Calculate Your Estimated Tax for 2014

Most of you should have received your last pay-stub for the year by now.  My coworker sent me this link from the IRS website that you can use to estimate the amount of taxes you overpaid/underpaid in 2014.  A lot of the information you need for the calculator is on your last pay-stub so have it handy!

The goal is to get as close to zero as possible (no taxes owed or due).  A lot of people get excited when they get a large tax refund.  But that excitement is actually misplaced because when you overpay in taxes, you’ve given the government an interest free loan.  In other words, the government got to borrow your money for free.  If you had put that extra money in a CD at your local bank, the bank would have at least paid you interest when they gave you your money back, even if it is only 1%.  And if you had put that extra money in an IRA or 401k, you could have taken advantage of compounding interest and probably would have gotten an even higher return, much much higher (the S&P is up 8.5% YTD as of 12-17-14).

Of course, you also don’t want to withhold too little and end up owing a lot in taxes come April.  At best, it’ll take a chunk out of your savings account.  At worse, you won’t have the money set aside to pay for it.  Then you’re really in trouble.

Breaking perfectly even in the amount taxes owed/due is nearly impossible, so just try to keep the difference less than a few hundred dollars.  Using the calculator linked above helps a lot.  Of course you could also talk to a CPA to get even more accurate estimates.  If you see that the amount owed/due is over a couple hundred dollars, talk to your HR department about adjusting your withholding accordingly.

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Money Making Tip: Selling Clothes on eBay

A few years back, I tried selling a top on eBay.  The process was so complicated that I gave up after only a few minutes.  It wasn’t until I met my coworker, an eBay pro, that I decided to try again.  Since my second attempt, I’ve sold about 20 items of clothing and made over $200!  I know $200 isn’t enough to quit my day job or anything, but it’s still pretty awesome considering the fact that all the items I’ve sold would’ve gone to Goodwill anyway.  Plus, the best part of selling on eBay for me is getting rid of so much unworn clothes.

The time it takes me to photograph, upload and post an item is less than 5 minutes now.  Even though it’s so easy, I know a lot of people still think it’s too complicated to try so here are my tips for an eBay beginner:

When you sell, use the quick listing tool.  As soon as you click the “Sell” button on top, it should automatically take you to the quick listing tool.  But just in case it doesn’t or you accidentally click on the advanced tool, you’ll know to switch it to the quick listing tool.

The instructions for title, condition, photos and item specifics are all pretty self-explanatory.

Once you get down to the Details section, write a few things that the buyer may want to know about the item like if there are any stains or missing buttons.  Sometimes if there is nothing particularly worth mentioning, I write something like, “only worn once!” or “great with leggings!”

I like to list my items for Auction with a starting price of at least $3.  I’ve sold items for $0.99 before and believe it or not, those are the items that I never get paid for.  This has happened to me 2 out of 2 times.  I feel like with a $3 minimum starting price, people who bid on the item are much more committed and likely to pay up.  After setting the Auction starting price, I select the Buy It Now option and put an amount typically 2 or 3 times the starting Auction price.

For the Listing Duration, I like putting 3 days so the turn-around is quicker.  After the Listing Duration, you can schedule your listing’s start time.  If you don’t check that box, your listing will be live as soon as you click “List it” at the bottom.  I like to schedule my start time for 7:30am because that means the auction will end at 7:30am 3 days from now.  I can check eBay that morning and if there was a bid on the item, I’ll bring that item to work with me for shipping.

Shipping is, for me, the tricky part.  From my experience, eBay does a good job 90% of the time estimating how much postage costs to ship your item.  But when they’re wrong, it can be costly… for YOU.  For instance, there was one top I sold that eBay thought weighed 6 oz or something like that, which means the buyer paid $2 for shipping.  Once I tried to ship it, I found out the top actually weighed 14 oz.  This was a problem not only because it was much heavier, but also because it surpassed the weight limit for First Class shipping (13 oz).  So then I had to ship it Priority Mail, which cost me over $7.  My net profit for that sale was less than $1, which was disappointing but at least I didn’t lose money!  From then on, I try to estimate the weight myself and probably even over estimate by an ounce or two just to be on the safe side.

Last thing, don’t be surprised if after a month after your first sale you get an email from eBay saying you have a balance.  Ebay charges a seller’s fee but it’s not too bad considering you won’t get charged a seller’s fee unless you’ve made money from a sale.

And that’s it!  You’re ready to list your first item!

For those of you who are eBay veterans, I’d love to hear some of YOUR selling tips!

Finding Out My CFP® Exam Results

My friend took her CFP® exam a few weeks ago and told me her preliminary results that day.  When she told me her results, it really brought me back to when I found out my results.  My experience was completely different from my friend’s because I took the exam before the change.  When I took it, the exam was 2 days, 10 hours total.  Everyone took it with a good old fashion #2 pencil and paper (the thin, grey, newspaper-y kind).  Our results got posted online FIVE weeks later.  The wait was painful and liberating at the same time.  Ignorance is bliss, right?  Nowadays, the exam is taken online and you’re done in 6 hours.  Immediately after, you get your preliminary results followed by your final results a few weeks later.

A coworker and I both took the March exam this year.  It was a second attempt for both of us.  Taking the exam with your coworker could be the best thing ever or the worst thing ever, for obvious reasons.  If you both pass, it’s double the celebration!  If you both fail, well, misery loves company.  The worst, of course, would be if one of you passed and the other one failed.  Our results were scheduled to come out on a Friday morning.  My coworker and I agreed in advance that we wouldn’t check it that morning and we would, instead, wait until the weekend.  (Both of us have experienced, on separate occasions, the pain of finding out we didn’t pass and having total breakdowns in front of our colleagues.  For me, it was the first and only time most of my coworkers have seen me cry.)

The Thursday before our results were supposed to come out, we woke up to an email saying that the results have already been posted.  We texted one another and confirmed that we still weren’t going to check until the weekend.  Thirty minutes later, I walk into the office and as I pass by her desk, I see she has this smirk on her face.  I was like, “what?!”  She squealed, “I PASSED!!!”  Apparently, her roommate knew her account login and password and checked it for her.  And when her roommate saw that my coworker had passed, she called to give her the good news.  Suddenly, all eyes were on me.  Literally.  I had maybe 5 or 6 colleagues staring at me wide-eyed asking, “Are you going to check?!”  No pressure.

I went back and forth between checking it right away and waiting till the weekend.  But finally I was like, “Screw it!  Everyone at the office already knows the results are out and that my coworker passed.  Might as well put everyone (including myself) out of their misery.”  So my coworker grabbed a laptop and we went into a bathroom stall.  (It was the only way we could get some privacy.)

I logged into my CFP account and got to the last button standing in between me and my results.  A sudden wave of panic washed over me and I couldn’t bring myself to click the button.  What if I didn’t pass?  WHAT IF I DIDN’T PASS?! was all I kept saying to my coworker over and over again.  Finally, I handed the laptop to my coworker and asked her to click the last button for me while I sat across from her with my eyes closed, knees pulled up to my chest and hands covering my face.  Yes, it was THAT dramatic for me.

I heard a click.  Then silence.  Then, “AHHHHHHHHHH!!!!!  YOU PASSED!!!!!”

We hugged; we cried; we laughed.  It was glorious.  The entire office celebrated with us over ice cream.

I think that day will go down as not only one of the best days of 2014, but also one of the best days of my life.  Because honestly, passing was a huge struggle for me.  And it was so rewarding to finally see all that hard work pay off.