by Patrick on October 19, 2009
The IRS recently released the 2010 Traditional and Roth IRA contribution limits, which will come in handy for those of you who like to start planning early. As expected, the 2010 Traditional and Roth IRA contribution limits remain the same as the 2009 Traditional and Roth IRA Contribution Limits. That is good information to have as it gives people time to start their financial planning for 2010.
2010 Traditional and Roth IRA Contribution Limits
The Traditional and Roth IRA contribution limits for 2010 are $5,000 for those under age 50. Persons age 50 and over can make additional catch up contributions of $1,000, for a total contribution limit of $6,000. You can have both a Roth IRA and a Traditional IRA in the same tax year, but you can’t exceed the contribution limit with your combined contributions to both accounts. Self-employed retirement plans may have different rules, so be sure to read up on the different self-employment tax plans or check with your accountant or financial advisor.
2010 IRA Contribution Limits
| Year |
AGE 49 & BELOW |
AGE 50 & ABOVE |
| 2002-2004 |
$3,000 |
$3,500 |
| 2005 |
$4,000 |
$4,500 |
| 2006-2007 |
$4,000 |
$5,000 |
| 2008 |
$5,000 |
$6,000 |
| 2009 |
$5,000 |
$6,000 |
| 2010 |
$5,000 |
$6,000 |
Traditional IRA Deductions and Roth IRA Phase outs
The IRS has specific rules regarding who can contribute to an IRA. Traditional IRAs and Roth IRAs base certain eligibility guidelines on the taxpayer’s Modified Adjusted Gross Income (MAGI), which is calculated when you file your taxes.
Traditional IRA Deductions.
Traditional IRA contributions are tax deductible if you make less than the IRS deductibility phase out level. Tax filers can deduct a lower portion of their Traditional IRA contribution starting at $55,000 and can no longer deduct any of their contribution when they earn $65,000 or more. The phase out range for married filing jointly is between $89,000 and $109,000.
Roth IRA phase out.
Like the Traditional IRA, the IRS has phase out rules for Roth IRAs. Tax filers will be able to contribute less to their Roth IRA when they have a MAGI above $105,000, or above $167,000 for married filing jointly (up $1,000 from last year). Single filers with a MAGI above $120,000 and married filing jointly with a MAGI above $176,000 are not eligible for Roth IRA contributions.
Making 2010 IRA contributions
You can still contribute to your 2009 IRA until April 15, 2010, and you can make IRA contributions for the 2010 tax year from January 2, 2010 and April 15, 2011. If you make an IRA contribution between January 2 and April 15th you should designate which tax year your contributions are for.
Here is more information about opening a Roth IRA account and the best places to open a Roth IRA.
by Patrick on October 18, 2009
I bought an iPod Touch last week and one of the first apps I downloaded from the iTunes store was the Amazon Kindle app, which allows you to sync your Amazon Kindle and your iPod Touch or iPhone. If you don’t have a Kindle, you can use your Touch or iPhone as a reader.
I borrow most of the books I read from the library, but there are times when I want to take a book with me when I travel, so this feature comes in handy. A kindle can also come in handy if you want to keep a book and reread it or use it for reference.
I wanted to try out the Kindle App on my iPod Touch, but I didn’t want to spend $10 on a book if I didn’t enjoy the reading experience (most best sellers are $9.99 at Amazon). So I looked for some free books to try it out. Most of the free books are older books where the copyright has expired, but there are some new books as well. I downloaded a couple collections of short stories and other books to try it out, and while reading a book on the iPod Touch is not the same as reading a paperback book, or even a Kindle because of the smaller screen, it is a convenient way of carrying around multiple books. I read a couple stories from the Adventures of Sherlock Holmes and downloaded the Bible for reference and I enjoyed it enough to download a few more books.
Free Books for the Amazon Kindle
You can download books for the Kindle from many places, but the most convenient location is from Amazon because you can order with one click and have it automatically uploaded to your Kindle, iPod, or iPhone the next time you have access to wi-fi service. The following list is of free Kindle books you can download directly from Amazon (Amazon features multiple selections for many of these authors).
