All posts by TL Wall

I'm the owner of TL Wall Accounting, located in North Syracuse, NY
Managing Money

How To Determine Whether Something Is A Scam

Last year we wrote a post titled 4 Scams Looking To Take Your Money. At that time, there were some specific types of scams going around that we wanted to alert people to.

This time around, we thought we’d indicate some ways that you might be able to figure out whether something is a scam or not.

Thousands of people fall for scams every year. Many of them get away relatively unscathed, but some people have been scammed for hundreds of thousands of dollars. If you really get scammed, even a lawyer might not be able to get you out of trouble. That’s because sometimes these people are elusive and hard to find. Also, sometimes it’s the person’s fault for not reading a contract before signing it.

We’re going to help you out. These things should seem like common sense but, sometimes, they’re not.

1. If you get a check in the mail and it’s not from anyone you know, it’s not a real check. Many times it’s an advertisement for something; just rip it up and don’t look back because they’re trying to trick you.

2. If you get an offer in the mail for a drastically large loan or line of credit and it’s not your bank, rip it up and immediately throw it away. No one ever gets that high loan and, if you check the fine print, you’ll see the interest rates can be pretty high. It’s not worth your time to even look at them.

3. We’re mentioning this one because, even though it’s the oldest type of scam on the internet, people are still falling for it.

If you get email from someone who doesn’t mention you by name and tells you that a relative has left you money but doesn’t tell you who the relative is, it’s a scam. If you receive email telling you that you’ve won a lottery, it’s a scam. Actually, any email you get from someone you don’t know is a scam; just ignore it.

4. While we’re at it you need to be wary of email you get from entities you know. There are a lot of emails sent out from banks and sometimes it looks like your bank is sending you something. Almost no banks are ever going to offer you potential loans or credit cards via email, though it can happen here and there.

A way to find out if it’s a scam or not is to copy the link the site gives you and paste it into your browser without having it go to the site. The reason you do this is to see if the initial link is actually going to your website or to a different site. For instance, if you do online banking at Chase, the link might begin http://www.chase.com. If it’s a scam email from Chase it’ll begin with http://www.somethingelse.com/chase; they’ll leave “chase” in there because many people won’t pick up on it but now you know.

These are just a few more things to help you avoid being cheated out of your money. We hope they’re helpful.
 

Finances

Lower Interest Rates Aren’t Always The Best Option

If you’ve ever gone for a credit card you know that the biggest thing you’re looking at is the interest rate. Many cards will offer you an introductory period of free credit if you move a balance over to their card. If you pay it off then you owe only what you got, but once you reach a certain period now you start having interest added to it.

Still, this seems like a good deal, but you’re still shopping for the lowest interest rate card you can. At least with credit cards this is a smart move.

However, this yearn for the lowest interest rate isn’t the same when you look at other things. For instance, when you go for a car loan or a home loan, depending on your circumstances, it might be more prudent to go for the higher interest rate sometimes.

Does that seem unbelievable? Let’s take a look at an example.

Say you go to a car dealership to buy a new car. Before you went there you went to your bank and they said they’d give you a rate of 3.5%. That sounds pretty low so now you’re at the dealership, trying to see what they have to offer you.

They go back, crunch some numbers, and come back at you with a counter offer. You look at it and say “Hey, this interest rate is higher than the one the bank is giving me. This means their deal is better.”

The car person says “Yes, our rate is 4.25%, but we’re willing to give you an instant rebate of $2,500 up front and set the payments up over the course of 5 years. With our deal, you’ll pay less than you will if you take the bank’s deal.”

Does this sound kosher?

Actually, it is. The reason it ends up working better is because of the way interest is calculated. For most car loans, it’s calculated daily, but it’s based on the initial amount you’re starting out with.

Since the numbers will look convoluted if we actually show a daily interest calculation, let’s look at this a different way.

Even though interest is calculated daily, the percentage is actually an annual, or yearly, percentage rate. Thus, at the end of the year the rates have to equal either 3.5% or 4.25%. However, each month, after you make a payment, the amount you actually owe keeps getting lower, no matter what the interest rate is.

What we’re going to do is divide each percentage by 12. If we take these two numbers, 3.5% becomes .08625 and 4.25% becomes .086875. Those are pretty close, aren’t they?

Next, we look at the two deals we have. From your bank, the .08625 goes against $10,000, whereas the .08675 goes against $7,500. This means that on the first amount, without a payment, the amount of interest accrued is about $8.62; on the second amount, the interest accrual was $8.69. It’s higher but negligible.

At that rate is would take decades before there would be some kind of balance equality. However, your car loan is only going for 5 years in this instance; even if it was over 6 years, you end up with a lower payment and less to pay because more was put down on the car ahead of time via the rebate.

It’s for this reason that, when you’re looking to buy a new house, everyone recommends you find a way to put down as much money up front as you can. It lowers the amount you’ll have to pay monthly, the amount you’ll end up paying in full, and gives you the potential to pay it off quicker.

If you get an offer where the seller is looking to give you something like $10,000 off the cost of the house but the interest rate is slightly higher, it could be the better deal overall, even with a 30-year mortgage.

Of course, you’ll always want someone representing your interest to put the numbers together to make sure you’re protected from higher payments. But don’t immediately dismiss a higher interest rate if someone is willing to pony up a bit of money on your behalf.
 

Health Care

Have You Purchased Health Care Coverage Yet?

There are more than 11 million people who have signed up for insurance through the government’s health exchange, also known as the Affordable Care Act. At this point in time more people have insurance coverage than ever before in the history of this country.

