Each year, I wait until the last possible minute to prepare and file my income tax returns. Basically, I just don't like to do my taxes. First of all, I usually wind up paying additional taxes each year, so I'm in no hurry to pay them early. Second, it's just no fun. I have used various programs over the years to prepare and file my taxes: TaxAct, H&R Block, etc. Little did I know I probably could have done my taxes for free.

"Good Morning America" recently featured some tips on how to prepare and file income taxes for free. Among them:

1. File through the IRS web site. It features 20 different programs you can use to file your taxes at no charge. There are some income restrictions.

2. Let an IRS volunteer prepare your taxes for you. Again, there are income restrictions and they file only the most basic of returns.

3. Are you a senior? The AARP can help you prepare our taxes. Again, there are income restrictions, but it's free.

4. In the military? There are tax preparers available at your duty station, and again, the service is free.

5. If these situations don't apply, you can still contact the IRS for assistance for preparing your taxes. While you might feel a bit paranoid letting the IRS prepare your taxes, look at it this way: if they make a mistake, they have no one else but themselves to blame.

More detailed explanations are available in this video.

In an economy in which thousands of jobs are evaporating each month, it is hard to imagine that any business is actually benefiting from the hard times. However, there are companies that are not only surviving, but thriving during what is being called "the worst economic crisis since the Great Depression."

Wal-mart is certainly doing alright for itself these days. As consumers look to save a buck on their household purchases, they are turning to the discount retail giant in droves. In fact, customers that avoided Wal-mart in the past are now finding the low prices suddenly appealing. Wal-mart ended the quarter on January 31st with a profit of $3.8 billion. Compare that to other blue-chip companies which are actually losing billions of dollars, and laying off tens of thousands of employees.

Hormel is another company that is doing quite well during the economic downturn. Hormel makes a product called Spam. Before its name was synonymous with unwanted junk email, it was best known at the pink, gelatenous ham-like substance that comes in a square can. Hormel cranks out millions of cans of the stuff every year. I actually like Spam, and I have always purchased it along my weekly groceries. I enjoy eating Spam and eggs for breakfast. It's one of the cheapest meat options you'll find anywhere. Sales of Spam have grown by double-digit percentage points recently, and the plant that produces the stuff has employees working around the clock to meet demand. Spam may get a bad rap amongst "foodies" but it is considered a downright delicacy in Hawaii, which got addicted to the faux ham during World War II.

Nestle is another food company which is reaching out to struggling consumers. It is said to be stepping up its marketing of its low-cost staples such as boullion cubes for making soup stock and its brands of instant coffees. It will also start offering its products in smaller packages at lower prices to reach consumers who are looking to pare back their food budget.

The companies that will prosper in the current economy are those who are willing to adapt to rapidly-changing conditions and serve their customers. The companies that will continue to do poorly are those who don't take the lighter wallets of their customers into account when pricing their products.

When to Cut Your Losses

Posted by T | 7:51 PM | | 0 comments »

Americans hate to quit or give up at anything. I think it is something that is a part of our culture. To quit is to admit failure, to admit we didn't achieve our goal, and that we have lost something. We are taught that quitters never win and winners never quit. What this way of thinking doesn't take into account is that there are times when it is smart to quit.

While quitting is rarely the best possible outcome for a situation, when it comes to personal finances there are times when quitting will prevent you from losing more money and help set you on a better financial path.

My oldest son learned this lesson recently. He bought a car that I would have wanted when I was in high school: a red Camero. He didn't have any credit and I was not about to become a co-signer. I had urged him to work at his job for awhile and save enough money to buy the car in cash. Instead, he decided to purchase it from one of those "buy here, pay here" places.

The auto dealership did nothing wrong. In this situation, my son purchased a car before he had a driver's license, which he still doesn't have. As a result, he was making $300 per month car payments and $100 per month insurance payments on a car that sat in our driveway all day. After he moved out of the house, my son decided that this was too much money to pay for a car he could not drive.

