Categories
Taxes

Lessons in Saving For Private Education Fees

Families often need a lesson in looking after their money when planning a private education.

Even though they have the best of intentions, the figures just do not add up to cover the many thousands of pounds needed to put just the one child through a private education – let alone two or three.

Families fund education in three main ways:

  • Paying fees from their own income and building a reserve fund on hand to supplement the cost. If both parents work or have the cash resources, they might fund half the cost of education from income and need an investment plan to pay the rest
  • Investing regular amounts in a savings plan to give an income to pay education fees. These parents may have small but regular amounts to save over a long period.
  • Investing a lump sum, like a gift or inheritance to give an income to pay education fees.

Saving to fund education fees is basically the same as setting up any other investment plan, but professional, unbiased advice can help whatever the circumstances.

How much will school fees cost?

Currently, prep boarding fees work out from £4,250 to £6,250 a term and senior boarding from £5000 to £8250. You also need to add in uniforms, games equipment and other incidentals.

The fees depend on the standard of school and the age of the child. Day fees will be less.

Take an average of £5,000 a term, multiply by three terms a year over 13 years covering school from when a child is five until they are 18 and the figure is a staggering £200,000.

Once you have this figure, calculate the time between now and when your child starts at the school. This will give you some idea of what you need to save and the timescale to meet that amount.

Then, sit down with an independent advisor regulated in the UK by the Financial Services Authority, and draw up a strategy that matches your objectives.

Obviously, if you have more than one child you want to put through school, then this has to be factored in to the equation as well.

Don’t forget to consider interest rates and inflation as these could have a dramatic effect on your investment. One solution to offset these is saving more than you need as a cash reserve.

Keeping private education costs in the family

Parents and grandparents contributing in to a pot often pay education fees. Tax effective investments that may involve taking specialist advice about trusts or family foundations. Although this may seem expensive, this good advice should serve the family well over the years.

Often, if the family is living across several countries, a spread of investments is a strategy that can take best advantage of tax rules in different countries, which is just one service that a leading Wealth Management firm can offer.

For instance, if the grandparents live in the UK and aged 50 or over on the 5 April 2010, they can invest up to £10,200 in an ISA with half as cash and the balance in other investments like stocks and shares.

If the parents live overseas, then many investment options are open to them, including international life insurance savings plans.

Estate planning to consider how to legitimately avoid inheritance taxes in the UK and overseas is an important part, of any school fee strategy.

For instance, the grandparents might decide to skip a generation and leave their estate in trust to their grandchildren with the parents as trustees to fund education fees.

Other tax effective investment opportunities to consider include:

  • Children’s annual income and capital gains tax allowances
  • Options to re-assign life policies and investment bonds
  • Tax-free returns available through offsetting against a personal mortgage
  • Opportunities available through offshore investments

When to start saving for private school fees

Forward thinking parents should start saving as soon as they can – even if they don’t yet have any children. The longer the investment period, the more likely the fund will grow without too much strain on the budget for other expenses.

Categories
Taxes

The Truth About Tax Resolution Fees

Within the tax resolution industry, there are a variety of fee models that you should be aware of. Different fee models have different potentials for abuse by the firm offering the services, and it is important to do your due diligence and fully understand what you are paying for, how much, and when, before ever paying a single dime to a tax resolution firm.

One of the most common fee models is a retainer model, which is a carryover from the world of legal and CPA firms from which many tax practitioners come. Under this model, you pay an up front amount, which the firm holds on to and then bills against on an hourly basis. Close to the time when the retainer is all used up, you will (or, actually, SHOULD) get a bill showing what was done, how long it took, and the hourly rate it was billed at. This bill will usually also include a request for additional retainer. The key thing to remember here is that if you don’t keep paying, they don’t keep working.

If you’ve been researching particular companies online, you may already have come across BBB, forum, Attorney General, and other complaints against some firms that aggressively bill down retainers, and are constantly asking their clients for more money, without making much significant progress on a client’s actual tax case. It is important that you thoroughly vet a company before giving them money, in order to avoid becoming another victim of a devious company.

