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How to Protect Yourself from a Home Improvement Scam

Paul Michael — Thu, 05 Jul 2018 08:30:18 +0000

From a small task like new sod, to a major job like a finished basement, home improvement projects can become a nightmare if you fall victim to a scam. Even the savviest consumers can get taken for a ride if they don't know how to spot the red flags. So before you commit to any kind of home remodel or upgrade, make sure you know how to protect yourself from the scammers.

Don't get work done that you didn't seek out

This happens all the time, even though door-to-door salesmen seem to be a thing of the past. You'll get a knock on the door and a friendly face will tell you that the recent hailstorm means your roof is in major trouble. Or, their firm is in the area replacing windows, and because so many of the neighbors have signed up, you'll get a great deal. The patter revolves around the same kind of setup, but the result is always the same — they won't go away until you agree to sign something and hand over a deposit.

Now, in all fairness, reputable companies will go door-to-door sometimes as well, but they won't use high-pressure tactics. The scammers will use every trick in the book to get invited inside and throw the hard sell at you. Don't ever get work done that you didn't actively seek out yourself; you're just asking for trouble.

Do your research, and do it well

When you take on any kind of home improvement project, it's not the same as getting a car overhauled or a gadget repaired. This is your home. Your safe space. Before you let anyone near it, let alone into it, you want to know they are reliable and trustworthy. A simple recommendation from a friend or work colleague isn't enough.

You have the vast resources of the internet and a community of clients to tap into, so use them. Start with the Better Business Bureau and Yelp. Get yourself a membership to a site like Angie's List (which is free now) and scour reviews. You may even want to do a Google search for the contractor's name followed by a phrase like "rip-off" or "scam." If there are overwhelmingly negative reviews, avoid them. If there are no reviews, avoid them. You want glowing reviews from at least a dozen people before you commit to anything. (See also: How to Find and Hire a Reliable Contractor)

Get free estimates from multiple sources

If you're any kind of savvy shopper, you won't buy anything without doing a little price comparison. The same applies to a contractor, only this is a much bigger and more important purchase.

Once you have researched the best three firms for the job, ask them to each give an estimate for the cost of the service, and ask them to itemize it as well. Next, compare the estimates side-by-side and look to see who is giving you the best value for money. Remember, this is not about the lowest price but the best investment in your home. The lowest price may come with cheaper materials and no guarantee.

You want to balance cost with quality, and if one firm is giving you everything and more for a surprisingly low cost, investigate it. If it looks too good to be true, it usually is. (See also: 8 Questions to Ask Contractors Before Hiring One)

Make sure this isn't a job you can easily do yourself

You'd be amazed at how many homeowners are willing to pay thousands of dollars in labor for a job that requires just a little research, elbow grease, and $50 in parts. And some unscrupulous contractors are quite happy to do that simple job and charge an arm and a leg for it.

Again, you live in the information age, and it's easy to not only identify a problem, but find multiple online videos and walk-throughs showing you just how to do the work yourself. Anything from replacing a washer to an entire furnace is now something within reach of many DIYers.

Of course, if you're just not comfortable doing any kind of work around the house, that's your call. But it you're willing and able, and can get some help from a handy friend, you could save a whole lot of money. What's more, check the status of the warranty if you're looking at a repair job. You may discover that you don't even need to pay for service. (See also: 10 Things to Know Before You Start a Home Improvement Project)

Get a contract, and get it checked before you sign

A contract is a vital piece of protection for a consumer and you must demand one. Even if it's just a small job costing a few hundred dollars, you should get the project down on paper and get it signed. List everything that needs to be done, the costs you have both agreed upon, any materials that need to be purchased, any permits that need to be pulled (permits offer additional protection against shoddy work), and the start and completion dates.

Ideally, you should have a legal mind look at it, be it a professional or someone who can help you out for free. Read every word, including the small print that can hide traps. You don't want to sign anything that could leave you high and dry. This contract will be your protection should anything go wrong and you need to take it to court.

Don't give more than 33 percent as a down payment

A contractor will ask for a down payment to secure the work, make sure you're serious about committing, and purchase materials. All this is absolutely business-as-usual. But if the down payment starts climbing above the 33 percent mark, you should proceed with extreme caution. Give away too much money at the beginning, and you may never see it or the contractor again.

You should hold off on paying the bulk of the money until the job is completed to your satisfaction, and even then that final payment should only be handed over when you receive something called a lien waiver, stating all supplies and any additional subcontractors have been paid for. Otherwise, you could find yourself getting harassed for extra money. (See also: 9 Home Improvements You Should Always Negotiate)

When possible, choose a credit card over cash payments

Not all small businesses accept credit cards. But if your contractor offers the option, paying with a credit card can provide a degree of purchase protection you wouldn't otherwise have with cash. Should the project have issues, you can call your credit card company and dispute the charges. They employ teams of professionals that will work on your behalf to get this issue sorted. (See also: 12 Times Your Credit Card Has Your Back)

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This article is from Paul Michael of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

7 Ways to Vet Your Mortgage Lender

Dan Rafter — Fri, 20 Apr 2018 08:30:09 +0000

Buying a home is one of the biggest purchases most consumers ever make. And yet many of us put little to no thought into getting a mortgage loan or the lender we'll work with during the process.

This attitude can cost you. In 2015, the Consumer Financial Protection Bureau found that 47 percent of mortgage borrowers didn't shop around for lenders. The CFPB also found that those applying for a 30-year, fixed-rate mortgage could qualify for interest rates that varied by more than half a percent. This may not sound like much, but the CFPB noted that the difference between 4 percent and 4.5 percent could result in savings of $60 per month, or $720 per year.

So how do you make sure that the mortgage lender you choose will offer you the best deal and the best service? You need to vet these financing professionals.

1. Ask your real estate agent, but also shop around

Real estate agents work with plenty of lenders and should be able to recommend a mortgage loan officer. Because they want their clients to refer them to other buyers and sellers, they tend to recommend loan officers and lenders who provide good service and prices.

But don't automatically take your real estate agent's recommendation. Talk to friends and family members who recently took out mortgage loans. Did their lender do a good job for them? Do they wish they'd worked with a different one?

Search mortgage comparison sites such as LendingTree, too. LendingTree lets you put in your basic financial information and receive preliminary offers from lenders seeking your business. Just be aware that there is no guarantee that these preliminary offers will match the final offers lenders make should you formally apply.

Once you have a list of lenders and loan officers, contact them. It's now that you can ask them questions to help determine if they are worth working with.

2. Do some rate and fee comparisons

When interviewing lenders, ask them how much their borrowers typically pay in closing costs. These are the fees that lenders and other third-party providers, such as real estate attorneys and title insurance companies, charge to originate your mortgage loan. These fees can quickly add up, often totaling 3 percent or more of your loan amount. Ask the lenders you are interviewing, too, what interest rate someone with your finances can expect to be charged.

Be careful, though: Some lenders might quote you a lower interest rate, but charge you a higher closing fee at the same time. Make sure to consider both the rate and fees. (See also: Here's What's Included in a Home's Closing Costs)

3. Ask about closing times

Originating a mortgage loan takes time. You can expect to wait 30 days or more between the moment you apply for a loan and the day you sign the papers. But some lenders are faster than others. Ask your lender how long it takes borrowers on average to get to the closing table. If most lenders say 30 days, but one says 60? You might want to skip working with the outlier. (See also: How Long Does It Really Take to Close on a House?)

