What questions should I ask before agreeing to relocation

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What questions should I ask before agreeing to relocation

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Q: My Husband is Relocating to Another State. We have Bought a House in Florida. The Market is Down and We Don’t Know What to Do About the House or What Questions to Ask Concerning the Relocation. Any Advice?

A: Start by asking your husband’s employer what relocation benefits, if any, they are willing to provide. Some companies will do just the basics: like paying for moving costs. Others will offer more assistance, like reimbursing you both for house-hunting trips, putting you up in hotels during temporary stays in your new state, or even paying for meals and local transportation during the transition period. With really generous companies, they may offer to fund some of the cost of buying a new home (like providing money for a new down-payment), or may consider buying your existing home, or perhaps reimbursinig you at some level if you have to take a loss to sell it quickly. Relocation packages vary greatly based on the industry, region of the country and, of course, the specific employer involved. But you should ask about any or all of these options. Also inquire about neighborhoods and the cost of living in your new region. Do some basic online research, yet ask your husband’s soon-to-be boss or his colleagues about desirable communities and where there are good schools in your new state. This later area will be of particular importance if you have kids. Ask too about taxes in your new state. Not just property taxes, but also ask whether or not your husband’s employer may consider “grossing up” his income to cover some of the taxes you’ll have to pay if he gets a cash relocation stipend or bonus.

Regarding your existing house, I don’t have to tell you that it’s a buyer’s market – particularly in Florida. Without knowing any specifics about your home or your particular neighborhood, I can only really tell you to price it agressively (i.e. make it attractive to potential buyers) if you want to move quickly. Also, if you need to sell your current home in order to afford a new home (as most people do), then you might as well get the ball rolling and put your home on the market as soon as possible. Ask for referrals or drive around your current neighborhood and look for signs to find a local, experienced real estate agent. Then call that person and have him or her come by your house to do a complete market analysis and tell you what your house is likely worth. Good luck!

I Cannot Afford to Pay My Estimated Quarterly Taxes. What Should I Do?

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Author: The Money Coach

Q: I am Going Through a Very Acrimonious Divorce and Paying Through the Nose. I am a Private Practice Epsychologist. I Usually Had No Problem Paying Estimated Taxes, But Can’t Make Ends Meet Anymore. My Ex Refused to Sign the Joint Return Last Year Which Cost me $20K. I’m Afraid That Every Year I’ll Get Further Behind B/C of the Inability to Pay Estimated Quarterly Taxes. I Can’t Even Function With the Money I Have. What Should I Do?

A: I’m sorry to hear about your bitter divorce and the financial problems you’ve been experiencing. I sympatize with you on both fronts – having been through both ordeals myself. Moreover, I also know from firsthand experience – as an entrepreneur too – how difficult it is to pay those dreaded estimated quarterly taxes.

As you may know, as a self-employed individual you are obligated under the law to pay federal income tax, along with Medicare and Social Security taxes, more commonly called self-employment tax. How much you pay in federal taxes is based on your adjusted gross income. The current rate for self-employment tax is 15.3% on the first $106,800 you earn. Of course, you also have to factor in any required state and local taxes, depending on where you live.

The deadlines for filing and paying your quarterly estimated taxes are: April 15, June 15, September 15 and January 15 (or the next business if those days fall on a Saturday, Sunday or legal holiday).

If you can’t pay your quarterly taxes, don’t make the mistake of not filing at all or ignoring your situation. That will just worsen the problem. A failture to file taxes and pay what you on on time could result in late penalties and interest of 25% or more.

So if you simply don’t have the money, try one of these options:

1) Request an extension of time to pay
Extensions are usually granted for 30 to 120 days. You still get socked with penalties and interest, but they’re usually less than what you pay in an installment plan.

2) Ask for an installment agreement
With an installment agreement, you request a payment plan with the IRS for the most recent tax year. You can get a payment plan for as long as 24 months and not have it impact your credit rating, in terms of the IRS putting a lien against you or reporting you as delinquent to the credit bureaus. If you owe $25,000 or less, just go online to the IRS website and fill out the Online Payment Agreement.

3) Consider a loan to pay your tax bill
A bank loan or home equity loan (if you can get either) will carry a much lower interest rate than paying the IRS off over time under and installment agreement.

4) Ask the IRS about an offer in compromise
The IRS usually only grants these when:
a) a person can show that they have severe economic hardship; or
b) it’s doubtful that the taxpayer could pay what’s owed over the time the IRS has to collect the debt

Start by asking your accountant for which path he/she would recommend, since that individual is likely to be very familiar with your situation. Or, if you don’t use a CPA, call the IRS directly at 800-829-1040.

Is There a General Debt-to-Income Ratio Related to Tuition Costs?

