Tyler's Post

At the beginning of the day we were introduced to all the topics we covered this week. In one of the J-Term planning lunches we were assigned topics to do a presentation on and I chose debt, how to avoid it, how to get out of it, what it is, as well as the proper use of credit cards and the disadvantages and advantages of it. We were supposed to read the prologue of our first book, “Your Money or Your Life,” in preparation for the seminar. We did some in class work like working on the life game set up where we had to research where we want to go for undergraduate school and if we wanted to go to graduate school too. We shared our first memories of money, and a lot of the stories were really interesting. 

Debt is something, usually money that is owed or due as well as  borrowing money and never paying that money back. Not knowing how much money you owe, often paying bills late, getting a new loan to pay back the old ones, only paying the minimum balance due at the end of each month, spending more than twenty percent of your net income on debt maintenance, losing a job results in immediate financial problems, and spending more than you earn and using savings to pay day to day expenses are how most people get in debt. The best ways to avoid getting in debt are to have an emergency fund, charge only what you can afford, avoid unnecessary balance transfers, don't miss credit card payments, pay balance fully every month, and avoid cash advantage.

Getting out of debt is hard and will take time. The best ways to get out of debt are to make a list with all your debts such as the name of your creditor, interest rate, and balance. You’ll need to write down how much you’ll need to pay to zero-out the cards’ debt within three years. Be sure to remember to include your loans that are not listed on credit reports like family loans and medical bills. Lowering your rates is very helpful as well. Based on your credit, you may qualify for better internet rates on credit cards. You could open an account on a website like credit.com to see what kind of low rate balance transfer credit cards you can get. Call your card issuers to ask for lower rates on credit card balances, they will most likely help you out. 

There are in fact good types of debt such as getting a loan to pay for college, or investing in something that will later make you more money than what you put in. There are many advantages of credit. The first few advantages of credit are being able to buy needed items, you won't have to carry cash around , it creates a record of purchases, it’s more convenient than writing checks, and it consolidates bills into one payment. Credit cards may offer you additional protection if you bought something that was lost, damaged, or stolen. Your credit card statement as well as the credit card company can both vouch for your lost, damaged, or stolen purchase if the original receipt is lost or stolen as well. Having a good credit history is very important. It will help you apply for credit cards, apply for loans and rental applications but you can’t build credit without having it.

There are many disadvantages of having credit. More of the commonly known ones include interest, credit may require additional fees, financial difficulties may occur if one loses track of how much has been spent each month, increased impulse buying, and credit card fraud. The biggest disadvantage of credit cards is that they encourage people to spend money that they do not have. Most credit cards do not require you to pay off your balance each month, so even if you only have $100, you may be able to spend up to $500 or $1,000 on your credit card. This may seem like free money at the time but free money does not exist. The longer you wait to pay it off, the more money you will owe because credit card companies charge you interest each month on the money you have borrowed.

Noor's Post

Today we started the day with a seminar on the last chapters of Your Money Your Life. We had a great conversation about fulfillment and whether or not we believe that money can fulfill us and make us happy. It was great to hear people’s different opinions on this topic and hear about different beliefs on the topic. After that, we spent the rest of the morning watching the movie Trading Places. Not only was it really funny and entertaining, but it was also linked to our class as it discussed trading and stocks. We’ve been learning about that for about two weeks now, so it was great to see how it was applied in the movie. After lunch we continued to work on either our Game of Life, if it was still not completed or our future plans for investment. Basically, after successfully completing the Game of Life, we had to decide what investment plan we would choose to take based on our results. I also gave my presentation on Entrepreneurship and Starting your Own Business and shared what I had researched with the rest of the class. After that, we received a presentation from Garret’s dad on investment and entrepreneurship. He showed us his portfolio and explained to us his reasoning behind investing the way he does. He also went through all the pros and cons of real estate investment, options, YES, Money Markets, entrepreneurship start ups etc. It was a pretty successful day and we got a lot of work done.

Filing a tax return and January 18

January 18, 2018 overview:

Today I gave a presentation about filing a tax return. I first went over who has to fill out these forms, and what time of the year they have to be done. Then I described some of the different types of forms, and the main purpose of each of them. 

I talked about how taxes can be different depending of the state, and information forms and receipts. Finally, I showed some pictures of the different forms I described earlier, and briefly explained them again, so that the audience would get to see how they look.

After that, we listened to a presentation about investing money into real estate and learned about how it can earn you a lot of money in the long term if it is done smartly, and how it can also help you to retire at a younger age. Also, we learned how investing money into real estate takes a lot of effort, however it is stable and will most likely give you a lot of money in return.

Then, we had a seminar, and talked more about the tax forms, and went in to detail about each part of the forms and what they mean. Also, how it is important to hold on to all you receipt, because the IRS will have to check if everything you put on your taxes are true, if you get audited.We also talked about building your credit score by paying off your credit card on time. We went over how you should not trust people who make money from your money, and how you should not invest in to anything until you have a full understanding on where your money goes.

Then we listened to a presentation about stocks and bonds, and learned how there are different ways to invest in stocks. We also learned how there are ways to predict what will happen in the future in the stock market. One of these ways is based on the Fibonacci number that can be used to help approximate when the stock graphs will fall or rise.

