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Archives For February 2010

$20 Cash Giveaway (Sorry – This Giveaway Is Over!)

Corey —  February 26, 2010

       After 9 months and over 200 posts, Provident Planning has had 20,000 visitors! To celebrate, I’m giving away $20 in cash to you, my readers. Without you, I wouldn’t have gotten this far. Thank you so much!

       Since this isn’t a huge giveaway, I’m not going to make it difficult for you to enter. But I’d also like to get some feedback from you. So here’s what you can do to enter:

  1. Fill out the form at the end of this post. – 3 entries

    2.  

  2. Tweet about this giveaway. Your tweet should say “$20 Giveaway at Provident Planning – @providentplan”. (The link points to this post.) – 2 entries

    3.  

  3. Include a link to this giveaway in a blog post. If your blog doesn’t send pings or trackbacks, make sure you email me (paul@providentplan.com) with a link to your post so it will get counted. – 3 entries

       You can only do each of those things once, but you can do all three of them to get a total of 8 entries in this giveaway. Duplicate entries will not be counted (e.g., you fill out the feedback form below more than once).

       All entries must be made by 5:00 P.M. Eastern Time on Monday, March 1, 2010. The winner will be chosen through a random drawing using the integer generator on random.org. I’ll update this post on Monday evening to announce the winner. The winner will also be contacted by e-mail to receive the $20 cash via PayPal, so be sure you use a valid e-mail address in the form below. If the winner is via a Twitter entry, I’ll send a direct message to get your e-mail address. The winner must respond by 9:00 PM Eastern Time on Wednesday, March 3rd, or I’ll select another winner. If you have any questions, let me know in the comments!

And the Winner Is…

       With only three entries, everyone’s odds of winning were quite good. But congratulations are due to Donna! She won the random drawing, so I’ll be emailing her to confirm. If she doesn’t reply by 9:00 PM EST on Wednesday, March 3rd, then I’ll select another winner through a random drawing. Thanks to everyone who participated (all three of you!), and make sure you enter the next giveaway. If I keep getting so few entries, you have great chances to win!!! 😛

In Miscellaneous
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Lower Your Taxes: Claim All Eligible Dependents

Corey —  February 25, 2010

Uncle Sam says,        Making sure you claim all of your eligible dependents is an easy way to lower your taxes. Each dependent you claim will increase the total amount of exemptions you can apply to your tax return (a benefit of $3,650 per person for the 2009 tax year). Additionally, the number or type of dependents you can claim will affect your eligibility for certain tax credits. It’s also important to make sure you’re not claiming ineligible people as your dependents so you don’t get in trouble with the IRS. Here’s what you need to know:

Who Are Dependents?

       Dependents are either a qualifying child or qualifying relative who depend on you, the taxpayer, for at least 50% of their support (among other qualifications). The key phrase is “qualifying”, which means that they qualify according to the IRS definition – not yours. Just because someone lives with you doesn’t mean they’re automatically your dependent. There are specific requirements they must meet before you can claim them as a dependent on your tax return.

       While the requirements for a qualifying child and qualifying relative are similar, there are some tests that are specific to each type of dependent. We’ll look at the tests for a qualifying child first, and then we’ll look at the tests for a qualifying relative. This can get a bit complicated, so I’ll try to keep it simple and link to IRS resources for the exceptions.

What Are the Tests for a Qualifying Child?

       Use this series of questions to determine if a person can be considered a qualifying child for your tax return.

  1. Was the person younger than you or permanently and totally disabled?
     
    If YES, go to question #2. If NO, go down to the tests for a qualifying relative.

    2.  

  2. Was the person your son, daughter, stepchild, adopted child, eligible foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of those?
     
    If YES, go to question #3. If NO, go down to the tests for a qualifying relative.

    3.  

  3. Was the person under age 19 at the end of the year? OR Was the person under age 24 at the end of the year and a full-time student for some part of each of five months during the year? OR Was the person permanently and totally disabled (regardless of age)?
     
    If YES, go to question #4. If NO, go down to the tests for a qualifying relative.

    4.  

  4. Did the person provide over half of their own support for the year? Click here to read through the IRS definition of support.
     
    If NO, go to question #5. If YES, you can’t claim this person as your dependent.

    5.  

  5. Did the person live with you as a member of your household for more than half of the year? Note: There are special exceptions for kidnapped children, children that were born or died during the year, certain temporary absences, and children of divorced, separated, or never married parents. Click here to read about the exceptions.
     
    If YES, go to question #6. If NO, you can’t claim this person as your dependent.

    6.  