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Author: The Money Coach

Q: My Daughter’s Private School at Our Church is Closing this Year. To Keep her in Private School We Will Need to Pay Double the Tuition Costs We are Currently Paying. I am Not Comfortable With This as We are Trying to Become Debt-Free and This Will Hinder That Process. Is There a General Debt-to-Income Ratio Related to Tuition Costs That Might Aid My Decision?

A: No, there’s no general rule of thumb regarding how much school-related debt a parent should take on relative to his or her income. But frankly, you don’t need broad guidelines or even specific rules of thumb to decide what’s best here from an economic standpoint. Private school is already relatively costly, certainly compared to getting a free public education. If you had to pay twice the amount for a new private school that would no doubt crimp your budget and set your family back in numerous ways.

Think honestly about what you’ve already said: namely that you’re in debt, trying earnestly to get out of your financial bind, and that paying double what you’re accustomed to for your daughter’s schooling would be a financial hardship that would derail your efforts to become debt-free. I applaud you, of course, for wanting the best possible education for your child. As parents, we all want that. But sometimes you have to make tough choices because it’s in the entire family’s long-term best interest. It sounds like you’re grappling essentially with the decision to sacrifice an awful lot of money by sending your child to private school versus sending her to public school. Obviously, I can’t make that decision for you. But I can share with you my own story, because I’ve dealt with this very issue.

To make a long story short, I had my two older children in private school – at a time when I was in debt, as you are – at a cost of about $20,000 per year. This was when my kids were only 3 and 5 years old, mind you. Ultimately, I made the choice to take them out of that school. They transferred into a different private school that was about 1/3rd of the cost. They continued to do outstanding in school. And now, for the past couple of years, they’ve been in public school. My kids remain pretty much straight-A students and they are thriving in public school — doing far better than I’d imagined they would through these two transitions. Thank God that everything actually went very smoothly.

I say all this because so often as parents we worry about all the “what if” scenarios and think that we might be “harming” our children by “not giving them the very best.” In my case, I ultimately came to the conclusion that I had to “get real” about my finances, and that the “best” that I could offer my kids was to be honest about what our family could realistically afford. Also, by not spending so much money on private school now, our family is able to better save for my kids’ college education, which we all know will be outrageously expensive. My older two children are now 12 and 10 and again, they’re doing very well. I also have a four-year-old who will start public school in the fall.

So generally speaking, I’d recommend that you not over-extend yourself by sending your daughter to a new private school when you know that financially, you simply can’t afford it at this time. There’s no shame in that. And that decision certainly wouldn’t preclude you from letting your child do extra curricular activities, having academic tutors, etc., if you felt it was necessary. But again, the decision is best left to you and your family after you carefully consider all your options, as well as the short and long-term impact that private or public school would have on everyone involved. Good luck!

How to Lower Your Child’s College Tuition: Free Event (askthemoneycoach.com)

How Can My Husband and I Lower Our House Payments?

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Author: The Money Coach

Q:How Can My Husband and I Lower Our House Payments? In the Past Four Years, We’ve Refinanced and Then Two Years Ago We Were Close to Foreclosure and Got a Loan Modification and Lower Rate. Even With the Modification, Our Payments are High.

A: I think you have to seriously consider whether you can afford your current home. Based on your email you’ve done three things to lower your monthly housing costs: refinanced, got a loan modification, and you also mentioned getting a new county assessment on your property. Since you stated that the new assessment found that your house was thousands less than last year, I assume that your property taxes were also reduced. All of these sounds like reasonable strategies to have a more affordable house payment. But it concerns me that even after having done these three things, you still find the house expenses to be “high.”

You certainly can try to refinance your home again. Since it sounds like your last refi happened four years ago, rates are much lower now. If you have great credit and at least 20% equity in your home, you can get a 30-year mortgage at around 5%. If you live in an expensive area, and have a jumbo mortgage (i.e. a loan above $417,000), your rate will probably be around 6%. Before you look at a refinance though, do take a good, hard, honest look at your overall financial picture. If you come to the conclusion that the house is simply too expensive given your combined incomes and your other bills, consider selling and finding less expensive housing. There’s no shame in that.

Foreclosure Rescue Scams: How to Recognize Bogus Mortgage Help (housingwatch.com)
Why You Should Give Reverse Mortgages Another Look (askamoneyexpert.com)

Posted in Couples and Money, Credit Scores, Family Finances, Financial Planning, Homeownership, Real Estate, Saving Money |

Tags: assessment, Banks, budgeting, Budgeting and Money-Management, Couples and Money, credit, Credit and Debt, Credit Scores, debt, Family Finances, Financial Planning, Foreclosure, homeowner, Homeownership, jumbo mortgage, loan modification, Mortgage Loans, Real Estate, refinancing, Saving Money, Spending Money Wisely |

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