Another common fee model is a flat fee-for-service model. This fee model has a large number of variations, from a flat fee for a specific package of quoted services, to a “menu of services” model where each service you can order off the menu has a specific fee. This latter method is very akin to the most common pricing model used in tax return preparation, where each specific tax form has a particular fee for preparing it. You’ll see this fee model used at just about any CPA firm or retail tax preparation outfit (including Jackson Hewitt, H&R Block, etc.).

When you are speaking with a sales person regarding a package of services, it is very, very important that you understand exactly what services you are being quoted for, and what the company’s policy is regarding fees for additional services. When it comes to tax matters, it is not uncommon for additional services to be required, which will require additional fees if they are not covered in the quotation you are already working under. Ideally, the sales person you speak with will have conducted a thorough analysis of your situation and will have included everything in the proposal sent to you.

When comparing proposals between multiple companies, keep in mind that you probably aren’t comparing apples and apples, but rather apples and oranges. Here are things to consider when comparing proposals between firms that are competing for your business:

  • Is any tax return preparation included in the quote?
  • Does the fee include all appeals necessary for handling your case?
  • For business owners, is Trust Fund Recovery Penalty representation included?
  • How many quarters or years of tax issues are covered by the fee quote?
  • Is a penalty abatement application included, or is that extra?
  • What specific resolution option does the fee cover, and what happens if the resolution strategy changes?

This last question is particularly important. There are some tax resolution firms that will try to sell everybody an Offer in Compromise, because they charge a higher fee for this service. However, it is critical for anybody and everybody to understand that most individuals and small businesses DO NOT QUALIFY for an Offer in Compromise. In fact, the IRS accepts less than 20% of all Offers that are ever submitted, and the only reason this number is so low is because of the high number of ineligible offers that get submitted in the first place. It is also important to understand that the average processing time for an Offer in Compromise exceeds 10 months.

What does this mean for your fee? Well, a reputable firm will conduct a thorough financial analysis, and tell you whether or not you are an Offer candidate. If you are not, then they will negotiate another resolution option for you within the same fee. If a firm tells you they will charge an additional fee for negotiating an Installment Agreement (monthly payment plan) after you’ve already paid a higher fee for an Offer in Compromise, then you should seriously question this.

You should also beware the firm that tells you that, yes, you are an Offer candidate, even when you own assets in excess of your tax liability. Simply put, if you have assets that exceed your tax debt, then the IRS will never accept your Offer. There is an incredibly rare exception to this rule, but it’s so rare that it only happens once or twice per year (literally). This exception is called the “Effective Tax Administration” rule, and if a firm tells you that you can qualify under this rule, then chances are you are being straight up lied to. You practically have to be on your death bed in order to qualify for this exception.

Another big thing to consider when discussing fees is the issue of what’s an appropriate fee, and what is too much. The cost of a service obviously varies based on geographical location, but in general fees for tax resolution services across the country do fall into a line of what’s appropriate and what’s not. Here are some examples of what would be considered standard fee ranges for certain services:

  • Negotiating an IRS Installment Agreement, penalty abatement, and all appeals on a $40,000 personal income tax debt: $2500
  • Same as above, but on a $200,000 business employment tax debt: $5,000 to $7,000
  • Trust Fund Recovery Penalty representation: from $1,000 to $2,500, depending on the nature of the case
  • Preparing a basic personal income tax return, married filing jointly, a home, two jobs, couple kids: $300-$500
  • Preparing a small corporate income tax return with less than $250,000 per year in revenue and no significant assets: $500-$800
  • Preparing a more advanced corporate tax return with multiple shareholders, assets, high revenues, etc: $1,200-$2,500
  • Negotiating an Offer in Compromise on a $150,000 personal tax debt: $3500 to $5000
  • Negotiating the release of a wage garnishment, and nothing else: $400 to $1,000

These are just examples of the types of fees you may see when it comes to working out tax problems. There are numerous factors that go into properly quoting a tax resolution fee, but when comparing proposals, these numbers can give you a good idea of what is considered reasonable.