  6. Was the person a U.S. citizen, U.S. national, or a resident of the U.S., Canada, or Mexico?
     
    If YES, go to question #7. If NO, you can’t claim this person as your dependent. Answer YES if you are a U.S. citizen or national and your adopted child lived with you as a member of your household for the year.

    7.  

  7. Was the person considered legally married as of the end of the year (December 31)?
     
    If YES, go to question #8. If NO, go to question #9.

    8.  

  8. Is the person filing a joint tax return for this year?
     
    If NO, go to question #9. If YES, you can’t claim this person as a dependent. You can answer NO if the person is filing a joint return to claim a refund and no tax liability would have existed for either spouse if they had filed separate returns.

    9.  

  9. Is the person a qualifying child of any other person?
     
    If NO, go to question #10. If YES, you can’t claim this person as a dependent unless you are the person entitled to claim the person as a qualifying child (read the IRS guidelines for the special test for a qualifying child of more than one person – you’ll have to scroll down to it).

    10.  

  10. Can you or your spouse (if filing jointly) be claimed as a dependent on someone else’s tax return this year? Note: This applies even if the person chooses not to claim you. You must answer YES if they have the option to claim you (or your spouse) as a dependent.
     
    If NO, you can claim this person as your dependent. If YES, you can’t claim anyone as your dependent – no exceptions.

Well that was fun! Now let’s look at the tests for a qualifying relative.

What Are the Tests for a Qualifying Relative?

       Use this series of questions to determine if a person can be considered a qualifying relative for your tax return.

  1. Is the person your qualifying child or the qualifying child of anyone else?
     
    If NO, go to question #2. If YES, this person is not your qualifying relative (you should go back up to the tests for a qualifying child).

    2.  

  2. Is the person your son, daughter, adopted child, foster child, or a descendant of any of those? OR Is the person your brother, sister, or a son or daughter of either of them? OR Is the person your father, mother, or an ancestor or sibling of either of them? OR Is the person your half brother, half sister, stepbrother, stepsister, stepfather, stepmother, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law?
     
    If NO, go to question #3. If YES, go to question #4. Note: None of the relatives listed in this question have to live with you in order to qualify as your dependent.

    3.  

  3. Was the person any other person (besides your spouse) who lived with you all year as a member of your household? Note: There are special exceptions for kidnapped children, children that were born or died during the year, certain temporary absences, and children of divorced, separated, or never married parents. Click here to read about the exceptions.
     
    If NO, you can’t claim this person as your dependent. If YES, go to question #4. Note: A person doesn’t meet this test if at any time during the year your relationship with that person violates local law.

    4.  

  4. Was the person a U.S. citizen, U.S. national, or a resident of the U.S., Canada, or Mexico?
     
    If YES, go to question #5. If NO, you can’t claim this person as your dependent. Answer YES if you are a U.S. citizen or national and your adopted child lived with you as a member of your household for the year.

    5.  

  5. Did the person have gross taxable income of less than $3,650 in 2009?
     
    If YES, go to question #6. If NO, you can’t claim this person as your dependent.

    6.  

  6. Did you provide more than half of the person’s total support for the year? Click here to read through the IRS definition of support.
     
    If YES, go to question #11. If NO, go to question #7.

    7.  

  7. Did another person provide more than half of the person’s total support for the year?
     
    If NO, go to question #8. If YES, you can’t claim this person as your dependent.

    8.  

  8. Did two or more people together provide more than half of the person’s total support?
     
    If YES, go to question #9. If NO, you can’t claim this person as your dependent.

    9.  

  9. Did you provide more than 10% of the person’s total support for the year?
     
    If YES, go to question #10. If NO, you can’t claim this person as your dependent.

    10.  

  10. Did the other person(s) providing more than 10% of the person’s total support for the year provide you with a signed statement (Form 2120 – Multiple Support Declaration) agreeing not to claim the exemption?
     
    If YES, go to question #11. If NO, you can’t claim this person as your dependent.

    11.  

  11. Was the person considered legally married as of the end of the year (December 31)?
     
    If YES, go to question #12. If NO, go to question #13.

    12.  

  12. Is the person filing a joint tax return for this year?
     
    If NO, go to question #13. If YES, you can’t claim this person as a dependent. You can answer NO if the person is filing a joint return to claim a refund and no tax liability would have existed for either spouse if they had filed separate returns.

    13.  

  13. Can you or your spouse (if filing jointly) be claimed as a dependent on someone else’s tax return this year? Note: This applies even if the person chooses not to claim you. You must answer YES if they have the option to claim you (or your spouse) as a dependent.
     
    If NO, you can claim this person as your dependent. If YES, you can’t claim anyone as your dependent – no exceptions.