A short selection of free classics on the Kindle:
And for the baseball fan:
Wow! Creating this list brought back memories of high school lit classes… Not sure if that is a good thing or not! There are hundreds of more free books for the Kindle, especially if you are willing to search from a site other than Amazon.com. There are thousands of books that only cost a dollar or two, so you can create an impressive library with a small amount of money.
Other places to get free books for the Kindle.
Again, I listed these books from Amazon because you can download it almost instantly to your Kindle, iPod Touch, or iPhone the next time you sign on. You will need to manually upload books from other sources. Some other great places to find free books that are compatible with the Kindle include Project Gutenberg (nearly 30,000 free titles), FreeKindleBooks.org, Fictionwise (A Barnes & Noble company, 43 titles),
recommended articles and carnivals
by Patrick on October 16, 2009
I got my first iPod yesterday. Oh I know, it’s only been like what, 43 years since the initial launch of the iPod? I can’t say there is one reason why I never joined the revolution… I just never felt the need to take music with me everywhere I went.
But then Apple launched the iPod Touch. At first I didn’t think anything of it. I didn’t want an iPod, so why would I want the Touch? Then my friend got one, and another friend showed me his iPhone. Suddenly, the iPod had a lot more appeal. It wasn’t just about the music anymore, it was the music, the apps, the games, the cool touch screen, etc. Still, I didn’t need one. So I decided to wait.
The Early Adopters Tax
The iPod Touch was launched 2 years ago in two configurations — 8GB and 16GB, which were priced at $299 and $399 respectively. At the time there were few apps and little more than the promise of being a little cooler and more intuitive than the traditional iPod. But as time went on the technology improved, the price dropped, more developers created apps for the iPhone and iPod Touch, and it became a lot more appealing.
Today you can buy an iPod Touch from the Apple Store in 3 configurations: 8GB for $199, 32 GB for $299, and 64 GB for $399. Or, you can save on those prices and purchase an Apple-Certified Refurbished iPod, which is what I did. The current refurbished prices are $50 less on each model and they come with the full Apple Warranty. Mine came out of the box looking brand new. The only difference I could tell was the brown box it was shipped in vs. the standard glossy box, and I didn’t have the option of having my iPod engraved, which you can do for free if you purchase it through the Apple Store.
It was worth the wait
I’m not the kind of person who needs the latest gadgets. I don’t enjoy constant upgrading, tinkering, and tweaking, and I don’t want to buy something when it launches, only to see the performance double and the price drop by half in the first year. But I understand why some people do, and that’s cool too. Early adopters spur the industry and lead to the development of new and cheaper technology. It comes with a price though, which is often known as the early adopters tax… and it’s something I try to avoid.
Thoughts on the iPod Touch
First off, I can say this was definitely worth the wait and now I understand what all the fuss is about! The functionality is intuitive, the apps are great, and it’s just plain fun. I’ve already downloaded apps from the iTunes Store, including the Kindle Reader, Stick Wars, and a couple other games and tools. I look forward to getting a lot of use out of my iPod Touch. But of course, new technology leads to a new dilemma…. now I want an iPhone! But I’m not getting one… yet.
Why I am not getting an iPhone
I plan on skipping the iPhone for now. It’s basically an iPod touch with a built in phone, and I know it is much more convenient to carry one multi-purpose tool around instead of a phone and an iPod (especially if you don’t have available wi-fi for the iPod). But I just can’t justify getting the iPhone right now.
I currently have a great deal with the Sprint SERO plan and I have no desire to break my contract and pay early termination fees. My entire immediate family is on Sprint, so I would also lose out on free mobile to mobile minutes. Signing up for the iPhone would cost me close to $100 per month for the phone and data plan, plus early termination fees, and I would be charged for my minutes when talking to family. At this point I just can’t justify giving up my $35 per month plan for a cool phone. So I’ll wait until the iPhone moves to other carriers and then I’ll see how things shake out. I’m not closing the door on it for good. I’m just waiting until the time is right.
by Patrick on October 15, 2009
Intuit recently released Quicken 2010, the newest version of their popular desktop money management software. Quicken 2010 has a new interface designed to be sleeker and easier to navigate. The home page features a snapshot view of the user’s spending, pending bills, and current savings – basically everything you need to get a quick understanding of your current state of affairs.
