I wrote a series of articles some time ago on Used Car Buying Tips and then decided to [...]]]> In case you didn’t see the link at the top, I am giving away my Used Car Buying E-book. This is totally free. No gimmicks, nothing to sign up for, nothing to do but download this free book.

I wrote a series of articles some time ago on Used Car Buying Tips and then decided to make it into a really cool, easy to read book. I want to give it away as it is my first e-book. I know I could make a few dollars selling it on Ebay, or charging $.50 to download. I know it is a useful book and I enjoyed writing it. There are many links in it to all sorts of great and helpful websites.

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Well, there are a number of things. First of all, you need to identify what changed. Why do you want out? Did you come to your senses and realize that a car lease (or Fleece as [...]]]> Ok. You now realize you shouldn’t have done that car lease. What can you do about it?

Well, there are a number of things. First of all, you need to identify what changed. Why do you want out? Did you come to your senses and realize that a car lease (or Fleece as Dave Ramsey calls it) is probably the worst financial move a person could make? An unevaluated life is not worth living. That is a quote I have heard, not sure who said it, but it is oh so true. When we make mistakes in life, we have to learn from them. Own up to them. Don’t blame everybody else. So you learned your lesson. No more leasing!

The costs of ending a lease early are usually very, very steep. You should get out your contract and see what options you have. If you are within a year or so from the end and you aren’t over too much on mileage, it may be best to ride it out. Not paying the lease will get you into so much trouble, credit wise, it simply isn’t an option. And no, you can’t just tell them to come get the car. They might come get the car, but you will still owe the balance and that would be worse than keeping it. You should do everything you possibly can to make your scheduled payments through the end of your leasing term.

So if waiting it out is not an option, here are some suggestions.

1. Call the company and ask for a buy out price. They will compute the cost to sell you the car today. This will include the rest of the payments and the “residual value” of the car at that time. It will likely cause you to have a panic attack, but it is an option. You can negotiate some of this by asking what part of the price is considered the residual value. Then go to Edmunds.com or some place similar and see how other cars like yours are valued. For example, if your leasing company says your cars’ residual value is 10,000, yet cars just like yours have a fair market value of 8000, you can negotiate some. The closer you are to the lease being over, the more you can negotiate, because the company really doesn’t want the car back anyway. Once you get the best price you can, in writing, you can determine if this is an option.. What I am suggesting is you borrow the money at your local credit union to buy the car, then you sell the car, then you pay the local credit union everything you get out of the sale, then you pay the remaining amount to the credit union in monthly payments. In other words, you aren’t going to get out of this without some pain. It will be far less in the long run, to pay a $3000 to $5000 loan off at the credit union, than to have your entire credit history trashed by not paying for this car. I wish there was better news.

One comment about the Edmunds site I listed above. I was reading some of their advice areas, and I disagree with most of their advice concerning leasing cars. At one point they say you can make money at the end of the lease, by selling your car.. Very doubtful that will ever happen. Just go through the numbers and you’ll see. I would guess 95% of people leasing, would lose money doing that.

2. You can get someone to assume your lease. In other words, you find someone who wants your car and is willing to take over the lease. The leasing company has to be agreeable to this and will usually charge a fee of $300 or more to do it. If you find someone credit worthy, the company will most likely allow it. The problem is, who wants to take over your car? Actually, I found a few companies out there specializing in “helping” you find someone to assume your lease.

3. Last option would be to just walk away from the car and payments. As I said earlier, that is the worst possible case. Your credit will be trashed. It will show up as a “repossession” on your credit report. That will cause you to have to pay much higher interest rates for almost any loan in your future for the next 7 years. Find another way.

Finally when you are over this, learn the lesson. I suggest saving money to buy the car you want, and in the mean time, buy a used car. You can get a $2000 – $3000 car, and put your $500 lease payment in a savings account.