       That covers all the tests for a qualifying child or qualifying relative. I can’t say that was particularly fun for me, and I’m sure it wasn’t for you. But like I said before, it’s important to make sure you’re claiming all the people you can and only those people you’re allowed to claim. If you have any questions, leave them in the comments and I’ll do my best to help you!

More Free Tax Saving Tips!

       If you want to learn more ways to (legally) reduce your taxes, sign up for free updates to Provident Planning. It’ll only cost you a minute of your time, but you might just learn how to save yourself hundreds or thousands of dollars!

In Taxes
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Fresh-baked Yeast Bread with Only 10 Minutes of Work

Corey —  February 24, 2010

Yummy Bread!       Few foods can top the smell or taste of freshly baked bread. But making it yourself is often time-consuming and requires skill if you don’t have a bread machine. And most of us don’t have a local bakery where we can pick up delicious bread at any time. Enter Blitz Bread – an easy recipe for a focaccia bread that takes 10 minutes or less of hands-on time. With this recipe, you can go from the mixing bowl to the table in less than two hours. And did I mention you don’t even have to knead it?! Just a good stand mixer will do.

       I’m not going to reprint the recipe here. You should go the the Blitz Bread recipe page to get it. But I’ll share some notes with you after making it myself.

       You’ll find a lot of helpful hints, pictures, and ideas on this page. Here are my tips:

  • The recipe calls for 1 tablespoon of instant yeast. If you only have active dry yeast, use two packets (or 4 1/2 teaspoons) and make sure you proof it first. Proofing just means that you dissolve the yeast in some of the warm water that you’ll be using for the recipe along with a little flour. Give it 10 minutes and see if it’s bubbly. If not, throw it out and use some different yeast (because the stuff you had is dead).

    •  

  • You can substitute your own flavors for the optional ingredients of pizza dough flavor, cheese powder, and pizza seasoning. For example, I made a rosemary garlic parmesan focaccia bread with 1 tablespoon of garlic powder, 1 tablespoon of rosemary leaves, and 1/4 cup of grated parmesan in the batter. I topped it before baking with a drizzle of olive oil and a sprinkling of rosemary leaves, parmesan, and kosher salt. But this is a versatile recipe, so try your own combination if you want. Next on my list is a sun-dried tomato and basil combination.

    •  

  • Make sure you have a good mixer, because this is a tough dough to mix. It’ll kill your little wimpy hand mixer in no time, and I wouldn’t want to mix it by hand. It bogged down our KitchenAid Artisan mixer, which is pretty heavy duty.

    •  

  • Make sure you give your pan a good coating of vegetable oil spray or shortening before you drizzle olive oil in the bottom. I didn’t spray enough and it stuck a little on me. I was still able to save the loaf intact though.

    •  

  • Expect the dough to be very sticky. It’s normal. Just put some oil or spray on your hands before putting it in the pan or poking it prior to baking.

    •  

  • Make sure you turn the bread out of the pan five minutes after you bring it out of the oven. If you don’t, the bottom will get soggy.

    •  

  • It makes great sandwiches! (But it’s good by itself, too!)

       I really want to encourage you to try this recipe – especially if you’ve never baked bread before or if you’ve always had problems baking bread. It’s extremely delicious, extremely easy, and hard to mess up. It doesn’t take much time either, and I’m sure you’ll enjoy the results.

       Try it out for yourself and let me know how it turned out for you! I’m especially interested in different flavor combinations, so let me know if you’ve got some good ideas.

In Cooking & Recipes
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What Are the Real Odds of Becoming Disabled?

Corey —  February 23, 2010

       According to insurance companies and their agents, you have an 80 percent chance of becoming disabled during your working years. I’m not sure about you, but that statistic just doesn’t mesh with my experience in life and the experience of people I know.

       Ron Lieber, author of the Your Money section of the New York Times, has a great article about the true odds of becoming disabled. I can’t do a better job than him in sharing the info he learned, so I recommend you check it out for yourself. I also want to share a link to a graph in the article because I want you to see it.

       I found this article from The Oblivious Investor who wrote about it on Twitter.

       What do you think about the true odds of becoming disabled and your need for disability insurance? Let me know in the comments.

In Insurance
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Raising a Cow for Beef: Month 6

Corey —  February 22, 2010

       Last month, I posted an update about how my wife and I are raising a cow for beef. This is a summary of our activity and costs for month 6. As always, let’s first check Bambi’s growth. Here he is at five months old:

Paul & Bambi - 5 Months Old

       And here he is today at 6 months old:

Bambi - 6 Months Old

       It might be hard to tell, but Bambi is still growing steadily. He should be somewhere between 300 and 400 pounds. (I can’t weigh him to know for sure.)