4. Ask your lender to explain the entire lending process

Most of us aren't familiar with how the mortgage-lending system works, so it's important to work with lenders who can explain this often-complicated process clearly. If the lenders you are interviewing can't or won't do this, find a new one to vet. (See also: 5 Homebuying Questions You're Embarrassed to Ask)

5. Ask to speak to past clients

Ask your lender to provide you the names and contact information of at least three past clients. When you get a hold of these referrals, pick their brains. Ask if the lender responded quickly to phone calls, if the closing costs they charged were higher than expected, and if they fixed any problems that popped up during the lending process. If lenders balk at providing referrals, don't work with them.

6. Do your online research

Once you've found a lender you like, do some online research. Check out sites such as Yelp or Zillow to find online reviews of the lenders you are considering. If a lender has an overwhelming number of negative reviews, you might want to steer clear.

7. Get preapproved

During the preapproval process, a lender will run your credit and verify your income. You help the process along by sending copies of financial documents such as your recent paycheck stubs, bank account statements, and income tax returns. Your lender will use this information to determine how much loan money they are comfortable giving you, and will send you a letter stating the results.

The best thing about preapprovals is that they are free. If you find three lenders you like, get preapproved with all three. You aren't obligated to work with any lender that preapproves you. But you might discover that one lender approves you for $200,000 while two others approve you for loans as high as $250,000. This could influence which lender you finally choose.

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This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

9 Ways to Vet Your New Employer

Tim Lemke — Tue, 27 Mar 2018 09:30:19 +0000

If you have been contacted for a job opportunity, it may be a very exciting moment. But you also want to make sure the position is right for you. Will you fit in with the company's work culture? Is the organization on stable footing? And how do you learn about things like benefits or vacation policies?

This potential new employer wants to know all about you, so you should try to find out as much as you can about them, too. Let's examine these ways that you can vet a possible employer.

1. Ask questions during the interview

We assume that a job interview is all about the employer peppering a candidate with questions. But in many cases, it's just as much about them wanting you to feel comfortable in the role. In every job interview, you will usually be presented with the chance to ask questions, and that's when you can find out many things about the job and the company's mission and culture. This will also help you get a better sense of whether the hiring manager is someone you'd like to work for. Many employers will actually view you negatively if you don't ask questions, because it may suggest a lack of interest in the company or the position.

There is one word of caution, though, which is to avoid asking too many questions that might indicate you're only pursuing the job for the money or the perks. For example, asking only about vacation policies, salary, or benefits may backfire. While those are important questions, they can be addressed if you get an offer. (See also: 5 Questions You Should Ask at Every Job Interview)

2. Online reviews

There are a number of websites that offer the chance for employees and former employees to share information about a company. It's worth noting that some of these sites can skew to the negative, as workers may only be inclined to leave a review if they have a complaint. But many of these reviews are simply rundowns of objective facts on things like salaries, benefits, vacation time, and workplace policies. Popular review sites include Glassdoor, Indeed, and Careerbliss. There are also review sites for specific groups, including Fairygodboss, which is focused on women in the workforce. Searching LinkedIn may also reveal some reviews from current or former employees.

3. Talk to current employees

It's not a good idea to cold call people you don't know, but if you are friendly with people within the company, it's a great idea to pick their brain. Do they like working there? How would they describe the workplace culture? Is your potential supervisor someone you might enjoy working for? Your friends will likely put a positive spin on things if they like working there, but they'll also be happy to share any information that will help you succeed. Similarly, they will also let you know if they are unhappy. (See also: 10 Warning Signs Your New Boss May Be a Bad Boss)

4. Social media

Performing searches on Facebook, Instagram, and Twitter may reveal some details about a company. Employees may post updates on projects they are involved in, suggesting that they are proud of the work they are doing. You may come across photos of people at work functions, appearing to have a good time. The company may also post information about awards or promotions, indicating that they celebrate workers who are succeeding. On the flip side, you may come across workers venting their frustrations about the company or their boss. Be sure to take all complaints with a grain of salt, but if your social media searches reveal a barrage of negativity, be wary.

5. LinkedIn profiles of current and past employees

You can glean some details about a company by looking at the LinkedIn profiles of those who work there and those who worked there in the past. If the employees seemed to have long tenures in numerous roles with increasing responsibility, that's a good sign. But if it seems like workers don't last long, that could indicate a problem. (When scanning LinkedIn profiles, be sure to browse incognito so people don't know you are checking them out.)

6. The company website

Obviously, organizations work to make themselves look good online. The messaging on websites is usually designed to cast a positive image of the organization, its work, and its employees. But if you dig around, you can find a lot of objective information about workplace policies, such as 401(k) plans, health benefits, telecommuting options, and more. In addition, public companies are required to release financial information, so you can have a good sense of whether the company is doing well or not.

7. "Best Places to Work" lists

Many local and national publications produce annual lists of companies that have a good reputation among workers. These lists will celebrate organizations with above-average salaries and benefits, and highlight those firms with perks like free food, generous vacation policies, or flexible work schedules. These lists may not necessarily help you learn if you'll like your boss or the job itself, but you may be happier if the company finds itself on one of these lists.

8. News articles

When it comes to companies, sometimes no news is good news. It's one thing if your prospective employer is in the news for the successful launch of a new product, or for hiring 1,000 new workers at its headquarters. But if the company is in the news for poor handling of sexual harassment complaints, that's bad. News about mass layoffs, poor earnings, or changes in leadership may also be red flags, though it's important to know the difference between temporary, fixable problems and those that are indicative of larger issues.

9. The Better Business Bureau

The Better Business Bureau is designed to help consumers, but it can be useful for prospective employees, too. Most people would prefer to work for a company that has high marks for customer service, as opposed to one that gets a bad grade. Complaints received by the BBB can also help you glean whether there are systemic problems within the company. The BBB is geared toward offering information about contractors and charities. If your company does not have a BBB profile, that's neither good nor bad.

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This article is from Tim Lemke of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

12 Things You Should Do in the First Six Months of a New Job

Paul Michael — Mon, 26 Mar 2018 09:30:23 +0000

A new job comes with a lot of excitement, trepidation, and change. While you're settling into your new role, it's easy to forget the reasons you got the job, and the things you need to do to make sure you keep it, grow, and move up the ladder. Here is a guide to the first six months on the new job, with what you should aim to achieve by month one, month three, and month six.

The first month

Some would say it's the hardest month, but that's not always true. As a newbie, you'll be cut a little slack, but after the first month you'll see that wiggle room disappear. So, take advantage of it, and do whatever you can to create an excellent impression. (See also: 6 Things to Do on Your First Day at a New Job)

1. Establish yourself as a conscientious worker

First impressions last. During the first month on the job, get in early and leave late as often as you can. Never do that the other way around; you need to become a valued team member before you occasionally duck out early or stroll in a little late. You should also be making sure you cross every t and dot every i. No mistakes. No sloppy work. No excuses. Think of your first month as a trial period. During this time, you're still being tested, and you want an A. (See also: 6 Simple Ways to Make a Fantastic First Impression)

2. Ask as many questions as you can

How do things work? Who are the people you need to know? Who are the heads of the different departments, and what do they do? What are the challenges of the company? What are the strengths? Become the most inquisitive employee you can, and take notes. Learn from the people that have been at the company for years, but remember to take some comments with caution. Jaded employees can inaccurately color your view of the company. Also, don't be afraid to watch how people do certain tasks. Ask if you can shadow them; most of the time, they'll be flattered that you want their expertise.