He asked me what I thought he should do. "Take it back to the dealership," I said.

He protested, saying he would feel bad because he is putting the dealership in a bad spot, and because he failed at purchasing his own first car. I pointed out that this was the wrong way to look at it. There is no doubt he learned a costly lesson (mainly because he didn't listen to my advice. Go figure.) I told him he had the following choices:

A. Keep the car. Continue to make payments and pay car insurance, which was costing him $400 per month, or $4,800 per year....for a car he could not, and would not, drive.

B. Give the car back. The dealership has already received a $750 down payment, and $2,600 in car payments. The car wasn't driven anywhere, so it has almost no more miles than when the car was purchased, and it was purchased used. It hasn't depreciated anymore than when he bought the car a few months ago. The dealership gets the car back, they will be able to resell it (more people are buying used, not new, these days) and they made almost $3,500 for their trouble.

Basically, my son learned a $3,500 lesson. If he had stayed the course he would have cost himself more money, with no benefit to himself. By giving the car back, he was cutting his losses. It wasn't the best possible outcome for either party, but it was the next best move. The dealership said after my son gets his license he can always come back and purchase another car, and they will apply the $750 down payment he already made to a different vehicle.

Some people may have stubbornly held on to that car, determined they could make the situation work...while depleting their bank account and not driving the car. I'm not saying everyone should shirk their responsibilities and start returning their cars. However, if you have a choice between making rent payments or making payments on a car you can't afford (and this does happen), you need to be able to determine what your real priorities are, and know when to cut your losses.

This post was featured in this week's Carnival of Personal Finance. Check out this week's carnival for other great articles!

If you spend any amount of time watching TV, you have no doubt seen plenty of those "Cash 4 Gold" commercials. They feature testimonials from people who send in their "broken and unused gold jewelry" for quick cash. All they had to do was call the toll-free number and get their free "cash for gold" kit, which looks like a brochure with a padded envelope in which to mail gold jewelry.

Gold is definitely a hot commodity right now. Just 4 years ago, I was considering buying into some gold stock, when the precious metal was selling for about $400 an ounce. I didn't buy in, basically because I didn't have that kind of money sitting around. Now gold is selling for close to $950 an ounce, which makes it one of the best investments around...if you already have gold. Some analysts predict it will sell for more than $1000 per ounce sometime this year. This explains why we have seen so many "cash for gold" ads.

It sounds like a great deal. You send in your gold, and the buyer sends you a big, fat check...or at least that's the sales pitch. But is that the reality?

WSYR-TV in Syracuse, NY conducted an experiment on their "The Real Deal" segment. They sent in some gold jewelry to Cash4Gold and were sent a check for more than $112 (although not within 24 hours as promised in the TV commercials). That doesn't sound bad...until you consider they were offered more than $750 for the same jewelry by a local pawn shop prior to shipping to Cash4Gold. The CEO of Cash4Gold told the TV station that the company "never promises you'll get the best price for the gold." Well, obviously.

Then there is this post at Complaints Board, allegedly written by a former employee of Cash4Gold. Among the allegations: the "refiner's pack" in which customers ship their gold is only insured up to $100, the jewelry is appraised by hand, and weight pad and a bottle of chemicals, checks are sent 3-4 days after appraisal instead of the advertised 24 hours, the 100 percent satisfaction guarantee is only good for ten days from the time the check is dated, which is 3-4 days before it is actually mailed, some customers have received checks for as little as one cent and many customers complain about the amount of their checks.

Savvy Frugality tip: If you have gold you are looking to sell, get several estimates first...preferably from local appraisers who have been in the business for a long time and have a good reputation. That way, you will be able to sell your gold to the "highest bidder". If you send your gold to a company through the mail, you may have little recourse if you are unsatisfied with the amount you are paid.

Read this post and other great submissions in this week's Festival of Frugality.