Categories
Mortgage

Home Refinancing for People with Bad Credit – How to Avoid High Fees

Avoiding high fees when home refinancing with bad credit is as
important as finding low rates. With fees adding up to thousands of dollars,
make sure that you are getting the best deal by comparing lenders. Also
look at other types of credit to securing cash out financing.

Ask About Closing Costs And Fees

To save yourself money, research lenders before settling on a refi
loan. Request loan quotes that include information on closing costs and
fees. The APR will include the interest rate, closing costs, and any
annual fees. But be sure to also ask about early payment or any other fees.

Be aware of fees or closing costs that are included as part of the
principle. These are often labeled as "zero down" loans, but in reality you
are paying for those fees throughout the loan.

With loan quotes, know that even the fees are negotiable. You can ask
for them to be removed or eliminated. Some fees, such as the early
payment fee, are only removed if you pay an additional amount at closing.

Select Low Fee Terms

While you are researching financing companies, also take a look at how
they structure their loans. Often the lowest rates, such as interest
only or balloon payment loans, have the highest fees.

Select terms that are more favorable for low fees, such as fixed or
adjustable rates. Adjustable rates are usually the lowest costing loans
with some risk of increasing future rates.

Other Ways To Cash Out Your Equity

If you are simply refinancing to cash out part of your equity, consider
applying for different types of credit to save on fees. Second
mortgages and lines of credit have much lower closing costs than refinancing
your total mortgage. They can also be held for a shorter period, which
also saves you money.

While low fees may be your goal, be open to better financing options.
By comparing the APR, you may find that average fees can yield better
rates that will save you money. The longer you keep your loan, the more
important low rates will be.

Categories
PayDay Loans

Direct Payday Lenders: Omit Companies With Hidden or Unfair Fees

The best direct payday lenders may not have the lowest interest rates, but they will have the most bang for your buck. How could you pay a few dollars more for every hundred borrowed and save? It's easy. For starters, there are many lenders that will hide charges here and there to help make up for smaller interest rates and then some. It is always recommended to investigate a company before you apply.

What do hidden fees look like? Some are tough to identify unless you fully understand how the short-term loan process works. It is important to talk to the lender directly and try to uncover any costs you may struggle to payoff later. Most of the added costs are hidden within the fine print or explained with confusing content in the terms and conditions so it is up to you to understand.

-One of the first added costs you can omit form your loan is the application fee. Look for "Free Application" notice on the site or call and ask just to make sure. Not all direct lenders do this, so make sure you find one that doesn't. This fee (usually around $ 30) is debited from the account listed on your application form. This money pays for the direct payday lending company to accept your application and process it. This does not guarantee that your loan will be approved. You will not receive a refund if the application is rejected. Before you start sending out applications, call and verify that the company services free applications.

-Some direct lenders will give customers flexible payment options. It is tough to pay back the loan amount plus fees in just a few weeks' time. The most common available options are roll-overs and extensions. These buy you a few more weeks to come up with the money. Buy is the appropriate word here. You will have to pay interest fees in order to push the full payment to a later date. This works very similar to a credit card. It isn't cheating anyone out of money. You will have to pay money to buy time. What you don't need to happen is get charged any additional costs for extending your loan date. Fees on top of interest charges are not fair to the borrower. Another hidden cost to uncover is happening to the interest rates once the loan is extended. There are some companies that will raise interest rates when the loan is not paid as originally scheduled. Don't be surprised if you find a lender that will charge both additional interest plus a special roll-over fee. Call payday companies directly to find a lender that prices payoff options fairly. Expect to pay interest on your loan … only.

-You will find lenders that charge over-the-top interest which are often ignored because the company promises loan amounts larger than what most direct lenders will offer. Oftentimes, this money has no waiting period. Ever read an advertisement for fast money, as in less than 15 minutes? These companies seek to do business with vulnerable customers willing to anything to get extra cash in their bank account. Be careful. It is important to never borrow more than you actually have to have. Just because a high dollar amount is offered, it doesn't mean you have to take it. Remember, for every hundred dollars that you borrow, you will pay interest fees. Spending money needlessly is never cost effective. Shop around for a company that doesn't make over-the-top promises. These kinds of transactions are expensive.

