Many people tell stories that they bought foreclosed houses at bargain prices.  A multitude of websites and infomercials claim that you can find foreclosures for pennies on the dollar.  It sounds too good to be true and in most cases it is.

It takes lots of investigation and determination before you can find a good deal on a foreclosed house.  Most foreclosed houses sell for only slightly below market value, and those that sell for much less are few and far between.  You have also to realize that there are certain risks when dealing with foreclosed properties.

Many foreclosures are not in very good condition and this is sometimes one of the reasons that foreclosures sell more cheaply.  The former owners almost certainly went through a time of financial hardship and that often results in a poorly maintained home.  The owner may even purposely cause damage to the home when he realizes that foreclosure is imminent.

Another reason that a foreclosed house may be offered at a lower price is because it is in a bad location.  Whether you’re planning to use the house as a residence or rent it out, location is important.  A house that is undesirably located will be more difficult to rent at a decent price, and living there could prove to be unbearable.

There are legal issues that the purchaser of a foreclosure may have to deal with as well.  If the previous owner still lives in the home, he will have to deal with eviction.  It is even possible that the lender may not have full ownership of the home, resulting in major legal woes.  Tax liabilities may be transferred to the new owner as well.

Foreclosed houses sold at auction pose their own unique risks.  Prospective buyers often do not get the opportunity to inspect the property for sale, so they have no indication of what condition it is in.  The full purchase price is often due in a matter of days, if not on the same day.  Buying foreclosures at auction is a risky proposition for the buyer and is usually not a good idea for first time homebuyers.

If you have the time and patience to actively look for good deals on foreclosures and the experience to know how to handle them once you’ve bought them, they can be worthwhile.  But they are usually not ideal for new homeowners.  There are many problems that can occur with them and a new homeowner does not need to be exposed to the risks involved.

Debit cards are linked to checking accounts.  They can be used as credit cards if they contain a Visa or MasterCard logo on them.  They don’t incur fees like a credit card does because they are backed by the amount of money in the account.  With that said, are debit cards as good a choice as they seem? Continue Reading

Have you noticed that it seems people with higher than average incomes pay less tax than those who are barely scraping by?  Well, Congress have noticed it, too.  The alternative minimum tax, or AMT, came about as a way of leveling the playing field.  This is an explanation of how it all breaks down for the taxpayer.

The alternative minimum tax is an extra tax.  Some people are required to pay this on top of their regular income.  The guidelines for figuring this tax are different than those used for the standard IRS calculation.  To determine if you have to pay this tax, compare your taxable income through the AMT calculations and the standard way.

The calculation to determine the alternative minimum tax is complex, but don’t worry about that.  Most tax preparation software can calculate the amount of taxable income using the AMT (alternative minimum tax ) guidelines for you, so it is easy to compare side by side with your normal taxable income.  If the amount of taxable income is lower with the standard calculation than with the AMT calculation, you don’t have to pay any extra taxes.  If the situation is the other way around, you will more than likely owe the government some money.

I can see that some people are already confused.  To make it easier, here’s an example.  The amount of your taxable income is $40,000.  When the amount of taxable income is calculated using the AMT guidelines, the amount is $30,000.  What this means is that according to the AMT guidelines you are going to be paying taxes based on a higher amount with the IRS calculation.  So there is no need to pay additional taxes.

On the other hand, let’s look at a reverse situation.  The amount of taxable income is $30,000 according to the standard calculation.  When the AMT guidelines are applied, the taxable income amount is $38,000.  Since AMT assesses your income at a higher amount than the standard, you may not be paying enough taxes.  So, you will have to pay taxes on the standard amount and the extra $8,000.

The system is designed to help out the little guy, but it is not perfect.  There are some kinks and anyone can be subject to the alternative minimum tax.  The alternative minimum tax calculations don’t allow for most of the deductions you are entitled to under the standard IRS calculation.

Unfortunately, for people with lots of itemized medical deductions and a high standard deduction, this could be a problem.  The government has instituted an alternative minimum tax exemption to fix this problem, but it is not a cure-all.  Taxpayers can calculate their taxes with and without itemization and compare the figures to AMT calculations to avoid any potential problems down the road.

The alternative minimum tax is not a concern for most people who make a medium salary.  It is targeted at those with very large incomes who use tax shelters and other devices to pay less in taxes than the ordinary working man.  Tax software can compute the AMT for you so put your mind at ease.

Well, it’s that time again — tax time.  It’s time to gather all of those rumpled receipts from the shoe box and straighten them out in order to get your tax refund faster.  Whether you are doing your own taxes or having the service performed by a professional, getting all of your papers in order beforehand will help.  Here are some tips to maximize your tax refund: Continue Reading

No matter how many people there may be in your family, your average family grocery bill can be one of the most expensive items you have to pay for. But with a little planning and some creativity, there are at least seven ways you can cut your spending at the grocery store. Continue Reading