I consider myself a romantic guy. I love my wife dearly. However, I have a confession to make: We don't celebrate Valentine's Day.

Oh, we do special things for each other, but we don't run out and buy the boxes of chocolates, flowers, gifts or make reservations at a restaurant. On Valentine's Day we leave notes for each other (one year I wrote mine on the bathroom mirror with soap), listen to our wedding song (Groovy Kind of Love by Phil Collins) and eat a meal at home by candle light.

It's not that we're cheap (but we are frugal). We just don't see the point. I don't need to spend five dollars on a card that my wife is only going to read once, and vice versa. I do like to give my wife flowers, but she has told me that it's a waste of money to spend so much money on something that will last only a few days and then die. Occasionally, we will buy gifts for each other on Valentine's Day, or maybe go to the movies, but that's about it.

We don't need Valentine's Day in order to show our appreciation for each other. We try to do that every day. The day that we consider special is our wedding anniversary, and that is the day on which we do something above and beyond the daily "I love you's".

Make no mistake. A lot of people are going to be spending a lot of money this Valentine's Day. We just won't be among them. Do you want to give your significant other something special for Valentine's Day? Treat them right every day, and don't let a day go by without telling them you love them.

By the way, my wife does read this blog, so this is for her:

"I love you!"

I Have Been Drafted!

Posted by T | 8:42 PM | | 3 comments »

Something happened to me this past weekend that hasn't happened in years. I have been drafted...or rather, overdrafted. It wasn't as the result of anything I did, but it still cost me several hundred dollars.

It all started a few weeks ago, when my wife agreed to pay one of our creditors a lump-sum payment to clear a bill. She had been paying the bill with a direct debit from our checking account. She made an arrangement to pay off the rest of the bill with a lump-sum payment, and the creditor agreed to wait until the middle of the month, the next time I get paid. They didn't.

I'm sure you know what's coming. The creditor wanted their money sooner rather than later, and emptied my checking account. What's worse, the checks we used to pay the bills prior to this withdrawal all bounced.

Of course, I was more than a little irritated this happened. Ever since I started working to clear up my family's finances about six years ago, I haven't experienced a legitimate overdraft charge. Now, one simple snafu cost me in the neighborhood of $500. Luckily, I had the money to cover the overdrafts and set things right with my checking account again. However, this brings up some important points about dealing with creditors.

Get it in writing. If you make a payment arrangement with a creditor, get it in writing. Oral agreements won't hold up in a dispute with a creditor, and they can (and most likely will) break them.

Don't give creditors your bank info. There is a difference between automatic bill pay through your bank and handing over the routing and account numbers to your checking account. With these numbers, a creditor can withdraw any amount they want, leaving you holding the (empty) bag.

Pay your own way. If a creditor tries to force you into handing over your bank account info, don't do it. Tell them you will send a check or call on a certain date to give them a credit card number, but do NOT give a creditor the information they can use to drain your bank account.

Even though you are trying to do the right thing by paying off your bills in full, there is a right way and a wrong way to go about doing it. Doing it the right way can save you time, headaches and most importantly, your hard-earned money.

The unemployment rate in the U.S. is hovering right around eight percent, which is the highest it has been in decades. Some economists predict that the U.S. could see unemployment rates hit ten percent, which hasn't been seen in quite some time.

Unemployment is one of the most stressful times of a working adult's life. It brings with it feelings of inadequacy, failure and fear that you can no longer provide for your family. However, there is also an upside to unemployment.

In my previous career, I worked in the field of broadcasting. While this might seem like a glamorous job to some, it is also a job which is rife with low pay for most, and frequent periods of unemployment. I compare it to working as an actor. A few are like Tom Hanks, who work often and make millions of dollars. The rest are suffering for their art.

When I lost my second-ever job in broadcasting during the recession of 1991, I sunk into a deep depression. I felt anger, fear and worse yet, I felt like a failure. What I didn't realize at the time was it is not being out of work that makes one a failure, but how they deal with being out of work. On that count, I did fail...miserably.