No one wants to be nickel and dimes to death. When it comes to payday loan predators, their nickels and dimes are often misunderstood and misrepresented landing borrowers in heavy debt. If you are skeptical about an offer, take that to heart and move onto another direct payday online lender . Your best defense is to talk to the company directly. Ask important questions and expect clear answers. In the end, it is your money, so make emergency payday loans as cost effective as possible to save in the long run.

Categories
Mortgage

Free List of Foreclosed Homes – How to Search Foreclosures Without Paying Membership Fees

Finding high quality free foreclosure listings is one of the most challenging parts of getting started with foreclosed homes. Fortunately, there is a easy way to browse all of the currently available homes in your area, on the biggest, most trusted foreclosure websites, without paying for any membership fees. Read on and you will be a foreclosure pro in no time!

How Do I Find Foreclosures for Free?

If you are thinking about buying a new home, or investing in the real estate market, you will definitely want to check out a list of all your local homes in foreclosure. These foreclosures are owned by banks, which have taken possession of the property due to the previous homeowner’s inability to keep up with their mortgage. Once the bank has possession of the home, they will attempt to quickly sell it, often at a price that is up to 60% below market value.

The best route for finding these deals is to search online foreclosure listings to see what is available in your area of choice. These websites will commonly have millions of home listings, in all cities, states, and neighborhoods across the country. Browsing these websites is by far the best way to locate all types of foreclosures.

How to Access Foreclosure Listings for Free

The main factor that keeps beginners from accessing these websites is that they all charge a monthly membership fee to view their listings. So how can you view these listings without paying for a membership? Well, luckily most of the major foreclosure services let you browse their sites for free by signing up for a 7-day trial membership. This will give you full 100% access to all listings, prices, addresses, and photos for a full week, allowing you to satisfy your curiosity and decide if foreclosures are right for you.

Categories
Credit

How To Read A Credit Card Merchant Statement – 5 Ways To Categorize Fees

Reading your merchant statement and finding the rates and fees you’re being charged can be like playing “Where’s Waldo?”. One reason is because there are nearly as many different statement formats as there are merchant acquiring companies. Also, because of how competitive the industry has become, many monthly statements don’t completely disclose the rates being charged. And sometimes they are completely hidden.

I know of banks that don’t even send a statement out. If a merchant wants details of what they paid they have to logon to an online account to find it.

It’s War Out There!

One reason for this is the competitiveness. You have to remember that credit and debit cards make up part of a 2 trillion dollar industry. Money is like a magnet – it attracts Most merchants are being contacted continually by competing processors trying to get them to switch processors, by promising “lower rates”, etc.

So, to prevent a sales agent from another processing company from taking a merchant away – some processors make it as hard as possible for a competitor’s sales rep to walk in to a business, analyze a merchant statement, and do an ‘apples for apples’ comparison.

That being said, there are still some basic keys to look for when reading your statement. Here’s what I look for in analyzing a merchant statement, in order:

  • One: The pricing structure – how has the account been set up? Which pricing model does it employ? Is it using tiers (e.g. 3-tier; 4-tier, etc.) or – is it using “Interchange Plus”? (NOTE: most merchants are on a tier pricing model, which, in my opinion guarantees they’re being overcharged. Also, there are other pricing structures but tier pricing is by far the most common)
  • Two: The monthly fees (sometimes called “Other”) – next, I look to see what the monthly fees are. This can include: a statement fee; monthly service fee; account maintenance fee (normally, you’d only see one of these although I’ve seen two – or, you may see the equivalent fee but using a different term); PCI fee; batch fee; and gateway or access fees. Any miscellaneous, but not monthly fees can also show up here – e.g., an annual fee or semi-quarterly.
  • Three: Processing Fees – this is where the discount rates will be listed. If you are on tier pricing the best statements will print an itemized list showing the “qualified”, “mid-qualified”, and “non-qualified” (the 3 tiers) rate. If you are on Interchange Plus, you’ll see a list showing all the different cards you took, followed by the actual interchange rate for the card, the “dpi” (discount per item), plus the processors mark-up expressed as basis points and a transaction fee (or per item, depending on the term used to list it).
  • Four: Authorization Fees – here’s where you’ll find fees that go to VISA and MC. They’ll show up listed as access, authorization, and /or WATTS fees. You could also find here AVS fees (address verification); assessment fees; brand usage fee; risk fee; settlement fees, IAS fee (Issuer Access & Settlement).
  • Five: Third Party Fees – 3rd parties means networks other than VISA & MC that are included in your statement. This would include American Express, Discover, and the debit networks if you are using pin debit