3. Find out what is expected of you

Job descriptions are all well and good, but once you have the position, you may find out that reality is a little different from perception. The employer may have painted a glowing picture of the company, but it might not really be all smooth sailing. Also, managers and interviewers are only human, and may have forgotten a few of your duties.

So, make sure you sit down with your supervisor as soon as you can after starting in your new position, and find out exactly what is required of you. Do you have to submit reports, and if so, when? How will your daily duties be assessed? What standards are you required to meet? Get it all down, and if possible, get your boss to acknowledge it.

4. Get to know your colleagues

Whether you're working in a massive corporation or a mom 'n' pop shop, you need to make an effort to get to know people. Do it sooner rather than later, otherwise you may come across as anti-social or aloof.

You don't have to be the life and soul of the department, but find the time to introduce yourself to the people you'll be working with on a regular basis. Learn about their roles, and how you can help each other out. You're not looking to make best friends, you're simply laying the foundation for a good working relationship. If possible, ask for an organization chart from human resources or your supervisor, so that you can see how you fit into the company.

5. Show enthusiasm and passion for your role

The first month may present unexpected challenges, but you have to take them all in stride. You've only been on the job around 30 days, so you really haven't had the time or experiences to become jaded and downtrodden. Remember, you are fresh blood and there will be an expectation for you to inject new life into the department. So, approach your job with zeal and energy, and try to turn every challenge into an opportunity.

Three months in

Crunchtime. The honeymoon period is over. Now, you're part of the team and should know what you're doing. By now, your employer will expect to see you start walking the talk you gave in the interview. In many ways, this is your make-it-or-break-it milestone.

6. Find a mentor

After three months, you'll have a pretty good lay of the land. Now, if you haven't already done so, you need to connect with someone that can really help you get ahead in the company.

This is not about sucking up or finding cliques to cover your back. In fact, either of those strategies can often have a negative impact on your career. Instead, consider who the shining stars are in the company. Who are the ones leading the charge? Who has a lot of common sense and business savvy? Who is respected or admired, even if he or she is not the most popular person at work? That is someone you should be looking to for advice.

7. Get a feel for your performance so far

Some organizations insist on a performance review after three months. Some are more relaxed. If you haven't been invited to a meeting with your supervisor to discuss your progress, take the initiative and set one up.

This is a great time to establish, on paper if possible, what the positives and negatives have been about your first 90 days. Hopefully, it's way more good than bad, but don't be afraid to ask about the latter. What can you improve? Where have you made a few missteps? Your boss will appreciate your candor, and will be more invested in you if he or she believes you genuinely want to be better.

Set some goals, but also get down your achievements and your contributions to the company so far. This is also a great time to read your boss directly. Are you getting good vibes and positive body language? Are you hearing a lot of references to the future? This means you're becoming valued.

8. Begin to push boundaries

After three months, you should know which rules to follow, and more importantly, which rules you can bend a little. This kind of flexibility will come in handy when you want to push ideas or initiatives that have, for one reason or another, never been implemented.

As a newcomer to the business, you will have a fresh set of eyes on problems and solutions. You also aren't weighed down by the baggage of being told no a bunch of times. You will be amazed at what can be achieved simply by not having any history with the typical negativity or cynicism that can come from years of doing things the same old ways. What's more, even if your ideas don't come to fruition, the fact that you're really trying to push boundaries and make things happen will be seen as positive.

9. Make your voice heard

It's not easy to speak up during the first few months. You're new, you don't know how a lot of things work, and you could be saying things that may sound naive, or are just uninformed due to your lack of company experience. After three months, however, you should have a good grasp of the culture, the business, and the successes and failures that have come before you. Now is the time to start speaking up and get noticed for the right reasons.

Often the people that get the promotions aren't the brightest or the most talented — they're simply the loudest. They speak up, they say what they're thinking, and they are not a wallflower in the weekly status meeting. Do likewise. Don't speak all the time and have nothing to say, but don't stay quiet and let someone else make the point you wanted to make two days earlier. You're good at your job. You have great ideas. Now … let everyone else know that.

Six months in

By this point, you can breathe a little easier. You've been accepted, you will probably have a six-month review coming up, and you'll want to reinforce the positives you've achieved. However, this is no time to rest on your laurels.

10. Establish a network of professionals

You're settled in. You've made a name for yourself. You're comfortable with your day-to-day tasks, and have a good feeling for the place. This is the perfect time to reconnect with some of your old colleagues and professional friends, for several reasons.

First, it never hurts to have friends in other businesses. They can help you should you ever get laid off or want to switch jobs. They can also offer valuable advice. Some of these friends may help you win new business for your new company, or give you leads that turn into great opportunities.

Perhaps most importantly, friends who know you and what you do can really help when times get tough. After six months, the bloom will definitely have gone off the rose, and you'll start to see problems that now seem impossible to solve, or challenges that the culture make impossible to change. This network of professionals will be there for you, and could help you on those days you really need a boost.

11. Cement your reputation

You have six months of solid work behind you (hopefully). It's time to use that bank of achievements to establish yourself as an indispensable member of the team. This doesn't mean bragging or constantly bringing up your wins. What it does mean is using what you have learned to have a positive and lasting impact on other initiatives. Your contributions on certain projects can be your "in" to larger developments. You have proved yourself on smaller jobs, now is the time to build on that success. From the foundation you have worked hard to establish, you can start looking at the next role.

12. Set your sights on a raise/promotion

If you have worked wonders for the company, you could have built up enough validation for a raise and/or promotion even though you've only been at the company for six months. Take a look at the hierarchy, talk to the human resources department (if you have one), and find out the process and procedures involved in getting promoted or adding to your paycheck.

It's quite possible that there is a history of some people being promoted after six months, or even less. It's also possible that there are some gaps in some departments, and you are a natural for that larger role. Scope it out. Start asking for more responsibility. Begin doing the job you want, not the one you currently have. Even if it doesn't pay off right away, you will be seen as a go-getter, and someone that is valued enough to get a raise or promotion to keep you from looking elsewhere. (See also: 5 Times You Should Demand a Raise)

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This article is from Paul Michael of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Costly Pitfalls of Hosting on Airbnb

Holly Johnson — Fri, 08 Sep 2017 08:30:05 +0000

Renting out your spare room or property through Airbnb can be a great way to supplement your income. For example, New York City hosts earned a median income of $5,474 from the service from June 2015 to June 2016, according to Airbnb data. Other home-sharing services such as VRBO, HomeAway, and FlipKey all work in a similar way to connect property owners with renters through an online platform. (See also: Best Websites for Renting Out Your Extra Space)

Unfortunately, hosting on Airbnb or one of its competitors isn't just puppies, rainbows, and profits. While there is money to be made, renting out a home, an apartment, or even a room requires a lot more skill — and patience — than many realize. There's a lot that can go wrong any time you're working with the public at large. (See also: 13 Things I Learned From Renting Out My Home on Airbnb)

We reached out to several Airbnb hosts to find out the biggest hassles, the most annoying downsides, and the worst things that can go awry. Their insights provide some valuable lessons on what you should really expect if you get into this business.

1. Rude and unruly guests

Renting a home or room to an Airbnb guest is a lot like running a hotel. You'll get your share of polite and courteous renters who want to enjoy themselves without making their presence a hassle. But you'll also get people who will never be happy no matter what you do.