After I came to realize that being out of work was one of the hazards that came with the job, I adopted a whole new mindset to being out of work. Although I did find myself unemployed at times, I began to deal with these jobless periods differently. Here is how I spent some of my unwanted time off:

Learn New Skills. I spent a lot of time reading and continuing to learn to make myself more valuable as an employee. The local public library is a great resource, and the best part: it's free. Many communities also have job training centers and job training programs. If you are in a line of work that is being phased out, take advantage of these programs. If your career field is going the way of the dinosaur, don't hang on to the past. Embrace this as an opportunity to do something completely new and reinvent yourself.

Pursue hobbies. You know those hobbies you always wanted to try but never had the time? Well, now you have plenty of time. During one of my stretches of unemployment, I discovered I enjoyed cooking. I watched cooking shows on TV during the day and had dinner ready for my wife when she came home from work. She said she never ate so well as when I was unemployed. Of course, you need to make finding another job a priority, but for your own sanity you can only spend so much time during the day looking for a job.

Spend more time with family. My jobs have always taken a lot of time away from my family. I used my jobless periods as opportunities to spend more time with my kids. They loved the fact I was able to go to the park with them during the day, when I would normally be working.

Take care of your health. I have always worked a "desk job" and with that has come weight gain and flabbiness. When I was out of work, I had more time to walk, run and lift weights at home. By the time I found another job I was in pretty good shape.

Try out other jobs. Have you ever wondered if you would be happy doing another job? Why not try one out on a part-time basis while looking for a full-time job? You'll make a bit of extra cash while looking for work, you'll avoid having a long jobless stretch on your resume, and you never know...you may like the part-time job so much you may decide to do it on a full-time basis.

Make no mistake: being out of work is no fun. It's also not a death sentence. Take advantage of the free time you have and it can actually be a productive break from the day-to-day grind of the 9 to 5.

With a new year comes a new look for Savvy Frugality. Hopefully, you will find the new format more user-friendly and easier to navigate.

I have been wanting to update to look of Savvy Frugality for a few months now, and I finally found a layout that I think is a huge improvement over the old page. It's not nearly as cluttered as the old layout, and I think things are labeled more clearly as well.

I hope you like the new look of Savvy Frugality, and will continue to be a regular reader!

Best Buys in Coffee

Posted by T | 3:29 PM | | 2 comments »


When it comes to coffee, more people are catching on to the fact that it's best to brew your own. I've posted my rant against the high-priced, and in my opinion, too-strong Starbucks coffee here before. But, if you're going to buy and brew your own, what's the best? Consumer Reports has actually put that question to the test.

CR taste-tested 19 different brews, and the results were a bit surprising. One of the cheapest Columbian coffees rates at the best: Eight O'Clock ground Columbian rated at the top of the home-brews. Starbucks didn't place anywhere near the top of the regular coffees.

The best decafs were Dunkin' Donuts and Millstone brands, available at your local grocery store. I usually purchase Maxwell House, but Consumer Reports rated it and Chock Full o' Nuts behind Eight O'Clock. This might be one of the reasons I often find Maxwell House on sale.

Another hint: if the label doesn't say "100 percent Columbian", then it isn't. Many store-bought coffees are a blend of different beans, and some of them are definiely of lower quality. Also, coffee tastes better if you grind your own beans just before brewing. My Magic Bullet (remember the infomercial?) works perfectly as a coffee grinder.

The coffee maker makes a difference, too. The best reach 195 to 205 degrees, according to Consumer Reports. Although I have a Black & Decker automatic coffee maker, the best I have ever tasted was from a French Press coffee maker. These can be found at kitchen supply stores and even on eBay.

If you're looking to save a few bucks and get your caffeine fix, brewing your own favorite coffee, Eight O'Clock or otherwise, is the way to go.

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