Costs & Time

       Again, there haven’t been any huge changes in the amount of time it takes to care for him. It’s pretty easy right now.

       We didn’t spend much money this month because I had stocked up before we left for Haiti in mid-January. We only needed to buy a little medicine. (You’ll find out why in a minute.) We’ll have to spend a bit next month to buy more feed and hay. Here are our costs for this past month:

  • Medicine – $5.00

    •        

  • Total Spent this Month – $5.00

    •        

  • Time – 7 hours

       And here are our total costs over the past six months:

  • Cost of Bambi – Free!

    •        

  • Castration & Dehorning – $16.00

    •        

  • Milk Replacer – $45.54

    •        

  • Miscellaneous – $46.87

    •        

  • Calf Feed – $160.35

    •        

  • Hay – $52.00

    •        

  • Straw – $15.00

    •        

  • Medicine – $5.00

    •        

  • Total Spent – $340.76

    •        

  • Time – 56 hours

       So after six months we’ve spent a total of $340.76 and 56 hours raising a cow for beef. We’ll need to buy feed and hay next month, but that won’t cost too much.

       We had a small scare with Bambi this month. He didn’t eat or drink anything for 3 days. I called our friend, Konrad, who gave us Bambi back in August. We checked Bambi to see if he was sick, but he seemed as healthy as ever. Konrad had some medicine for gastrointestinal problems, so we gave that to Bambi for two days in a row. He finally started eating again after the second day on the medicine. This just highlights the risk you have when you are raising an animal. It could get sick and die on you at any time. Yes, medicine or a vet could fix some things, but there’s always the chance that the animal can’t be saved and you’ll lose it. Lucky for us, the medicine we gave Bambi only cost about $2 total (but I gave Konrad $5 though he didn’t want anything for it).

       Also, we’ve had a lot of snow this month. It’s not especially fun to go out to the barn in 15 MPH winds and blowing snow to feed Bambi. But it has to be done. This relates to what I wrote last month about finding someone to care for the animal when you are gone. Unless you can automate the feeding and watering, someone has to be there every single day. Even when that can be automated, someone should be checking in on the animal to make sure it’s still healthy. These are factors that aren’t easily figured in to time and costs.

       That’s it for this month. If you have any questions or comments, please leave them below. And make sure you sign up for free updates to Provident Planning if you’re interested in knowing what it takes to raise a cow for beef!

In Miscellaneous
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How to Find $50 a Month to Give to Charity with Minimal Effort

Corey —  February 19, 2010

This is a guest post from the Editor of VoucherCodes.co.uk, a site offering voucher codes and printable vouchers to help you save more money.

       In the current climate it is hard for many to get by. All of our budgets seem to have been slashed, and what’s left over for the end of the month for luxuries has all but disappeared. Giving to charity each month can therefore seem a bit of a hardship, but it is ironically at this time that it is needed so much. The recent earthquake in Haiti has provided an all too clear signal of the need for charitable donations. With a few personal finance tips, you can put aside a large part of your monthly budget therefore freeing up more resources for charity.

Budget!

       The first thing to do is to know exactly where you stand. As has already been pointed out on Provident Planning, a site such as Mint offers free financial software that can show you exactly where your money is going each month. This can be an excellent tool, but it can be difficult to work with this as a household tool. In a dual income household, communication is especially important. The whole family will have to sit down together in order to work out their expenditure and to plan for the months ahead. If you have children this can be a great chance to educate them on how to manage money and to set a great example.

Save on Groceries

       To help with the family planning further you can log on to Netmums, a UK community of mothers and download their weekly meal planner – this is just as applicable for a US family. Any shopping trip can then be more focused around what is essential. Supermarkets are designed to bombard you with information encourage you to make impulse purchases. They have become very sophisticated in their marketing (ever noticed how the premium brands are at eye level?). If at all possible, it can be better to leave the kids at home when shopping – they are usually much more persuadable to making unnecessary purchases and are no doubt very adept at persuading you as well!

Cut Back on Your Energy Bills

       It is also essential to cut the amount of energy you are using in your home. With just a few tricks you can save lots of money. Head over to the Energy Savings Trust website and take their free home energy check to ensure you are not frittering away your hard earned cash in wasted energy each month.

Use Coupons

       Coupons have also become an online phenomenon in 2009 – and if you’re not using them in 2010 you will really be missing out. Ever been prompted when buying online to enter a voucher code (or promo code or something along these lines)? Well a simple Google search for “Coupons” will provide a huge collection of coupon sites where you can find the correct text to enter to get the relevant discount. These can usually knock $20 off the weekly shop. [Paul’s note: I like RetailMeNot for this. I’ve saved a lot with that site.]