Airbnb host Zeona McIntyre owns properties in Boulder, Colorado and St. Louis, Missouri, and says she's experienced both the good and the bad. Some have even made her cry.

"Most guests are friendly, excited for their vacation, and really grateful that you are opening your home to them." says McIntyre. "A very small group of them are entitled, rude in exchanges, and unrealistic."

"I have had guests message me at all hours of the night, expecting an immediate response and I've had guests make me drive over in a snowstorm to change a light bulb."

If you ask any Airbnb host, you'll find that none of this is rare. In fact, dealing with an occasional bad egg is really just par for the course for any Airbnb host or landlord. Before you decide to rent a room or your home, make sure you're prepared to deal with whatever — or whoever — comes your way.

2. Bad reviews

One of the major components of any Airbnb business is customer reviews. While good reviews can help attract new renters, bad reviews can cause the opposite reaction. Either way, the review system is an integral part of the equation since it's the only way for new renters to learn what your rental experience is actually like.

As McIntyre notes, however, the review system can be a tough pill for a new owner to swallow — especially if you're transitioning a long-term rental into an Airbnb. With a long-term rental, your tenants tour the property ahead of time and know what they're getting into. With Airbnb, this is not the case.

"People all of a sudden feel empowered to critique your design sense, mattress choice, and even cleaning products," notes McIntyre. Occasionally, even simple choices like these cause renters to leave bad reviews when it's completely unwarranted.

"Constructive criticism makes us better, but it does not need to be hurtful or exaggerated," says McIntyre. But whether you like it or not, becoming an Airbnb host means learning to deal with negative feedback. (See also: This Is How You Rent Your Place on Airbnb — And Succeed)

3. More work than people realize

Too many people jump into their new Airbnb business with the false idea they're going to have it easy. List your Airbnb property for a profit, hire staff to keep it clean in between renters, and you can sit back and collect the checks, right?

Wrong. According to Airbnb host and real estate expert James Carlson, renting a home or even a room can be a lot more work than people realize. And, Carlson should know. Not only is he a realtor, but he runs several properties of his own and teaches classes on becoming a profitable Airbnb host.

Unless you hire out all the grunt work, you'll be doing laundry, cleaning kitchens, and making beds every few days. Not to mention being responsive to future guests and to your current guests' needs. "Remember, they don't have a concierge service," says Carlson. "You're it, so you need to be available."

Depending on the number of units you have, you end up putting fires out a lot, says McIntyre.

"If a unit is not as clean as it needs to be, you need to get another cleaner there right away. If a toilet plugs up and a guest is only in town for the weekend, they need it to be functioning," she says. "The key is not to lose your head."

Most of all, be prepared for an array of inconvenient situations. It's not a matter of "if" they'll happen, only "when."

4. Basic logistics

While unruly tenants and late-night calls can put a damper on your experience, sometimes it's the normal everyday logistics of running an Airbnb that cause the most hassle and stress.

Landlord and Airbnb host Elizabeth Colegrove, who owns multiple properties and blogs at TheReluctantLandlord.net, says some of the hardest problems to solve are the ones that should be simple but aren't.

"One of the biggest pains in the beginning was figuring out trash," notes Colegrove. "Tenants don't take the trash out to the curb and get really upset when there is trash left over from other people."

But, since her properties are mostly single family homes, there's no dumpster and turnovers aren't always around the time of trash day. To avoid miscommunication with tenants about the trash, Colegrove added a notice to her welcome packet so tenants knew they were required to take trash out to the outside bin. She also upped the fee she paid her cleaning company so they would take the trash to the curb on trash day.

Then, there are logistics that have to do with tenants themselves — for example, some tenants want to stay a single night but need to check out at 6 p.m. "Basically they want to pay for one night but get two days, which does not work for same-day turnovers with cleaning," says Colegrove. "We have had to get very strict on turnover and are even thinking about imposing a fine if not out by turnover."

5. Tax consequences

Abby Eisenkraft of Real Life Tax Advice is a tax professional who helps new Airbnb hosts prepare their taxes every year. She says that, especially the first year, Airbnb hosts are rarely prepared for the tax implications of running their business.

Eisenkraft says she's seen a few different scenarios play out over and over. First, many Airbnb hosts never set aside money to pay taxes on their Airbnb income. Unfortunately, this can mean owing more in taxes than they planned for. "They are always surprised — and many are tearful — when they see their tax bill," she says.

Second, new Airbnb hosts tend to be confused about what they can write off, so they try to write off personal expenses that have nothing to do with their Airbnb. Eisenkraft's job is explaining what they can and can't write off, and her answer doesn't always please her clients.

Lastly, new Airbnb hosts are typically surprised when they receive a Form 1099K in the mail showing their Airbnb income. Many falsely assumed their Airbnb business was "under the radar" and thus, not subject to taxes.

Obviously, assuming any of these things can be costly. Knowing about them in advance can help you decide whether you really want to have a short-term rental on your property, with your eyes wide open to both the costs and benefits.

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This article is from Holly Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Hire Your First Employee

Annie Mueller — Fri, 28 Jul 2017 08:30:10 +0000

Hiring your first employee is exciting! And also pretty intimidating. You don't need a complicated system in place to make your first hire, but you do need to take a few essential steps along the way. Here are some ways to simplify the process of hiring your first employee.

Decide what your employee will do

First things first: You know you're busy and you have more on your plate than you can accomplish alone. However, do you know exactly what your employee will take off your hands? Before you write an ad or think about a salary, make a list of the tasks and responsibilities you'd like to hand off to an employee. This list will help you hire the right person, and will also help you know exactly how to get them to full productivity quickly.

Write that employee handbook

Writing an employee handbook sounds like an overly complicated, formal process. It doesn't have to be! An employee handbook can be direct, casual, whimsical, full of pictures, and even interactive. It can also be a simple document of a few pages that covers the important values and rules you need to have in place for all employees, present and future. The U.S. Small Business Administration has a thorough guide to writing a handbook, or you can find free templates online.

Set up a payroll service

In hiring an employee, what's most important to you is getting work done. What's most important to your first employee is getting a paycheck. Take some friendly advice: Hire a payroll service to handle the paycheck part of the equation. You will save yourself countless dollars in time and headaches. A good payroll service will provide necessary tax withholdings according to federal and state rules, keep accurate documentation, allow customizable withholdings to be set as needed, and ensure that your employee gets paid on time. All you have to do is go through the initial setup process and put a salary in place.

And for the record: It's a really, really good idea to pay yourself through a payroll service, too. Missing tax documentation will always come back to haunt you.

Advertise for a great employee

Now you're ready to start seeking your first employee. Start by writing a great job listing ad. How, you ask? The keys to a great employment ad are specificity and authenticity.

Specificity means that you'll list the exact tasks and responsibilities that your employee will take on. Don't use a vague term like "Office Manager" or "Production Assistant" without stating exactly what that means in your business. By making your ad specific, you will automatically filter out the applicants who aren't qualified or interested in completing the work you actually need done.

Authenticity means that your employment ad should be like you, and like your business. If you're a casual, mom-and-pop kind of place, don't write an ad with formal language and overblown requirements for employment. Use first-person language, for example: "We're looking for someone to work at the front counter."

On the other hand, if your business is a more formal establishment with a dress code and high-end clientele, reflect that accurately in your advertisement. Use a more formal tone: "Bobkin, Bobkin, and Butters, LLP, seek a qualified office assistant." The language and tone you use in your initial ad help you attract the type of applicant that will fit well and work well in your business.

