Author: Wilson Mack

On the face of it, it may seem utterly ludicrous, but PayPal, the San Jose, California based online payment processing company has announced that it wants to be a leader in the nascent field of interplanetary commerce. Indeed, PayPal, which is owned by the Internet’s dominant online auction site eBay has disclosed via press reports that the company is presently working with both the Space Tourism Society and the SETI Institute to develop a new program known as “PayPal Galactic”. According to company officials, PayPal Galactic is intended to be the world’s most trusted solution for managing the problem of making and collecting payments in space.

This is no joke. As PayPal President David Marcus so affirms: “As leaders in online payments, it’s kind of our duty to lead the way on how commerce in space will happen. This is a big problem that needs to be solved.” Mr. Marcus acknowledges that space commerce as we might imagine it is “at least a decade in the future.” Making credit card payments in outer space safe and secure may not be what keeps most people up and night, but it is comforting to know that somebody out there is working on the problem.

Respecting the reader’s need for some background and context as to why this news item should be regarded as plausible, we need to delve a bit into the company history of the Internet’s main payment processing colossus. PayPal as we know it today came about by way of a merger between Confinity Inc. and organization known as X.com. One of X.com’s original co-founders is Mr. Elon Musk. Musk is probably best known for bringing into the world SpaceX (Space Exploration Technologies Corporation) and Tesla Motors. SpaceX is a space transportation company that does real space business. In 2012, the organization became the first for profit-company to send actual cargo into space. One of its rockets was contracted to carry a payload all the way to the International Space Station. Apparently, Mr. Musk’s enthusiasm for space travel knows no bounds, and soon (in perhaps a decade or two) we will have the means to make and accept electronic payments outside of the earth’s orbit.

As preposterous as it may seem to us today, there is a case to be made for making the development of extraterrestrial commerce a reality. Sir Richard Branson, chairman and founder of the Virgin Group started Virgin Galactic in 2004 and gave it a mission to sell tickets to well-to-do space tourists everywhere. At present, Virgin Galactic stands ready to provide suborbital launch service for science missions and orbital launch service for delivery of communications satellites. Branson’s spaceships are real, and they do fly. They are launched from large fixed-wing aircraft rather than from a launch pad. This gives his ships more speed and altitude than ground-launched rockets. If his project becomes a success there is no telling what kinds of things future space travelers will want or need to buy when they take off. It’s not a stretch to believe that firms like Virgin Galactic will discover some way to connect the mobile devices of their passengers to the earth’s existing cell networks. If this happens, then the downloading of digital goods and content in space would indeed be possible and perhaps even profitable.

Wanting to get started on building long-term savings is an admirable goal. If you are able to free up some extra money in your budget to build that savings bigger faster, that’s all the better. Here are 10 tips to free up extra money to boost your savings.

1. Cut down on eating out
If you buy a fast-food or deli lunch every day at work you are probably spending $7 to $8 a day. Taking your lunch each day only costs a couple of dollars a day, leaving you a savings of around $5 a day that you can put toward your savings.

2. Refinance your mortgage
If you own your own home, you might be able to free up extra money by refinancing. If you plan to stay in your home for at least a few years and can get at least a 1 percentage point decline in your mortgage rate, you could significantly reduce your monthly mortgage payments and free up several hundred dollars a year to put toward savings. Use a mortgage calculator and see if you’re leaving money on the table.

3. Inquire about auto insurance discounts
Car insurance is a place you may be able to save some money to boost your savings. Inquire with your insurer about possible discounts you might qualify for, such as a good driver discount, a discount for completing a safe driver class or a multi-car discount. Consider the situation you’re in and make sure that you have the right company as your insurance provider. For example, seniors should look for a good senior auto insurance policy. Some companies specialize in those non-standard situations.

4. Increase your deductibles
Another way you can save extra money to save is to increase your deductibles on car and homeowners or renters insurance. Doing so will reduce your premium costs each month and free up extra money to save.

5. Bundle for discounts
Bundling services can get you discounts you can apply toward your savings. For example, you can bundle your cable TV, Internet and phone services with the same provider, which usually results in a discount of at least 10 to 25 percent. You can also bundle insurance policies.

6. Get a rewards credit card
You can earn 1 percent or more on your credit card purchases that you can put toward your savings. Use the card only for necessities, such as gas and groceries, and make sure to always pay the bill in full and on time every month.