Part of the problem in reading a merchant statement is different processors use different category names and different terms to identify charges. That’s why I began by saying it can be like playing “Where’s Waldo?” While there are common terms used for certain fees there is also a wide variation used, depending on the acquirer (the company you signed a merchant agreement with).

Again, part of this is due to an attempt to hide what’s being charged and make it difficult for a competitor to analyze a statement. While that’s ‘somewhat’ understandable – in my opinion it’s a disservice to the merchant. Integrity demands transparency. Maybe if processors were more merchant oriented they’d have a lower turnover and would not have to worry about competition so much. At least that’s my opinion.

Categories
Taxes

The Coming Age of the Formation of Tax Unions to Collectively Negotiate Taxation Fees

There have been a tremendous number of negotiations between the Obama Administration and the labor unions. He has often changed his methodology and implementation of his signature ObamaCare plan when negotiating with these unions. He also negotiated with labor unions and creditors, giving the unions what they wanted in trade that they would support him politically for a second term in office. With unions knowing they are that strong in the political process, surely this will give way to the future of; tax unions.

What is a tax union? It is a group of people who collectively negotiate for lower taxes and a better deal. They would do this in the same vein is a Corporation does when it promises to bring jobs to an economic development area, all in trade for lower taxes in the future. A tax union has a lot of leverage, consider if you will a large group of people refusing to work, promising to stay on the public dole and not get a job unless they are guaranteed lower taxes if they do decide to work. What will the government do with such hard-core negotiation tactics? Will the federal government give in, or will it clamp down?

A Supreme Court justice once said that “it is every individual’s responsibility to pay the least amount of taxes.” Well, if these individuals get together, and we do allow collective bargaining in our great nation, then we will see the formation of tax unions. This will of course upset others who have to pay different levels of taxation, in different percentages than everyone else. This would be akin to the 1% having to pay more money than everyone else as a percentage of their earned income.

Right now, we have the lower 50% of our population paying no income tax, and they’ve negotiated this by voting for politicians which promise not to tax the poor. At some point in the middle class, what’s left of them, the good hard working men and women are going to get upset, and start forming their own coalitions. They will have more power, greater numbers, and a lot of pent up energy behind them. The federal government doesn’t understand they can’t have it both ways.

It can allow unions to force corporations into submission, or cause large employers to enroll in the ObamaCare mandate, unless it will maintain the equality in the law for all, that would include ditching the hypocrisy in Washington DC, and making sure that every government agency regardless of size; municipal, county, state, or federal also follows the ObamaCare mandate.

Some people might say the coming age of the formation of tax unions to collectively negotiate federal taxes can never occur. Sure it can. Indeed I hope you will please consider all this and think on it.

Categories
Bankruptcy

Bankruptcy Attorney Fees For Chapter 13

Recently, a large number of Americans have been using Chapter 13 bankruptcy as a way to stop foreclosure and eliminate debt. Because the growth of Chapter 13, many people are questioning the changes to the bankruptcy code were more for the reason of allowing a bankruptcy attorney to charge more for bankruptcy cases. Some have gone as far as to say that they believed attorneys were steering their clients away from Chapter 7 bankruptcy and into Chapter 13 so they can charge higher fees. While it does sound suspect, I don’t believe a bankruptcy attorney would go through that much trouble to make a few extra bucks. A Chapter 13 bankruptcy is very involved and the client is attached to the hip of the bankruptcy attorney for up to five years. This doesn’t sound like a picnic for the attorney either.