Provide initial training

While you're waiting for the pre-filtered applications to roll in, thanks to your stellar employment ad, get your training materials in place. Do this by going back to that list of tasks and responsibilities that you want your first employee to handle. For each major task, write down the step-by-step process to complete it, well, completely. For each responsibility, list the tasks to be completed and, as appropriate, the timelines, resources, contacts, and other pertinent information.

When you make that first hire, you'll have the information to start their training. As a general rule, it's a good idea to do two things: First, provide a copy of the complete training material to your employee, so they can go over it and get a big picture of the role they're taking. Second, prioritize the tasks and responsibilities and work with your new employee on each one in order of importance.

Set up a system for performance reviews

Ah, the dreaded performance review! Employees don't tend to love them, and frankly, neither do employers. However, when done well and frequently, reviews can create a working relationship that's much more beneficial for everyone involved.

Start by letting your employee know that you will provide weekly feedback in their first month, or quarter. This is important as new employees often have no way to gauge if they're doing the job right and meeting your standards, or not. Not knowing leads to anxiety and tension, which leads to more mistakes, and can create an ugly cycle of stress and mess-ups. Provide clear, regular, weekly (at a minimum) feedback for your new employee for at least their first month.

Thereafter, feedback sessions on a quarterly, monthly, or even a continued weekly basis are the most effective. Annual reviews are too few and far-between to be effective; they have the fun effect of making employees feel blindsided and betrayed. Don't do that! Instead, provide ongoing, informal feedback to your employee, either in face-to-face meetings or via phone, email, or messaging.

You can provide feedback on a scheduled basis (weekly or monthly, for example) or after the completion of a task or project. In both cases, shorter, more frequent meetings tend to be more helpful. For best results, focus less on "what you did wrong" criticism and more on "specific steps to improve" instruction.

A last note: It's a great idea to get feedback from your employee, as well as giving feedback to your employee. It's your first hire, but it probably won't be your last. Ask your new employee how you can make the process easier and be a better boss; you'll be even better prepared when it's time for your second hire.

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This article is from Annie Mueller of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Easy Ways to Make Good Money From Airbnb

Amanda Gokee — Mon, 24 Apr 2017 08:30:07 +0000

Airbnb is the most widely known home rental website in the U.S. If you've got a spare room or a whole property to rent out, listing it on Airbnb can provide extra income while allowing you to meet interesting people from around the world.

But you're not the only one with this idea, of course. You may be competing with hundreds of other people offering properties in your city on any given date. It goes without saying that you need to keep your home and bedding spotless, and provide comfortable furnishings and amenities such as a TV, strong Wi-Fi connection, and hair dryer. To make sure you stand out and get the best price possible, follow these five tips.

1. Take professional photos of your space

Listings that have more attractive photos will have more success on websites like Airbnb because the layout of the website is visual. The first thing most viewers will see is a featured photo of your listing. I know from my own experience as a traveler that if an Airbnb rental doesn't have good photos, I'll scroll through to the next listing.

But unless you're a very skilled photographer, taking attractive pictures of interiors can be difficult. Spaces may be tight and lighting, which can make or break your listing, is tricky. A good professional photographer will have the right equipment and skills to visually open up your rooms, and highlight their beautiful and unique qualities.

Airbnb offers free professional photographers for hosts in many cities. In a pinch, you can rely on your own skills, but it helps to read up on how to photograph interiors first.

2. Offer an added service

When you are initially getting started on Airbnb, you can make your listing stand out by including a free service that adds value for your guests. Some examples: a yoga class, breakfast (B&B style), or transportation from the airport.

Keep it to something that is within reason, of course, and only offer services that you can consistently provide for your guests. This will make all the difference between an average listing and one that truly stands out. (See also: How to Rent Your Place on Airbnb and Succeed)

3. Secure good reviews from your first guests

Another critical factor that any potential guests will consider when they are looking into renting your property is the rating that previous guests have left you. In fact, this is one of the most important features of the Airbnb community. Having a high rating (four or five stars) will inspire confidence in future guests, since it is essentially proof of a good track record with your previous customers.

Getting a great rating does not have to be complicated. Offer the kind of hospitality you would like to receive if you were traveling to a new town or city. Be helpful and welcoming to your guests. If possible, greet them when they first arrive. That way, even if you don't see them for the rest of their stay, you will have given them a good first impression.

As their stay progresses, be sure to check in with your guests and make sure they are comfortable and have everything they need. Also, try to collect the keys when they leave, which can be another good opportunity to make a connection with guests and remind them that you appreciate reviews on Airbnb. (See also: Best Websites for Renting Your Extra Space)

4. Include personal touches in the room

Remember that guests are choosing Airbnb either for its affordability, amenities (like a kitchen), or its unique character. If you want to increase the price of your rental, do your best to capitalize on that third characteristic.

Start by thinking of a signature special touch for the room or apartment. Will you provide flowers or a bottle of wine for your guests when they arrive? A welcome package with information about your hometown? An exceptional Airbnb experience often revolves around small details, such as useful pamphlets, a map, or personal recommendations that allow your guests to experience your town like a local. Minimally, you should always have Wi-Fi information available.

5. Regard it as a business

If you want to earn more from your Airbnb listing, it's important that you regard it as a serious endeavor. You can earn a lot from your listing, but you need to be committed to it. Consider how much time you can devote to running this small business and how you can provide exceptional service to your guests to set yourself up for a very successful listing. Like any small business, you have to consider the costs, not just in time but in real dollars, for example, by paying for professional cleaning after each guest or in stocking your pantry and linens.

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This article is from Amanda Gokee of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Get Even More Freebies in Exchange for a Review

Ashley Eneriz — Tue, 07 Jun 2016 09:00:12 +0000

Who doesn't like to get free stuff? It's even better when the free stuff is actually stuff you want and like. Through the help of a small personal website and my Amazon review account, I have been able to review — and keep — over $1,000 worth of goods for free.

Here are my simple tips to increase how many freebies you can score each year.

It All Starts With a Good Amazon Account

If you want to be approached by companies, you have to have an Amazon review account that is full of reviews. Not all of my reviews are great, but if you can take the time to write some helpful and detailed reviews for products you already own and love, then you will increase your chances of being seen by a company. Companies will go based off of reviewer ranking and helpful vote counts.

I also highly recommend updating your Amazon reviewer profile to include a little about yourself, your email address, and your picture. My profile says something like, "Yes, I will review your product. Just email me." A few companies have reached out to me through my profile to offer me a product to review.

Have a Small Website

A small website, even one that is on a free WordPress or Blogger platform, can help you get stuff for free to review. Some review sites will have specific requirements, such as X number of Facebook followers or X number of pageviews each month. I have found that most of the Christian publishers I review books for have very easy restrictions, since Amazon reviews tend to be the gold that most publishers are going for.

Try Reaching Out to Companies Directly

Maybe you don't have a website but instead a social media account or YouTube channel with quite a few subscribers. If you are not approached by companies already, try reaching out to them.

A few years ago, I ran a site called The Thrifty Wife, which was not popular, but it had about 1,000 views a week. I looked at other sites that were comparable to mine and saw what they reviewed. I then would reach out to those companies asking if they were interested in exchanging their product for a review. This might be out of your comfort zone, but it worked for a few products.

Companies usually have a PR or marketing department, and those individuals most likely do not have time to research every social media account. Most of the extremely popular websites and social media accounts are hard to get a hold of or charge companies to review products. This is where individuals with a decent following come into play.