Recent Changes with Intuit and Quicken
Quicken has received a lot of press this year as they joined forces with 2 major competitors. Not long ago, Intuit agreed to purchase Mint.com, an online money management program that is a direct competitor to Quicken Online. Intuit maintains that the two operations will continue as is for the time being. Intuit also received a boost when Microsoft shut down Microsoft Money, their main competitor in the desktop money management software niche. Microsoft worked with Intuit to ensure their customers would have an easy way to import MS Money data into Quicken 2010 so their long term customers wouldn’t lose their historical financial data.
Quicken 2010 Review
Quicken 2010 features many of the same capabilities Quicken users are already familiar with, but they enhanced it with a new layout, easier to use navigation tools, and several other new and improved features.
Quicken 2010 features:
- Total financial snapshot. With Quicken you can track all your accounts including online bank accounts, brokerage accounts, investment accounts, personal property, real estate, vehicles, and more. It’s a great tool to use to calculate your net worth and track your financial picture over time.
- Budget setting. Use Quicken to track your spending and create a budget based on your actual income and expenses. (See how Quicken compares to You Need A Budget Pro as a money management tool.)
- Set financial goals. Quicken has a goal setting feature that can run calculations based on hypothetical situations. It’s a good way to get a rough idea of how much you need to save for retirement or other financial goals.
- Tax planning. Intuit is the parent company for both Quicken and TurboTax, which makes it easy to export your data directly to TurboTax for fast and accurate tax preparation.
- Track and manage investments. Quicken 2010 features the ability to track investments, analyze your portfolio’s asset allocation, track investments for cost basis, estimate capital gains, and view your portfolio value over time.
- Other features: “What If I Buy or Sell” calculators, Capital Gains Snapshots, and Investment Tracker tools.
New or improved in Quicken 2010:
- Import Microsoft Money Data into Quicken. Many diehard Microsoft Money fans were disappointed when Microsoft pulled the plug on MS Money earlier this year. But now there is an import function to import your MS Money data directly into Quicken so you can maintain your past history and current tracking. If you decide you need less tracking capabilities or don’t want to go through the import process, there are a host of other options including these free online money management tools. You can get more information on importing MS Money from this pdf.
- Faster and easier setup. Quicken 2010 features a simple three-step setup guide that walks you through the set up process to connect to your online account, set up bill reminders, creating savings goals, track investments, and more.
- Improved automatic categorization. Transactions are automatically categorized when imported into quicken, which makes it faster to track your spending and earnings and minimize your time working within Quicken. There are preset categories and you can create custom categories allowing you to track your spending how you want to track it.
- Bill reminders and financial calendar. You can schedule bills to be on a certain day of the month and set up notifications for other important financial matters. This makes it easier to forecast expenses and plan your spending to last through the month – helping you avoid overdraft fees and penalties.
Check out this video for more information about Quicken 2010:
Get Quicken WillMaker FREE – $69.99 value
Quicken is celebrating their 25th anniversary by offering Quicken WillMaker FREE with the purchase of Quicken 2010 Deluxe, Premier, Home & Business and Rental Property Manager. This is a limited time promotion that expires on November 1, 2009. Quicken WillMaker will be added to your cart at checkout.
For more information, or to purchase Quicken 2010, visit http://quicken.intuit.com/.
by Patrick on October 14, 2009
The Credit CARD Act of 2009 is only a few months away and credit card companies are already raising rates and changing credit card terms in anticipation of more strict credit card regulations. You may have already seen changes to your credit card terms even though the Credit CARD Act won’t officially go into effect until February, or possibly as soon as December. I know I have already received new terms for the majority of my credit cards. The changes won’t affect me very much since I pay my cards in full each month, but if you carry credit card debt, then raised interest rates or other changes to your credit card terms may have a big affect on your bottom line.