Since the changes to the bankruptcy code back in 2005, an individual filing bankruptcy is required to qualify to file Chapter 7 bankruptcy. To qualify to file Chapter 7 one must pass the means test. Basically, the means test takes the last six months income, divides it by six and multiplies it by 12. This will give the annual average income for the individual filing bankruptcy. This amount will be compared to the median income chart in the state the person resides. One thing that most people don’t consider is the bankruptcy court looks at household income, not individual income. So if the person has a spouse working, their income must be included also even if one is filing separately. But this is not all, even though the person may make less than the median income, they need to also complete an income and household expense report. This is where the person will include all their monthly expenses from rent, food, clothes and any medical expenses etc.. The person cannot include any payments to creditors as expenses. If a person has more than $170 of expendable income, they might be forced into a Chapter 13 bankruptcy. This is not the fault of the bankruptcy attorney, but it is the bankruptcy law. Many attorneys will try and make sure the person understands the importance of including ALL their expenses. This is a problem area that many do-it-yourselfers filing bankruptcy short themselves and end up having a bankruptcy trustee trying to push them into a Chapter 13.

The bankruptcy attorney has to work with the numbers that are given to them. They can explain the bankruptcy code until they’re blue in the face, but if the client doesn’t qualify either because they make too much money or they don’t have enough household expenses, it looks like filing Chapter 13 bankruptcy is their only option. In some cases, depending on the career a person has, the bankruptcy attorney can hold off on filing bankruptcy to a time of the year when the individual makes less money. This is typical with people who work for commission like a realtor. People need to get over the idea that an attorney is misdirecting them for financial gain. The numbers speak for themselves and if someone doesn’t qualify to file Chapter 7 bankruptcy the only other option is Chapter 13.

Categories
Bankruptcy

Bankruptcy Lawyer Fees – The Simple Truth

If you are considering whether you need to hire a bankruptcy lawyer, one of the first things you are going to think about are the bankruptcy lawyer’s fees. Unfortunately, millions of Americans find themselves considering bankruptcy as a serious option to deal with their dire financial circumstances. If you’ve got a pile of debts sufficient to make you consider such an option, chances are you don’t have extra money laying around to pay fees associated with hiring an attorney.

Here’s some of the questions you’ll probably want to understand about attorneys fees before you hire a bankruptcy lawyer:

1. How much is a reasonable fee to pay a bankruptcy lawyer?

2. How do I pay a bankruptcy lawyer’s fees? (I am broke, after all)

3. If I’m representing to the court that I’m bankrupt, how do I explain being able to pay my bankruptcy lawyer?

More than anything else, you probably just want to know how to pay as little as possible but still get excellent service from your bankruptcy attorney. First of all, you should understand that this question is dealt with in the bankruptcy laws and their are mechanisms put in place to allow payment to your lawyer. Of course, if there weren’t such provisions, there wouldn’t be very many bankruptcy attorneys around. That is surely not the case.

The good news for you is that this is a competitive industry and if you know what you are doing you can usually get a good bargain from a good lawyer. Of course, most lawyers don’t want you to have this information because they want you to pay them as much as possible.

Before you begin focusing too much on how much the lawyers fees will be, you should understand that this is a complicated area of the law, and its a good idea to make sure you get an experienced attorney who knows what they are doing. There are a lot of scam artists who aren’t even attorneys trying to take people’s money to help with bankruptcy filings, and they aren’t even lawyers. You should avoid them like the plague in my opinion.

When it comes to hiring a bankruptcy lawyer and dealing with their fees, most will offer a payment plan, and most will be willing to negotiate within reason. Keep in mind that via the bankruptcy you’ll be eliminating a lot of debt, so hopefully there will be extra money around to pay the attorney. Your lawyer will also be able to explain all the costs that will be involved and how the court will deal with the question of the bankruptcy lawyer’s fees.