Book Publishers That Offer Review Copies

I review Christian books as a part of Tyndale, Moody, and HarperCollins' book reviewing programs. However, there are several programs available for both Christian and non-Christian books. Check publisher's websites to see if they have a reviewer program or a first look newsletter. Many indie authors are usually more than happy to provide free digital copies for reviews, so don't be afraid to reach out.

Other Product Review Sites

Right now, I am a part of Blue Ribbon Reviews, which offers free and heavily discounted items to review. I have received a backseat car organizer, reusable baby food pouches, and food containers for less than a $1 a piece, and they were things I could use anyways. So far, their free items I have seen offered have been for sleep-inducing syrup and wallets.

The other company I review for is All Star Review. The site has offered 100% free items, but you are alerted of the free item a day before it launches, and then it is a first come, first serve basis the day the freebie is live.

Obviously Amazon's Vine program would be ideal, but I am still waiting for my invite. You can check out these other sites, too. Some are for free products, and others are for deeply discounted items.

I have received several great things for free that have been very useful to me, including many organic food items and books that were on my "to read" wish list. However, there have been times I have been asked to review random things, such as a TV antenna or a refrigerator filter that didn't go with my fridge model. To avoid bringing clutter into my home, I only review products I want or know that I will use.

What have you been able to review for free?

This article is from Ashley Eneriz of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

8 Ways Being Patient Saves You Money

Kentin Waits — Fri, 11 Sep 2015 15:00:30 +0000

We all know that patience is a powerful virtue. It helps us get ahead in our careers, be better parents and partners, and avoid unnecessary conflict in nearly every area of life. Patience can even save us money. Here are eight ways going zen before you spend can help your budget:

1. You Have Time to Check Consumer Reviews

Informed consumers are smart consumers. Patience gives buyers a chance to compare features and prices, read online consumer reviews, explore product ratings on non-profit sites like Consumer Reports, and get the very best deal possible. It may sound cynical, but some manufacturers have built their livelihoods on selling junk to uninformed "gotta-have-it-now" buyers. Don't be one of them.

2. You Have Time to Decide If You Really Need It

Impatient consumers are led by their hearts and have trouble avoiding impulse spending. How many times have you purchased an item on impulse only to later ask yourself "What was I thinking?" Being patient gives you time to consider (and reconsider) if you truly need what you're tempted to buy.

3. You Can Wait for a Sale

Don't you relish that moment when the stars align and something you really want or need goes on sale? Sadly, impatient folks never get to experience that natural high. They simply can't wait and their impatience costs them cold hard cash.

4. You Might Find it Used

There are many reasons why buying used is better, and saving money is just one of them. A few years ago, I was dangerously close to forking over $3,000 for a new Tempurpedic mattress. Instead, I took a deep breath and gave myself a few months to find a better deal. Amazingly, I spotted one for sale on Craigslist. A newlywed couple had received the queen-sized mattress as a wedding gift (what an amazing gift, right?) and didn't like it. Though technically second-hand, it was still in the factory plastic wrap. It's the best $1,000 I've ever spent.

5. You Can Explore Alternatives

Several years ago, I was decorating my new condo and stumbled upon a limited edition lithograph that I loved in one of those big chain galleries at the mall. It was out of my price range by several hundred dollars, but I crafted all sorts of justifications for the splurge. Luckily, I hesitated just long enough to be invited to a local art fair where I found an original painting that I loved even more — for one-third the price. A bit of inadvertent patience saved me hundreds, helped me support a struggling independent artist, and allowed me to discover a wonderful original image that I'll treasure for years.

6. You Might Get it as a Gift

If there's an item you want or need, add it to your holiday wish list or drop a few subtle hints in advance of a birthday, housewarming party, or similar gift-giving occasion. Sure, it's not the most evolved money-saving strategy, but often our friends and family are looking for just the perfect gift and would welcome reasonable suggestions.

7. You Can Wait for the Release of a New Model

Our consumer machine is constantly churning out smaller, sleeker, and faster models of the same product you must have right now. If you're patient enough, wait for the new and improved model to be released and then buy the original version at a deep discount.

8. You Can Save up and Avoid Finance Charges

Putting your impulse purchases on pause gives you time to save up and pay cash. Avoiding interest charges, potential late fees, and overdraft dings makes a patient approach even smarter. In fact, there are loads of reasons why using cash-only rocks.

In our act-fast, don't wait, while-supplies-last world, patience is a rare quality. Retailers encourage us to buy now and think later because they realized a long time ago that emotion moves products. Patient people spend less and when we do spend, we make better purchasing decisions. When it comes to my money and my budget, impulse has its place, but patience rules the day.

Do you consider yourself a patient person? How has being patient helped you save money?

This article is from Kentin Waits of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Can a Robot Called Digit Really Help You Save More?

Lars Peterson — Wed, 18 Mar 2015 21:00:07 +0000

The frugal living world is full of exhortations to save more for emergencies, to save for important purchases, to save for big life goals. Along with that comes lots and lots of advice about how to trim costs, earn more, and to budget and plan. Despite all of that, Americans still don't save as much as they should — 60% of us don't have enough set aside for even minor emergencies like a car repair or an emergency visit to the dentist.

So why don't we save when we know we should? Because even though it seems easy, saving money actually isn't that simple.

Digit Is Designed to Make Saving Easy

Digit is a free smartphone app that analyzes a connected checking account and makes periodic withdrawals to a separate, Digit-controlled savings account. The algorithm monitors spending and income habits to determine the size and frequency of the transfers. They are generally small ($15 to $20) and occur once or twice a week. Individual transfers are capped at $150.

Most interaction with the service is via mobile text. Every morning Digit sends an account update with details about recent transactions and current balance. Users can send texts to issue commands and check balances, too. There's also a clean and simple website interface.

I've Saved $58.75 in Two Weeks With Digit

After I got over some squeamishness about letting a mysterious algorithm connect to my checking account and begin transferring funds, I signed up through the website (it's easy, of course) and waited for Digit to do its thing. The first transfer, for $6.50, came about a week later. A handful of transfers have followed since (they seem to come in pairs, about a week apart), and I've amassed a tidy little nest egg of $58.75. When it reaches $100, I'll transfer it back to my checking account and from there into my savings account. Woo-hoo! An extra hundred bucks in my vacation fund.

What I Like About Digit

Here's why I'll probably keep my Digit account live even after I've written this review.

It's Easy

Setting up an automatic transfer between a checking account and a savings account is easy. Digit is easier, and works alongside my current transfers to help me find extra money to put aside for whatever. Signup is quick and painless. The interface is simple, clear, and direct. The list of commands is short and to the point.

It Sends Me Daily Text Updates

I try to check in with my banking and credit accounts every couple of days to see where my money's going and to keep an eye out for mistakes or erroneous charges. Unfortunately, sometimes life happens, and I may not check in for a couple of weeks. Digit sends me an update every morning with account balance and transaction details. It doesn't seem like much, but it goes a long way toward keeping money and personal finance "top-of-mind." I'm thinking more about my money, and that's good.

Digit's Designers Are Thinking About Psychology

Digit doesn't ask me how much money I would like to save — it just does it, based on my financial habits. Compare that with an automatic transfer between accounts. The user has to make the decision to save, the decision to set up the accounts, and finally the decision on the amount of money to withhold. Each of those decisions are "opt-in" moments, which are surprisingly difficult to overcome. The last one is especially difficult because in addition to opt-in, we have to overcome "loss aversion," which is what psychologists call our reluctance to give up what we have in order to gain something else. When you set up an automatic transfer between checking and savings, you have to decide how much to give up from spending now in order to gain some savings later. That's hard.