Don’t Waste Money When You’re on Vacation

       In the end we all deserve to have to have a break from counting the pennies, but this does not mean we want to be ripped off when going on holiday. If we easily reduce the amount we fritter away, it means we can spare a little more from the holiday fund. A little local knowledge can be found in the online Time Out guides – they provide comprehensive schedules of the events coming up in most of the major world cities. Booking in advance you can usually make huge savings and avoid inflated “at the door” prices. You can also find great advice on non-touristy restaurants to save further. These combined can cut your travel budget by almost half painlessly.

       I hope these tips show that with a small bit of thinking we can be more charitable each month without breaking the bank!

This has been a guest post from the Editor of VoucherCodes.co.uk. Be sure to check out their site if you live in or will be visiting the UK. I’m sure you’ll find some ways to save money!

In Budgeting, Frugality, Giving, Stewardship
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Is Malachi 3:10 the Only Place in the Bible Where God Tells Us to Test Him?

Corey —  February 18, 2010

       Supporters of tithing as a requirement for Christians love to point to Malachi 3:10 for proof of why we should tithe. The most common argument is that this is the only place in the Bible where God tells His people to test Him. I’ve already discussed tithing in the Bible, but let’s look specifically at this idea. There are three major problems with claiming that we should tithe because God told us to test Him in it:

  1. We are no longer under the blessings or the curses of the Law.

    2.  

  2. The entire Law of Moses was worded as a test for the Israelites.

    3.  

  3. Tithing alone was never enough to guarantee blessings from God.

No Longer Under the Law

       Christians are under the New Covenant, and our righteousness comes from the blood of Christ – not our ability to keep all of the Law. To throw ourselves back under the Law – even just the law of tithing – requires us to completely turn away from the imputed righteousness we claim in Christ. If we’re going to say that we are either blessed or cursed based on our giving, we’re saying that Christ died for nothing. We are no longer under the curse of the Law because Jesus has taken that curse for us. And we are not blessed because we tithe – we are blessed because we have received eternal life through the blood of Jesus.

       Taking Old Testament commands and saying that they still apply to Christians, along with the blessings and curses attached with those commands, is to completely ignore the necessity of Christ’s death. His death broke the hold of the Law over our lives. We are no longer judged according to our ability to keep the Law. We are judged according to Jesus’ ability to keep the Law and our acceptance of His sacrifice.

The Whole Law Was a Test

       The Hebrew word for “prove” in Malachi 3:10 is the only place in the Bible where that particular word is used by God to tell people to “test” Him. But almost every aspect of the Law was worded as a test to the Israelites. God told the Israelites if they would keep all of His commandments, then He would bless them. That’s a test. He also told them that if they didn’t keep all of His commandments, then He would curse them. That’s a test. God is saying if you do (or don’t do this), then I promise I will do this.

       To simply look for the word “test” in the whole Bible, only find it in Malachi 3:10, and then conclude that Christians should tithe because that’s the only thing God told us to test Him in is to ignore the context of the entire rest of the Law! It doesn’t matter if a particular word was used in Malachi 3:10 in a certain way and never used anywhere else in that way. God gave almost all of His Law to the Israelites in the form of a test and told them to do it. So Malachi 3:10 isn’t truly the only time God told His people to test His promises (either to bless or curse).

Tithing Alone Will Not Bring Blessings

       The final problem with this approach to Malachi 3:10 is that it assumes all you have to do is tithe and God is required to bless you. This was never true for the Israelites, the people this command was written for. They were required to keep the whole Law if they wanted to receive God’s blessings. If they broke even one part of the Law, God told them He would curse them. This false interpretation of Malachi 3:10 as a promise of God’s blessings if you tithe completely ignores Biblical truth.

       Was God promising to bless sinners and non-believers who only obey Him in regards to tithing? Was God promising to bless unrepentant Christians if they tithe? How can we look at this one verse as a simple “you do this one thing and I (God) will bless you abundantly”? How does that understanding mesh with the rest of Scripture? James made it clear that this is not the case in James 2:10, and Paul even quoted Deuteronomy 27:16 to show that you are cursed if you don’t keep the entire Law.

Better Giving Principles

       It’s clear that despite Malachi 3:10 being the only place God says to test Him we are not called to tithe as Christians. Under the New Covenant, we have much better and much more demanding principles for giving. I encourage you to read more about New Covenant giving guidelines if you want your giving to be founded on Scripture.

In Giving
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