant have been these very same types of companies.

More often than not the difference between a successful business venture and one that fails depend on two major factors: The first and most obvious factor is cash flow, and whether or not the company is generating enough revenue to be self-sufficient, the second and perhaps less obvious factor is the ability to attract and retain highly qualified and talented employees.

In order to survive in this economy, small companies have to be able to be nimble and adapt to the times. They not only have to make themselves attractive to talented candidates, but they have to be able to make them want to stay with them as well. As technology dictates the pulse of how business is done, complacency can quickly become the antithesis of innovation.

Here are 5 steps to attracting and retaining talent, presented by Matt Taylor of Corporate Strategies who also happens to be a good friend, sounding board and mentor.

Professional Growth
Employees want to know that they are advancing their skill sets and their position within your company. Yet, they often do not understand how their role affects the company’s success. Managers should communicate how each employee’s efforts, whether by working independently or as part of a team, directly impacts the company’s operations. It is important that everyone knows his or her contributions matter. Equally important, employers should help employees establish career paths by providing them with opportunities for promotion or cross-training to help keep them challenged.

Pay for Performance
Rewarding employees for a job well done directly affects their performance and the company’s bottom line. However, traditional merit-based pay plans, such as raises and bonuses, are not the most effective employee motivators. Paying workers based on their performance, commonly referred to as pay for performance, offers employers and employees several advantages over the traditional across-the-board merit system, including:

• Improving morale and retention. Top performers want to be recognized for their hard work. It is more motivating for employees to know they will be well compensated when they meet or exceed goals than it is when everyone receives the same increase regardless of their individual performance. Employers that provide extra incentives to valuable employees are more likely to enjoy lower turnover rates.
• Increasing productivity. When individual and group goals are aligned with the company’s objectives, productivity can be greatly enhanced. Each person is held accountable for doing his or her part and more, and poor performers are forced to work harder and carry their share of the workload.
• Engaging top performers. Employees want to work for an organization that values their efforts. A pay-for-performance initiative that is carefully communicated and executed can help employees exceed their goals.

While it is important to establish realistic goals, a pay-for-performance program should make it worthwhile for employees who do more to receive more. Employees should always know what is expected of them. Standards of performance should be established and communicated, and regular reviews should be conducted.

Public Praise
Recognizing employees for their positive contributions provides multiple benefits for companies. Employees appreciate being recognized both privately and publicly for their efforts and creativity. Honoring employees in the company newsletter and through employee appreciation events are other methods of developing loyalty among talented staff members. Special rewards also can be given for major achievements. And always, showing appreciation with a simple thank you—no matter how big or small the contribution—goes a long way.

Work-Life Balance
Successful employers understand the relationship between work-life balance and productivity and offer flexible work policies and practices. Those can include part-time employment, job sharing, telecommuting, and employee assistance programs. Many employees value time over money. Employers that offer opportunities to enhance work-life balance demonstrate to employees that they care about both their professional and personal well-being.

Have Fun
A fun work environment is among the many factors that employees say contribute to job satisfaction. Employers should foster an upbeat, enjoyable work environment that strikes a balance between productivity and fun. By celebrating a milestone, conducting team-building activities or going on quarterly group outings, employees can see that their employer is human too and not all-work-and-no-play.

Retaining top talent is essential to a company’s success. By establishing a rewards and recognition program, employers can help maintain employee motivation and an atmosphere where everyone feels they are an important contributor to the company’s success.
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