The Blog Of TL Wall Accounting

Archive for March, 2014

Reasons To Have At Least One Credit Card

Credit cards can be dangerous in the wrong hands. They can also not only be beneficial at times, but they’re necessary at other times.

There’s an interesting debate between financial experts on whether people should pay off all their credit cards as soon as possible or keep a balance on some of them and pay them down via a schedule to show that you know how to pay off debt. It’s a crazy conversation where, strangely enough, both sides make sense. There’s no doubt that if you have a lot credit cards you need to wean yourself off them but what are some of the thoughts on having credit cards in the first place? Check these out.

First, having at least one credit card turns out to be necessary if you ever plan on going anywhere or staying in a hotel. You can’t rent a car without one, can’t stay in a hotel, and if you’re flying in these days of terrorism worry you might have to find ways of proving who you are before you’re allowed to buy a ticket.

Second, you can probably alleviate some of these issues by using a bank debit card that’s either a Visa or Mastercard but there’s something you need to know. If you’re renting a car they’ll hit your account up for a much higher amount than what they believe your balance will be and that could leave you without access to your account if you don’t have way more money in it than you expected to need. The same goes for some hotels. They’ll only keep it that long for up to 24 hours but that could be quite stressful.

Third, though we’d probably side with those who believe if you can pay off your credit card immediately do so, within the context of a budget if you need a big ticket item and can pay it off within 3 – 6 months without hurting yourself overall it’s not a bad idea to do that.

Fourth, there’s a fine line on just how many credit cards you can have, even if they’re all pulled off, and how credit agencies will judge your worthiness. If you have more than what makes them comfortable they see you as a potential credit risk who could run up unconscionable debt within a short period of time, even if that’s never been your pattern. Having too few credit cards, or at least a history of having them, makes them feel they can’t get a gauge on the type of financial risk you might be. We can’t make that recommendation for you but it’s something you should know.

Fifth, if possible it never hurts to have at least one store credit card of some type, and the best type is a department store. In an emergency you might need clothes, and even if the interest rates can be higher on store cards having the ability to get clothes where the monthly payments will be lower than normal credit cards can be crucial.

There you go, some thoughts on why having a credit card might be worthwhile. Let us know your thoughts on this.

Don’t Wait Until The Last Minute To Do Your Taxes

We’re in the final countdown to another tax season and, if you’re like half the population, you probably haven’t even started putting anything together to give to your accountant, or if you don’t have an accountant are worried that you might owe money so you’re putting off the bad news until the last minute.

We’re a “wait until the last minute” society and that means we’re either not disciplined or are usually expecting the worst. People who expect good things always get to them as soon as possible so they can get on with having fun, or at least being comfortable.

When it comes to taxes, you might as well face the fact that you still have to report them by April 15th (although in some states it gets delayed a day and of course one can always file for an extension, even though by rights you’re still supposed to pay something if you think you might owe). It’s in this regard that we list some things you should think about that may or may not encourage you to get to your taxes earlier.

1. You might be getting a refund. We’ve never been able to figure out why people who know they’re getting money back won’t get their taxes in sooner. If you’re a millionaire we might understand but for the rest of us, which is close to 95%…

2. You might owe something. This is what people fear but the truth is that the IRS is probably one of the few agencies in the country where they’ll work with you on paying down outstanding debt, and the interest rates aren’t really all that high. Still, it’s possible that if you do your taxes earlier and you see there’s an amount you owe that you can save up and either pay the entire thing off on the 15th or pay something toward your balance; the IRS likes that.

3. If you’re not planning on doing your own taxes the availability of someone to do them gets severely tested. In January many accountants or tax preparation companies have people just sitting around waiting for you. As it gets close to the magic date you’ll often see lines and, in some cases, you’ll have to make an appointment to see some of these folks. Talk about anxiety levels!

4. If you’re doing your own and you’ve just bought the software you could find yourself getting confused. If you have any questions at all and need to reach out to someone you’re probably going to get put on hold and have to wait while they deal with all those other people who waited until the last minute to use the software to do their taxes.

As we like to say around here, it’s always better to know than not know. If you haven’t addressed it yet… well, what are you waiting for! 🙂