Let me know what you think! Am I right? Am I wrong? Let’s hear it. If you found this post helpful, help me by hitting the DIGG button, or post it on Stumbleupon.com, or somewhere else. Thanks!

Leave a comment or write me an email at mackgoodman@gmail.com.

If you have purchased a home in 2007, you may qualify for a new tax deduction. Many borrowers are required to purchase private mortgage insurance, or PMI, when they get a loan This insurance is required by the lender to [...]]]> Get Turbo Tax at Amazon.com. You can get much cheaper than at the store!

If you have purchased a home in 2007, you may qualify for a new tax deduction. Many borrowers are required to purchase private mortgage insurance, or PMI, when they get a loan This insurance is required by the lender to assure that should the borrower default on the loan, and the lender has to sell the house to pay for the mortgage, that the difference in the selling price and the loan amount is covered by this insurance policy.. This makes the loan essentially no risk for the lender.

If you made less than a 20% down-payment on the house, the lender typically requires this insurance. As the borrower, you are required to pay this, usually as a monthly addition to your mortgage payment. The first year it is usually paid up front at the closing. The cost of this varies from .50% to .75% of the loan amount, depending on the type of loan and the risk associated with it. For example, if it costs .50% and the loan was for $400,000, you would have to pay about $800.00 a year.

On a side note, you can deduct sales tax you paid on a new vehicle, if you bought  it between February 17 and December 31, 2009.  This is sometimes called the new car tax deduction.

There was new tax legislation passed in 2007 that could make this deductible on your federal return. Now this does not apply to everyone as it is phased out for taxpayers with adjusted gross incomes exceeding $100,000 ($50,000, if married filing separately). If you make over $110,000 filing jointly, you can’t claim it at all.

Let’s see how much that will reduce your 2007 tax payment. If you are in the 25% tax bracket, this deduction could be worth about (.25 X $800) $200.00. That could be a good start on a Roth IRA. See my post 16 Roth IRA Facts.

Quote from the IRS website –

“You may be able to treat mortgage insurance premiums you paid during 2007 as home mortgage interest. The mortgage insurance must be paid in connection with home acquisition debt, the mortgage insurance contract must have been issued after 2006, and you must have paid the premiums before 2008 for coverage in effect during 2007. You can deduct mortgage insurance premiums on Schedule A (Form 1040), line 13.

Limit on deduction. If your 2007 adjusted gross income on Form 1040, line 38 is more than $100,000 ($50,000 if your filing status is married filing separately), the amount of your mortgage insurance premiums that are otherwise deductible is reduced and may be eliminated. For more information, see Publication 936, Home Mortgage Interest Deduction“

I understand that some people are already getting confused about this, and they think that since they pay hazard insurance on the house, that it should be deductible as well. This is not the case. A typical homeowner’s insurance premium is not deductible. This new legislation applies only to PMI and only if the loan was made in 2007 or after.

We are not lawyers or tax authorities and we advise you, strongly, to consult your own tax professional, if you think this deduction applies to you.

Do you have comments about the PMI tax deduction? Leave a comment here so we can all benefit from your experience. If you liked this post, consider hitting the “Digg” button at the top and letting others know. I am trying to get more exposure for my blog and you can help me if you will. If you would like to link to this post on your own website, I would be glad to provide a reciprocal link on mine. Thanks for reading.

1. Contributions are made only on a non-deductible basis – the tax benefit is realized when funds are withdrawn because you pay no taxes on earnings. Great news!

2. Contribution limits are adjusted annually as follows:

The facts in here are for 2008.  Current limits change [...]]]> Important Facts About the Roth IRA

1. Contributions are made only on a non-deductible basis – the tax benefit is realized when funds are withdrawn because you pay no taxes on earnings. Great news!

2. Contribution limits are adjusted annually as follows:

The facts in here are for 2008.  Current limits change in each tax year .