Here is a reader question concerning new credit card terms and raised interest rates:
We currently have roughly $10,000 on a Citibank Driver’s Edge card, which is the oldest card on my credit history – it’s the one I’ve had since I was a freshman in college. We have an additional $10,000 spread evenly across a Discover Card (15.24%) and Chase Flexible Rewards Card (19.8%). We’re in the process of furiously debt snowballing / snowflaking to get rid of the Chase balance first, followed by the Discover, and then the Citi balance. We’ve taken the step of facing our consumer debt and are meeting the challenge head on.
Unfortunately, I just received a notice that my Citibank card is going from a fixed 6.18% rate to a VARIABLE one where it’s going to be prime + 14.99%. I can opt out and close the card; my expiration date is April 2011. I have already tried transferring some of the balance from the Discover / Chase cards to the Citibak card, but Citibank tells me that there are no available balance transfer offers for that account. I’m sure it’s tied to the super low fixed interest rate.
My husband and I currently own our home and may be looking for a used car in the next year to two years. We have a slight emergency fund built (less than $2,000) but I’m hesitant to tap into it in case we need to repair our older model cars or we have a medical emergency since we maxed out our FSA when our child was born.
My question is this: Should I opt out of the Citibank card and continue to pay it off at the 6.18% (estimated to pay it off completely in July 2013 at the current interest rate after paying the Chase/Discover down first) -OR- should we keep that card because I’ve had it the longest so as not to impact our credit score?
What to do about increased credit card interest rates
Thanks for the question. I think you are doing the right thing by snowballing your credit card debt – the sooner you eliminate one card, the easier it is to make big progress on your other cards. The psychological advantages of eliminating one credit card from your debt is also a big victory and can provide a motivating factor to eliminate the rest of your debt.
Here is some information that may be helpful. As always, check with a financial planner before making any major financial decisions.
Stop using your credit cards. Any new charges you make on your credit cards adds additional time to your debt repayment schedule and makes it more difficult to repay your credit card debt. Work on a cash only system and use your emergency fund for unexpected expenses.
Emergency fund. A $2,000 emergency fund is a great start, and it is better utilized for emergencies than for paying down your debt. As you mentioned, there is a possibility your emergency fund may be needed in the near future. Using your emergency fund to eliminate a small amount of credit card debt increases the likelihood that you will need to use your credit cards for any unexpected expenses.
0% Balance Transfer Credit Cards. Some credit card companies offer a 0% introductory rate for new customers. It sounds like the issue you ran into came when you tried to transfer a balance to your current cards, but that wouldn’t apply to you if you open a new credit card. Even if you do not qualify for a 0% balance transfer on a new credit card, you may be able to transfer your balance to a card with a lower fixed rate. Here is more information about how to do a 0% balance transfer and a list of the best balance transfer cards.
Negotiate with your other credit card companies. Credit card companies are a little less likely to budge on their interest rates compared to a year ago, but it never hurts to try. You may be able to negotiate a lower rate, or get your variable rate card moved to a fixed rate credit card.
Closing credit card accounts can affect your credit score. Another option is one that you brought up in your question. Closing your credit card will lock in your current fixed rate, but it could have an affect on your credit score. Your credit score is made up of several factors, two of which are available credit and age of credit. Closing your Citibank card would affect you on both accounts because it is your oldest card and because it has your highest balance. Your score would probably drop, though I can’t venture to say by how much. Here is more information about how canceling credit cards can affect your credit score.
Should you opt out of the Citibank Card?
This is a difficult decision to make, and one that I can’t make for you. If you think you may need a loan in the near future, then maintaining a higher credit score will be important. If that is the case, then applying for a new credit card with a 0% balance transfer offer could save you money, allow you to keep your old card, and help maintain your credit score. If you don’t think you will need a loan in the near future or maintaining your credit score is not a major concern in the near term, then canceling your card and keeping the low interest rate may be a good option.
I wish you luck with whichever decision you make, and I hope you will continue using the debt snowball to eliminate your credit card debt.