7. Cut your energy costs
If you keep your thermostat a couple of degrees higher than normal in the summer and a couple of degrees lower than normal in the winter, you can save a few extras dollars each month on your heating and cooling bills, which you can put toward your savings.

8. Bike or use public transportation
The less you use your car, the less you have to pay for gas and parking. If your workplace is close enough to bike or walk to, do so whenever you can. If it’s cheaper to take public transportation than drive, do so when you can to save money.

9.Cut your entertainment spending
Stay home a watch a rented movie rather than going out to one. You might also check out free plays and concerts instead of buying tickets.

10. Look at all discretionary spending
Can you find a cheaper gym membership? Do you need all the cable channels your provider offers? Do you have the Cadillac cell phone or Internet plan when the Kia version would do? Combing through your discretionary spending is likely to find you a few extra dollars to save.

Tax laws are large, complicated and forever changing. The 2014 tax year has some notable changes, both good and bad, that will affect a large number of American citizens. Keeping track of these changes is important, because it can have drastic consequences on income tax returns. The following major changes all have to do with federal tax returns.

Health Insurance Tax Changes:

The most notable and drastic change to taxation law for 2014 involves Obamacare and the use of the new health insurance exchange system it implemented. There are two major factors involved. The first is a penalty for not enrolling in an acceptable coverage program. The second is the financial aid that is available to certain lower income individuals to help them afford acceptable coverage.

The Penalty:

Starting in 2014, individuals who do not enroll themselves in an “acceptable” health insurance policy will face a penalty that is collected as a tax at the end of the year. There has been some debate on Capitol Hill about cancelling or extending the deadline on this mandate, but as of February 2014, the mandate still stands. There are certain exemptions for very low income individuals and those who meet certain other conditions. The 2014 penalty is rather small at $95 for the year. That pales in comparison to the thousand or more dollars a year it would take to pay minimum essential insurance premiums. This cost quickly escalates the following years. The planned penalty for 2015 is $325, and the planned penalty skyrockets to $695 in 2016. While these penalties are still lower than the total for monthly premiums, the idea is that most people would rather put their money toward insurance than just hand it over to the government.

Everyone has a three month grace period to enroll, so the penalty will not kick in unless they go more than three months out of the year uninsured. There is a catch, however. Open enrollment for insurance ends the last day of March, so if someone does not enroll by then, they will have to wait until November to enroll, and that will bring them over the three month grace period by default (http://obamacarefacts.com/obamacare-individual-mandate.php).

The Tax Credit:

The reverse of the penalty is the tax credit for enrolling in a qualified policy. Anyone who falls between 100 percent and 400 percent of federal poverty line in annual income will be able to collect the tax credit (http://obamacarefacts.com/federal-poverty-level.php). In most states, those lower than 100 percent will automatically be enrolled in Medicaid and will not be affected. There are, however, multiple states that have opted-out of expanding their coverage, and may fall into a coverage gap.

This tax credit can be provided monthly as a way to lower premium payments, or it can be provided as a lump sum on a person’s tax return. The exact amounts of payment are only final when the income is reported. Any differences between monthly payments and the actual coverage are made up for as tax debt or credit on the return. If someone ends up with a credit, then that can be collected as cash on their return, even if they were on the monthly plan.

Other Tax Changes:

There are a myriad of other, less major, changes. Here are some highlights of previous exemptions that are set to expire.

1. Option to deduct sales tax
2. Option to deduct higher education tuition and fees up to $4,000 for most individuals.
3. Transit pass tax break reduced from $245 to $130.
4. The option to deduct up to $500 for improvements to home energy efficiency.
5. Option for teachers to deduct up to $250 in school or classroom related expenses that they paid out of their own pockets.

The time to set a habit of frugality – of saving – is as early as possible, ideally when you’re in your early to mid-20s. Because of how compound interest works, every dollar you save early in your career is worth more than a dollar saved later in your career. The trick to saving in your twenties is to make the savings process as automatic as possible.

401(k) Investing

If your employer offers a 401(k) program, contribute to it, and have the money taken out of your paycheck. Most 401(k) programs have an employer matching level – typically 4-9% of your salary. What this means is that for every dollar you contribute to the 401(k) up to this threshold, your employer will match it – effectively doubling the investment up to this amount.

