Financial Tip

Have a Savings Plan –
Resolve to set aside a minimum of 5% to 10% of your salary for savings BEFORE you start paying your bills.


Is Business credit important?

What is a line of credit?

A line of credit is an amount of money provided by a lender, which and individual or lender can spend at will, either by credit or check, provided they pay some amount back each month.

What is an Interest Rate?

An interest rate is the amount by which a borrower’s debt increases each month. Interest rates are usually expressed as a percentage. Interest is how a lender profits from your credit line. The money a borrower pays in interest is collected by the lender as a fee for issuing credit.

The amount your debt will grow each month is calculated by taking the total balance and multiplying it by the interest rate. Fourteen percent is the average APR on new credit card offers. Thirty-six percent of credit card users say they didn’t know the interest rate on the card they use most often.

As you spend

As the borrower spends his or her credit line, they are responsible for paying it back. Payments are made monthly, in an amount at or above the minimum allowed payment. Fifty-four percent of American who said that they always paid their credit cards in full during the past 12 months.

Interest is compounded on the remaining balance, or p[aying less than the minimum payment can trigger penalties that add to the outstanding debt.

2 Different Types of Credit

Secured Credit Line: A credit card that requires you to promise collateral to receive credt. These cards are often sought by consumers with bad credit who may not qualify for an unsecured line. Common items used as collateral: cars, homes, businesses, stocks and savings accounts.

Unsecured Credit Line: Credit cards that are not secured by collateral. Customers qualify for such cards based on their credit history, their financial strength and their earnings potential.

How to Qualify for a Credit line

Individual: Lenders will perform a credit check on any individual applying for an unsecure line of credit. They also look into a borrower’s employment history and yearly salary. Lenders look at a borrower’s debt-to-income-ratio (DTI). This is a measure of the amount of debt the person already owes relative to their monthly income. Thirty-seven percent of American adults admit they do not know their credit score.

How to Secure Business Credit Cards

To qualify for business credit cards or other business financing, businesses need to present a lender with a strong tax return showing positive income and low existing debt. If your business has no tax return, you can secure the card with a co-signer. This could be you, any of your co-founders, or a friend with a strong solid credit history.

As of the end of 2009, 83% of small businesses used credit cards; 64% used small business cards, and 41% used personal cards.

5 Biggest Credit Card Issuers

  • Bank of America: $194.70 Billion
  • Chase: $184.09 Billion
  • CITI: $148.90 Billion
  • American Express: $105 Billion
  • Capital One: $68.78 Billion

Financial Tip: Stick to a Budget

One of my favorite subjects: budgeting. It’s not a four-letter word. How can you know where your money is going if you don’t budget? How can you set spending and saving goals if you don’t know where your money is going? You need a budget whether you make thousands or hundreds of thousands of dollars a year.

Related Resources:

Budgeting 101: A Collection of Budgeting Articles


Standard or itemized tax deduction?

Deductions reduce your taxable income. Less income means a smaller tax bill. What’s the best way to reach the smallest possible taxable income level — with a standard or itemized deduction? It depends on your personal circumstances.

The Internal Revenue Service says most taxpayers use the standard deduction. The amount is different for each filing status and is higher for blind taxpayers and those who are ages 65 or older. The amounts are also adjusted for inflation each year.

For 2010 returns, the standard deductions are:
  • $5,700 for single filers or married couples filing separately.
  • $8,400 for head of household filers.
  • $11,400 for married couples filing jointly.

Standard deduction amounts increased

Married couples who’ve been submitting joint returns for a while will notice their standard deduction amount has jumped substantially in recent filing years.


They can thank inflation adjustments, as well as tax law changes in place through 2012, that are designed to help ease the marriage penalty.

And some older and visually impaired taxpayers may be able to cut their tax bills with even larger standard deduction amounts by simply checking a couple of boxes on their tax returns.

That means the standard deduction might now be appealing to even more taxpayers. Remember, you always want to use the deduction method that gives you the biggest tax advantage.

So if all those receipts you stashed last year in the hopes of turning them into tax breaks add up to less than your standard deduction amount, throw them away. There’s no need to waste your time filling out extra forms.

But individuals who spend a lot on medical care, mortgage interest, state and local taxes, charitable contributions or a variety of miscellaneous items generally are better off itemizing.

Even purchases might help out some filers at tax time this year, thanks to the deduction for state sales tax paid. When all of these expenditures exceed the standard deduction, you’ll save on your taxes by filling out Schedule A along with your 1040.

Itemizing ground rules


Taxpayers who plan to itemize won’t be able to file their returns early this year; they’ll have to wait for the IRSto reprogram its computers to reflect the new tax law enacted in mid-December of 2010.

When you do itemize, there are a few things to keep in mind. First, not every dollar you spend can be subtracted from your income. In the medical category, only expenses that exceed 7.5 percent of your adjusted gross income can be deducted. If you didn’t spend that much, then none of your costs are deductible.

You have to reach a 2-percent-of-income threshold before you can use miscellaneous deductions, such as unreimbursed job expenses and investment and tax-preparation costs. There also are restrictions on how much in casualty losses you can deduct, as well as limits on the deductibility of very large charitable contribution amounts.

Filing status affects figures

Third, filing status sometimes affects your deduction method and amount. Married couples who file separately, for example, must work together when it comes to deciding which deduction route to take. Even though each partner will fill out a separate return, if one spouse decides to itemize, the other must do so, too.


Similarly, if someone claims you as an exemption on his tax return, the amount of the standard deduction you can take on your own return may be limited.

Finally, your deduction decision isn’t a lifelong commitment. As long as you meet the other guidelines discussed above, you can claim the standard deduction one year and itemize the next. Again, use the deduction method that gives you the lowest tax bill.

Source: _

Taxpayers who itemize have to wait until February to file

Taxpayers who itemize on their federal tax returns will have to wait until at least mid-February to file, the IRS said Thursday.

The delay is necessary because the IRS needs time to program its systems to accommodate tax breaks included in a compromise tax bill President Obama signed last week.

The delay means millions of taxpayers will have to wait longer to get their refunds next year. Taxpayers who will have to wait until mid- to late February to file include:

• Taxpayers who claim itemized deductions on Schedule A. Itemized deductions include mortgage interest, charitable deductions, medical and dental expenses, state and local taxes.

• Taxpayers who claim a deduction for tuition and fees. This is a so-called “above-the-line” deduction, which means taxpayers don’t have to itemize to claim it.

Parents and students who claim other education credits, including the American Opportunity Tax Credit and Lifetime Learning Credit, will not have to wait to file, the IRS said, assuming they don’t itemize.

• Taxpayers who claim the educator expense deduction. This deduction, which is also an above-the-line deduction, allows teachers to deduct up to $250 in out-of-pocket costs for classroom materials.

“The majority of taxpayers will be able to fill out their tax returns and file them as they normally do,” IRS Commissioner Doug Shulman said. “We will do everything we can to minimize the impact of recent tax law changes on other taxpayers. The IRS will work through the holidays and into the New Year to get our systems reprogrammed and ensure taxpayers have a smooth tax season.”