Filing a tax return presentation:

Firstly, if you make at least $10,350 a year, are single, and are under 65 years old, you must file a tax return. You must also file a tax return, if you are a dependent who is under 65 years, and you earn at least $6,300 or have at least $1,050 of unearned income (for example dividends or interest.)

Individuals file tax for the calendar year (January 1 to December 31) in the following year. Normally the deadline to file a tax return is April fifteenth, however, this year it is on April seventeenth. If you are not ready to file the tax return on time, you are able to ask for a six month extension of your tax. But you must ask of this before the April deadline and pay an estimate of your tax. You will owe interest and penalties if you underestimate your tax, which means you would be better off estimating it high.

As for tax forms, most people use form 1040. Some people who have simple taxes can use the form 1040EZ (easy), but if you have adjustments like student loans or IRA contributions (retirement savings), it would be better if you use the form 1040 so that you can get deductions.

Schedules and additional forms you need depend on your particular circumstances. Some of these additional forms include: 
-Schedule A, which is for itemized deductions. This might be better than blaming the standard deduction (in the form 1040) if you pay state and local taxes, and/or if you own a home and pay property taxes and mortgage interest.
-Schedule B, which is for ordinary interest and dividend income. This would be a good form for you to use, if you own stocks or if you earn bank interest.
-Schedule C is for business income, if you are self employed, you get to deduct lots of your expenses from the money you make, to reduce your tax bill.
- Schedule F is for farming income.  It has deductions that are meaningful for farmers, like chemicals, fertilizer, seeds and plants

Although Americans who qualify have to file a federal income tax return, each state has different rules.  Generally, states with low or no income tax have higher property taxes, because government services still have to be paid for somehow.  States with more natural resources (like oil and natural gas) or more large companies need less income tax revenue form individuals.  For example, Texas has not State income tax because it has both natural resources and lots of large companies.

To make it easy to fill out your income tax return, your employer, bank, investment company, and charities will all send you forms and/or receipts listing all the information you need.  Your employer must send you a form W-2 (for an employee) or a form 1099 (for a contractor) listing your income, and any deductions like income tax paid, and retirement savings contributions.  Your bank must send you a form 1099-INT for any interest paid to you.  If  you own stocks, you will receive a form 1099-DIV for any dividends paid to you.  If you donate money to a charity, be sure to get a receipt to prove it.  You can claim the deduction without a receipt, but if you get audited by the IRS, you will need to prove everything.

Works Cited:

https://www.irs.gov/newsroom/2018-tax-filing-season-begins-jan-29-tax-returns-due-apr il-17-help-available-for-taxpayers

https://www.irs.gov/pub/irs-pdf/f1040sa.pdf 

https://www.irs.gov/pub/irs-pdf/f1040sb.pdf 

https://www.irs.gov/pub/irs-pdf/i1040gi.pdf 

https://www.irs.gov/pub/irs-pdf/f1040sc.pdf

Mortgages

In past two days I’ve learned a lot. We have worked on the life game and setting it up and I‘ve learned about excel and how to put in formulas to calculate things and make it easier to work with.  Then we watched the movie the big short and learned about how the banking system is rigged and banker are inconsiderate evil people who only care about money and how they caused the biggest financial crisis in the 21st century.
I also did a presentation on mortgages. A mortgage is a legal agreement by which a bank or other creditor lends money at interest in exchange for taking title of the debtor's property, with the condition that the conveyance of title becomes void upon the payment of the debt. So basically a big loan one would take out in order to by house. is the lump total of money you have to pay upfront that reduces the amount of money you have to borrow. Most of the time it is 20 percent of the full cost. It is possible to find ones that are as little as 3 to 5. The more money you put down, the less your monthly payment will be.

Day 1 - Introduction + Banks/Bank Accounts

On the first day of our Personal Finance J-Term, we were focusing on the introduction to the class, as well as the first topic of the class. My topic to present on was the different types of banks and bank accounts. I talked about the eight different type of banks which include retail banks which hold checking and savings accounts, commercial banks which hold checking and savings accounts for business, investment banks which help businesses work in financial markets, central banks which manage money for the government (ex. US Federal Reserve Bank)  and oversee other banks, online banks which operate completely online, savings and loans banks use savings deposits from customers to fund home loans for other customers, and  credit unions and mutual banks which have the same services as a retail bank, however they are owned by their customers, whereas most other banks are owned by investors.
Then there are seven types of bank accounts which include checking accounts in which customers get an ATM card and checkbook that can be used to pay bills and get money from a cash machine, savings accounts where people deposit their money to be saved for a certain amount of time that will grow over time due to interest given by the bank, interest checking accounts which are the same as checking accounts but they have the benefit of gaining interest on the balance in the account similar to a savings account, money market account which is another type of savings account that will receive typically higher interest rates based off of the country the customer is in, a CD (Certificate of Deposit) which is where a person agrees to leave their money in the bank for a set number of days/months/years with a higher interest rate, IRA’s (Individual Retirement Accounts) which is a retirement account where you decide when you want to pay taxes on it, and finally a brokerage account which is used for investing into the stock market.