The second benefit of a 401(k) is that it comes out of pre-tax income; in most states and professions, this effectively means that every dollar you contribute to a 401(k) only takes 85 to 77 cents out of your paycheck.

The third benefit of a 401(k) is that any interest it accrues is tax-deffered. It doesn’t count as income until you withdraw from the account, and you can withdraw from it at the same time you’re eligible for Social Security Retirement benefits.

The final benefit of a 401(k) is something of a mixed blessing: 401(k) are par t of an investment portfolio – which means they’re at the vagaries of the stock market. It does mean that if you can contribute to a 401(k) when the market is down considerably (as it was in 2008-2009), you’ll see some substantial returns.

By and large, if you can, set your 401(k) as a “set it and forget it.” The longer you let it run without touching it, the happier you’ll be with the end result.

General Savings Plans

Once you’ve got your 401(k), you should figure out your monthly income and try to set your monthly expenses at 90% of that amount – and put the remaining 10% in the bank. One technique that works very well, if your employer offers Direct Deposit, is to split your deposit so that roughly 10% of your expected income is deposited into a savings account and the remaining 90% into your checking account, and try to forget that the savings account is there for a while.

When your savings account has a balance sufficient to support you for three to four months with no income, draw two months worth of income out of it and buy certificates of deposit, or CDs. A CD is like a savings account with a time-lock on it. In return for this time-lock, banks pay higher interest rates on CDs. You can buy CDs with staggered maturation rates; for example, buy your first CDs to mature in 3, 4, 5, and 6 month durations. Each time you have enough money to buy another CD, buy one that will mature one month later than your latest maturing CD. Whenever a CD matures, re-invest it the same way. Eventually, you’ll end up with a pipeline of 36 or 48 CDs, with one maturing every month, and periodically feeding more into it This gives you a greater rates of return than your savings account while still maintaining some fluidity.

When looking to invest, an individual can buy stocks, bonds, or real estate. While the stock market is intimidating to plenty of people, an investor should not worry. Here are four reasons why investing in stocks is an excellent idea.

Quick to start: Let’s face it, if you aren’t rich, you can’t invest in real estate or private companies easily. On the other hand, with stock investing, you can start with a couple of thousand dollars. Then, over time, as your situation improves and you bring in a higher income, you can put more money to work. Brokerages often allow people to open an account with a few hundred dollars, and a wise investor can add money in the future. On the other hand, if you want to buy a house or invest in a local company, you will need to come up with thousands of dollars to start. Therefore, if you are young or just starting out in your financial life, look to stocks, as this asset class is an easy one to get into.

Superior returns: When you want to invest in an asset, you want to see excellent returns over the long haul. If you buy stocks or mutual funds, you will enjoy superior returns against almost every other asset class. While precious metals, real estate and other assets will fluctuate greatly, over the long haul, stocks will rise. If you have a long-term outlook, you can fill your portfolio with quality companies and watch as you enjoy solid returns with little effort. To understand this point further, do the research yourself and you will see that stocks, by far, offer the best returns in the long run.

Easy: If you want to concentrate on life and not on investing, buy stocks. With an online brokerage account, you can purchase stocks or mutual funds from the comfort of your home or office. Then, you can walk away from your investments and let them do their work. This is in stark contrast to other investment vehicles such as property or small businesses. In fact, if you invest in blue chip companies and frequent trading, you will enjoy excellent returns with little effort. On the other hand, if you buy houses and work as a landlord or invest in other assets, you will face an uphill battle every time you deal with an unruly tenant or other issues.

Tax savings: If you open an IRA or contribute to a 401k at work, you will enjoy plenty of tax benefits. Over the long run, taxes take a bite out of your net worth and you need to reduce this by using legal methods. Luckily, if you fund an IRA or put money in your 401k, you can write off the contribution and lower your overall burden. Other times, if you are smart and open a ROTH IRA, you can pay taxes when you contribute money. However, you will enjoy tax-free withdrawals when you retire. Either way you look at the situation, if you want to avoid a massive tax bill, consider investing in the stock market via a retirement account.

While intimidating at first, an investor will enjoy plenty of benefits by putting his or her money to use in the stock market. Remember, stocks offer superior returns for even the average investor.