Digit doesn't eliminate all the "opt-in" obstacles (you still have to click a link and sign up, after all), but it does help us get over loss aversion. Once you're in, you're saving.

What I Dislike About Digit

Digit does a lot of things right, but not everything.

Digit Interacts With My Checking Account

It felt really weird at first to let a third-party service transfer money out of my checking account — automatically. Digit's designers have recognized that this is a tall hurdle for some people. They insist the algorithm will never cause a user's checking account to become overdrawn, and they offer an overdraft guarantee, just in case. So far, nobody's had to take them up on it.

My Money With Digit Doesn't Earn Any Interest

Funds transferred and held in Digit's savings account do not earn interest. Of course, funds in my checking account and regular bank savings account earn only paltry interest, so maybe that's a wash. In any case, this is how Digit keeps the service free and pays themselves — they are capturing the interest instead of passing it to users.

Also, transferring money out of my Digit savings account and back to my checking account takes about a day. (Meanwhile, transfers out of my PayPal account can take up to five.)

Digit's Psychology Can Work Against Me, Too

Speaking of getting my money out of Digit, the process is more like transferring funds between checking and savings accounts. It's all manual, with some "opt-ins" and a big "loss aversion" moment to overcome at the end. Automatic withdrawals back to my checking account — or even my savings account — based on preset goals met would be a nice feature. Maybe they'll add that in the future.

A Few More Details About Digit

If you're considering trying out Digit, you should know a few more things. (There's lots more at Digit's FAQ.)

Funds Are FDIC Insured up to $250k

Digit holds users' money at Wells Fargo or BofI Federal Bank, both of which are FDIC insured.

It Works With Most US Banks and Credit Unions

Digit is United States only currently, and while most major banks and credit unions are covered, not all are.

Passwords Are Anonymized and Secure

Digit claims they adhere to industry standards with respect to password and user data security.

Signing Up for Digit

If you'd like to signup for Digit, you can do so, right here, in just a few moments. Once you've spent some time with it come back and share your experience in comments.

This article is from Lars Peterson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Ask the Readers: Do You Read Product Reviews Before Buying?

Ashley Jacobs — Tue, 29 Jan 2013 11:36:31 +0000

Editor's Note: Congratulations to katie m, Tabathia, and Betty for winning this week's contest!

Making decisions on big purchases can be difficult! Many people spend lots of time researching prices, warranty info, and other relevant facts to their potential purchase. On top of that, many people take the time to read reviews on their potential purchase before actually buying an item. However, there are some people who buy without taking the time to do research or read reviews!

Do you read product reviews before buying? Where do you go to read reviews? If you don't read reviews before buying something, how do you decide whether or not to buy?

Tell us if you read product reviews before buying and we'll enter you in a drawing to win a $20 Amazon Gift Card!

Win 1 of 3 $20 Amazon Gift Cards

We're doing three giveaways — here's how you can win!

Mandatory Entry:

Post your answer in the comments below. One commenter will be randomly selected to win a $20 Amazon Gift Card!

For extra entries:

You can tweet about our giveaway for an extra entry. Also, our Facebook fans can get an extra entry too! Use our Rafflecopter widget for your chance to win one of the other two Amazon Gift Cards:

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If you're inspired to write a whole blog post OR you have a photo on flickr to share, please link to it in the comments or tweet it.

Giveaway Rules:

Contest ends Monday, February 4th at 11:59 pm Pacific. Winners will be announced after February 4th on the original post. Winners will also be contacted via email.
You can enter all three drawings — once by leaving a comment, once by liking our Facebook update, and once by tweeting.
This promotion is in no way sponsored, endorsed or administered, or associated with Facebook.
You must be 18 and US resident to enter. Void where prohibited.

Good Luck!

Tell us if you read product reviews before buying and we'll enter you in a drawing to win a $20 Amazon Gift Card!

This article is from Ashley Jacobs of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Things Tax Preparers Should Tell You

Darwins Money — Tue, 25 Jan 2011 16:02:00 +0000

Brought to you by TurboTax Federal Free Edition — Free to prepare, Free to print, Free to efile.

With tax season upon us soon, it's helpful to go into the tax preparation process with reasonable expectations and knowledge of how the process will work, what the roles and responsibilities are, and what you should anticipate as an output from your interactions with your preparer.

1. What You Need to Bring

It's not always obvious which documents are even required to complete a tax return. It seems as though we’re receiving a tax document per day in the mail, sometimes in a redundant and confusing fashion. Conversely, with the heavy reliance on electronic record-keeping, people are rightfully confused over whether they should always be getting a paper statement for tax purposes or whether they need to print out electronic copies.

You should plan to have in your possession all documents related to income, investments, interest, deductions, credits, and anything else that might reasonably result in an entry on your tax return. If you do any sort of investing outside a tax-deferred retirement account, chances are that any transactions will have to be reported. Just holding on to a dividend-paying stock requires reporting of dividend income. Interest from CDs, money market accounts, and savings accounts is fair game as well.

On the credit side, if you sought to take advantage of any of the various government stimulus programs like the home energy tax credits, cash for clunkers, the new homebuyer tax credit, or others, documentation related to those transactions should be shared with your preparer. Several such topics are outlined in much more detail in this nifty tax preparation checklist. If in doubt, bring it!

2. How to Optimize Your Deductions and Credits

Some like to think of tax preparation and advice as an art more than a science. There are various ways to approach how you set up your income and expenses in your personal life, as well as in any businesses you run, in order to optimize your returns by minimizing your tax liability. Your preparer may recommend anything from optimizing your small-business expenses to pulling forward contributions and expenses into the current tax year to beat the clock and realize the larger deduction come spring.

The preparer may point out credits and deductions you didn't even know existed. Likewise, he may also warn against being too aggressive with certain tax deduction claims to decrease the risk of generating an audit. An oft-cited red flag is the home office deduction, but there are others as well that seasoned tax preparers may recommend you avoid. (See also: 10 most overlooked tax deductions.)

3. How Your Tax Liability or Refund Was Calculated

Rather than just spitting out a number at the end of a session, your tax preparer should walk you through a methodical explanation of both the income side and deduction side, share any notable impacts of various tax rules, and then highlight how and why your ultimate liability or deduction came out the way it did. There should be a full double-check of the information you provided and a chance to point out any omissions or mistakes. While there are ways to amend tax returns later, it may come at additional expense and delay. It's ideal to get it right the first time – and get that refund on time!

4. When Will Your Refund Arrive

With most tax returns resulting in a refund of some sort, it's helpful to know when your refund will arrive. Many people know they're getting a sizable refund each year and plan to use those funds to do anything from pay the annual tax bill to fund the summer family vacation. Be it days, weeks, or longer, the preparer should be able to give an indication of when to expect a refund based on her own internal timeline for submission and the typical turnaround time from the federal government. It may not be evident at the time, but the initial preparer you meet with may or may not be conducting the actual calculations and generating the return herself. Outsourcing is a common business practice now in the field, so that may add to the cycle time considerably.