For those that don’t have coverage though, time is about to run out. We did a post on things to know about the ACA last year. What we didn’t cover in that article is the time frame that you need to have insurance coverage so you can avoid the penalty.

Basically, the law says that if you’re not covered for more than 3 consecutive months, you might have to pay a penalty. Last year it was 2 months, but they gave you until May to sign up for insurance coverage. You’re totally exempt if your income is below your tax filing threshold or if you were denied Medicaid coverage. You’re also exempt if coverage would cost more than 8% per person in your household.

Unfortunately, the open enrollment period is now over, but there is a special enrollment period that lasts through the end of April if you qualify for it. If you just forgot or had problems filling out the paperwork, it can’t hurt to check this out.

By the way, you need to remember that the penalties are added to your income, not how much you actually have to pay. As an example, if your income was $30,000 and you got hit with a 2% family penalty, it would mean your total tax would be based on $30,600. Maybe… because the penalty is the “greater” fee between 2% or $325 per adult and $162.50 per child. At least the maximum for a family is only $925.

Still, it’s always better to have insurance if you can afford it. Even with the high deductible plans, you’ll find that you’ll get some discounts on medical services that will help reduce your out of pocket costs. True, it’s a monthly bill that might cost you between $350 and $500 (depending on your state), but if you have kids it could save you money in the long run (and you might qualify for a discount if you have problems paying the premium based on your income). It’s at least worth exploring.
 

Tax Preparation

Anxiety At Tax Time

I don’t know many people who don’t get some kind of anxiety at tax time. Whether you think you have money coming back to you or whether you think (or know), you’re going to owe money, it’s a tough time of the year when you know it’s filing time.

Did you know it’s estimated that around 8 million people a year don’t file their taxes, either on time or at all? That’s a fantastic figure, and it’s estimated to cost the government $83 billion a year. Think about it; this includes people who are getting money back.

Why don’t people do their taxes? The figure isn’t all that high for those who don’t believe in the tax system, the ones who believe the government doesn’t have the right to tax them.

The top two things are people just forget about it and people are scared because they feel they’re going to owe and won’t have the money to pay for it. Since both of these are common but only one of them is something we can help you with, we’re going to talk about the second issue.

Here’s a dose of reality for you; it’s always better to know. Even if you think you owe, you need to know what it is because that’s the only way you can possibly do something about it. As we wrote 2 years ago, the IRS will work with you to help you pay back your taxes. Depending on how much you owe, you could end up paying them as little as $25 a month if that’s all you can afford. It always depends on your circumstances, but they’re willing to work with you.

Going to an accountant for tax help might be better than going to a tax service. One of our client’s wives was told that she owed almost $4,500 in taxes because she’d worked a part time job that didn’t take much in taxes out. By coming to us, we were able to combine her and her husband’s taxes (they’d filed separately because he worked independently) they were able to bring the combined liability down to under $500.

It’s not that accountants are doing sneaky things to keep their clients from paying their taxes. It’s that they know some things even tax preparers might not know. Often tax preparers are temporary workers who go through a class, pass a test and man a table during tax season. It’s hard to compare that to someone who’s literally doing tax work all year long.

Don’t sit home scared of finding out if you’re going to owe something to the IRS or not. Go see a professional and take a major step forward in controlling your life.
 

Managing Money

How To Evaluate Which Charities Are Real Or Not

Last May we posted an article titled 4 Scams Looking To Take Your Money. We identified one that, on the surface of things, always sounds legitimate but isn’t.

The problem with all the phone calls we get from this or that charity is that many of them are legitimate charities trying to raise money for whatever their purpose is. That’s why it’s so easy for us to be scammed. No matter what the rest of the world thinks about Americans, overall we’re probably one of the most generous countries in the world when it comes to donating our money to good causes.

Few of us are rich enough to give the kind of money all these charities want. We certainly don’t want our money going to fake charities, or charities that don’t really do what we hope they’re doing with the money. In that vein, we’re making some recommendations of what you should do when you’re not sure whether a charity is real or not.

The first thing is recognizing the name of an organization. Ever hear of the American Heart Association? What about the American Heart Foundation? The first is real; the second isn’t. However, when you’re on the phone, sometimes the person on the other line can make it seem like it’s the same thing. If you’re unsure of what you heard ask them to repeat it. If it sounds fake, tell them you’re uncomfortable giving our your credit card information over the phone and ask them for a link you can visit online to donate.

The second recommendation is to tell them you need to verify who they are and see if they can call you the next day. Most of them will hang up. Some of them will try to push you into foregoing all of that and making a payment anyway before they hang up. For the few that are willing to do so, check them out online, but while you’re at it also make sure you put into your search engine their name followed by “review”. Some sites can look really good, making you think they’re legitimate, but reading reviews will help to tell you whether they are or not.

The third recommendation, even if you know the organization but not the person you’re talking to, is to ask if you can pay them online. Not only is that still more secure (although some people are still scared putting their information online like that, it’s actually much safer than it used to be), but you’ll then have an opportunity to do a further search to see just how much of that money goes to the charity and how much of it is eaten up in administrative costs.

The final recommendation… look at this list. It highlights the 50 worst charities to give money to, and was put together by the Tampa Bay Times and The Center for Investigative Reporting. Some of these are legitimate but their administrative costs leaves them little to use for the purposes you’re giving. You’re probably better off giving to a local organization, which uses the money the way you hope it will.