3. The Roth IRA is only available to those whose income is below a certain level:

— Single filers with an income of up to $99,000 qualify for a full contribution; incomes of between $99,000-$114,000 qualify for partial contribution.

— Joint filers with an income of up to $156,000 qualify for a full contribution; incomes of between $156,000-$166,000 qualify for partial contribution.

— The numbers here change each year, so check IRS rules each year.

4. Contributions are permitted after age 70.5 as long as the individual or the individual’s spouse has earned income.

5. There is no requirement that withdrawals commence at age 70.5.

6. Contributions are not tax deductible but are not subject to federal income tax on withdrawal.

7. Earnings accumulate tax-deferred and may be withdrawn tax-free if:

* The withdrawal occurs more than five years after the individual first contributed to the Roth IRA; and

* The individual is at least 59.5 years old, disabled, dead, or the funds are used to purchase a first home.

8. The 10% premature distribution tax penalty for withdrawals of earnings before age 59.5 will be waived for qualified higher education expenses, first-time home purchases, disability, death and certain medical expenses.

9. Your eligibility to contribute to a Roth IRA is not dependent on whether you are covered by a retirement plan at work.

10. Dividends grow tax-free. Did I say Tax Free!!!

11. Tax-free distributions from the Roth IRA are permitted prior to age 59 for disability and/or first-time home purchases (up to a lifetime limit of $10,000), as long as the money has been in the account for five years.

12. Converting Traditional IRAs to a Roth IRA:

* You can convert your Traditional IRAs to a Roth IRA, using special rules developed by the IRS.

* Amounts in Traditional IRAs can be transferred to Roth IRAs provided the tax payer’s Adjusted Gross Income is $100,000 or less for the year in which the transfer is made.

* Part of the transferred amount is subject to income tax, but is exempt from IRS early withdrawal penalties.

13. Individuals can have both a traditional IRA and a Roth IRA, but they cannot contribute more than the combined maximum to these accounts (for example, in 2006 an individual age 49 or below may contribute a total of $4,000 to both IRA accounts, not $4,000 for each account). Individuals who are not eligible for deductible contributions to a traditional IRA or are not eligible for a Roth IRA may still make nondeductible contributions to a traditional IRA.

14. You can take your contributions out if you need to, without penalty.. You cannot remove any “earnings”, but contributions. So let’s say you put $20,000 in over a few years and decide you now need the money, you can remove the $20,000, but not any earnings that have accumulated. You see, you already paid tax on the contributions, so there is no penalty. Check with your personal tax adviser about this for the current laws.

15. You can use a Roth as a college fund for your kids. This works because you can withdraw all the contributions to pay for college expenses, and just let the earnings roll over. The earnings can be withdrawn penalty-free as long as the account has been open for five years, but you’ll still have to pay taxes. So if your son or daughter needs the money, it can be had. But if it is not needed — because they don’t go to college or because they got a scholarship — your retirement looks great! Good idea?

16. Use a Roth IRA as a home emergency fund. Why not, you can get the money you put in back any time, but the earnings in there would keep on compounding tax free. What a deal! ( this could backfire depending on market volatility of course)

Remember my recent post on it not being too late to contribute to a Roth IRA, the idea of saving on your taxes may not seem that important, but it really pays off. If a 25-year-old puts in $5,000 each year until he retires and makes an average annual return of 8% on his investment, he’ll have $1.4 million saved by the time he retires at age 65. And the money is all his, he won’t have to give the IRS a any of it if as long as he waits until retirement to take the earnings out.
If you have a question that you can’t find the answer to, email me and I will try to help. I may not know the answer, but I will try to help. I do enjoy helping people understand these things.

Email is mackgoodman@gmail.com

With any of this tax advice, you should check with a tax professional. I am only giving you my understanding of the tax rules. Always check with a professional for accurate tax advice and help.

What do you think? Leave a comment. We need to hear from you. Did we miss a critical point on Roth IRA’s? Let everyone know by leaving a comment.