5. Ideas to Better Manage Your Taxes

Aside from simply completing your return based on historical information, an adept preparer should be able to make suggestions to better manage your taxable liabilities. Suggestions may include highlighting any legislative changes that may affect you, new stimulus and tax-credit programs, how to best incorporate a small business, common deductions worth considering that you may not have tracked and documented in the prior year, and some basic investment concepts related to taxable versus tax-deferred accounts.

These are just a few of the topics an adept tax preparer should be sharing with you. Otherwise, you may be leaving thousands of dollars in tax-saving opportunities on the table each year.

This article is from Darwins Money of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Book Review: The Happy Minimalist

Philip Brewer — Wed, 09 Jun 2010 12:00:04 +0000

The Happy Minimalist: Financial independence, Good health, and a better planet for us all by Peter Lawrence.

Like frugality and simplicity, minimalism is both a means and an end. It's a way of living light on your wallet and light on the planet, and it enables certain choices (such as mobility) that are closed off to most people. The hows and whys of minimalism are the topic of Lawrence's book.

When Lawrence lays out his own path, the book is great. The story of how he came to minimalism and of how he lives his life is fascinating and compelling. He provides solid details on the specific choices he has made, in terms of what he finds he needs and how he gets by without many of the things that most people figure are needs.

I wish the book had more of that, because that's what Lawrence has to offer — his own experience told in his own words.

Unfortunately, that's only half of this rather short book. The other half is advocacy for minimalism, and that part reads as if Lawrence didn't trust the truth of his own words and his own experience. The advocacy part of the book is larded with quotes from Gandhi, Confucius, Socrates, Aesop's fables, the Bible, etc. There are literally pages of quotes. They're all fine statements of the value of living in accordance with your own values (rather than the values of society at large) and of minimalism as a pathway to doing so — but they're largely statements that everyone has seen before.

Nobody says it better than Thoreau, but rather than yet another repetition of "We are happy in proportion to the things we can do without," I'd have much preferred more of Lawrence's own insights:

I don't have a 42-inch flat panel high-definition TV. However, I take pride in my 120-inch high-definition view from my home of the mountain range. I get to see the sun rise every morning and moon rise every month.

Is there a danger of oversimplification or trying to minimize something that should not be minimized. Yes. Exercise is a good example.

We all live somewhere on the continuum from minimalism to maximalism, but where we are now is an artifact of our own history, social and family pressures, and mere happenstance. Unless we've lived a very thoughtful life, or been very lucky, we're probably not at the best possible point. Getting close to your own best point comes down to a thoughtful examination of your own values and a close look at how your life does or doesn't match them. Where a book like The Happy Minimalist can help is by illuminating one point along the continuum and saying, "Here's what it's like at this point! Here's what's good about it!" That knowledge can then inform us as we make the choices that move us one direction or another along the continuum. Despite its flaws, The Happy Minimalist does that.

Note: I received a free copy of the book for review. Links to the book are affiliate links.

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Book Review: One Year to an Organized Financial Life

Thursday Bram — Wed, 12 May 2010 12:00:03 +0000

There's a reason we tend to talk about getting our finances in order. More often than not, the first issue we have to deal with is organization. That may mean sorting through stacks of paper for bills and statements we didn't really want to see in the first place, or it may mean dealing with clutter that distracts us from even starting on the paperwork. It's just about impossible to improve your finances if you don't have them organized.

That's the premise of One Year to an Organized Financial Life, by Regina Leeds and Russell Wild. Leeds is a professional organizer as well as the author of such books as One Year to an Organized Life, while Wild is a NAPFA-certified financial advisor. The two have put together an organized approach to getting organized, breaking down the monstrous task of dealing with financial issues into small steps that can be handled without stress.

One Year to an Organized Financial Life is not written with the idea of completely fixing your finances overnight, though. It can take months or even years to build up a snarl of financial paperwork and plans, and Leeds and Wild know that it takes plenty of time to resolve such a situation. The book is organized around a calendar, offering a year-long guide. In January, the plan is to start work on the clutter and implement a filing system. With step-by-step instructions and bullet points, the book navigates through taxes, budgeting, credit, long-term savings and other key considerations for your finances. There's even a well-timed section in November on budgeting for the holidays.

This book is meant very specifically for readers who are fairly busy. If you've found yourself struggling to actually get specific parts of your finances in order, it's ideal because it's not just general advice, like some personal finance books. Instead, Leeds and Wild have created a resource that explains each action you need to take, along with the steps you can use to keep from having to come back and re-organize in the future. They go much deeper than explaining that a person should save more and spend less, discussing the reasons you may handle your finances the way you do.

There is always an emotional component when it comes to money and One Year to an Organized Financial Life takes that fact into account. Leeds brings in her experience as a professional organizer to discuss the symptoms that can go along with financial issues, such as physical clutter, as well as how you can handle those symptoms as you resolve the underlying concerns.

One Year to an Organized Financial Life is 288 pages long — a fast read, but a book you'll likely come back to again and again. It's published by Da Capo Lifelong Books and is available for $16.95.

Disclosure: I received a free copy of the book for review.

This article is from Thursday Bram of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Book Review: The Trap

Philip Brewer — Wed, 20 Jan 2010 14:00:05 +0000

The Trap: Selling Out to Stay Afloat in Winner-Take-All America by Daniel Brook.

For more than two years now writing at Wise Bread, my whole thesis has been that frugality leads to freedom — if you can live cheaply enough, you can choose whatever work calls you, instead of whatever work pays the most. This book thoughtfully presents the case that my view is not just shortsighted but actually harmful.

I've always recognized that the lifestyle I advocate has its limits. All sorts of perfectly ordinary aspects of a normal life — whether positive, such as having kids, or negative, such as becoming seriously ill — make it a lot harder to live a very frugal life.

Brook talks a good bit about the limits of frugality as a way to do whatever work calls you. Many of the examples Brook uses are people whose work requires that they live in a big city:

Activists who need to live where there's a critical mass of others with the same vision.
Social workers or community organizers who need to live in the community that they serve.
Creative types of the sort who can't just do their work by themselves the way a writer can — filmmakers, dancers, actors.

It's possible to live frugally even in a big city, but living very frugally requires not only luck and flexibility but also a level of constant attention that makes it hard to focus on the work that was the whole point.

Sure, Brook says, it's possible to live frugally enough that you can do whatever you want — as long as what you want doesn't include expensive things like sending your kids to college or paying for your healthcare if you get sick or living in a big city.

But that's really Brook's secondary point. His central point is that the way we've organized society is harmful.

Low tax rates were supposed to be good and fair. Letting everybody keep what they earn seems only right, and in a growing economy it wasn't supposed to be harmful for some people to become extremely rich. After all, as long as the poor and middle-class are also making progress, does it matter if some people are super-rich? Brook's answer is that it does matter.

Perhaps it wouldn't matter if the super-rich were spending all their vast wealth on Old Master paintings and private islands — but they aren't. They're spending significant amounts on stuff like college for their kids and healthcare and apartments in the city. Stuff, in other words, that the rest of us need to buy too. And, since they have so much money, they end up bidding up the price of the ordinary necessities of middle-class life.

The result of that is that people are pressured into selling out. Even people who are strongly inclined toward service in government or a non-profit find that they just can't do it — not and pay off their student loans, get married, buy a house, and support a family.

The big reason I advocate frugality as the path to freedom is that it's entirely within your own grasp — it doesn't depend on the government nor on changes to the way society or the economy are structured. But that doesn't mean that society and the economy are structured perfectly. Whether you're with me on the advantages of frugality or disagree, The Trap provides a fascinating look at the issues.

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: