Kicking Assets

A young person's guide to personal finance

Month: February 2020

Talking About Sales Tax

February 27, 2020 / / 0 Comments

Have you ever wondered why the price of your date night always costs more than you were expecting?  Why do the prices on the menu not add up to the total on the receipt? How come your new suit or dress always costs more at the register than it does on the price tag? These are all important questions that can be answered with just two words… Sales Tax.

What is Sales Tax?

Sales tax is commonly referred to as a tax put on goods or services by a governing body in order to fund various public expenditures.  Sales tax is commonly attached to tangible personal property such as common retail items like furniture, beauty products, paper goods, and much more.  The amount of sales tax you pay for a particular item depends on where you are located. For example, in Austin, Texas sales tax is 8.25% however, in Miami, Florida sales tax is 7%.  To find out what your state and local government sales tax is go to the Tax Foundation website.

It is important to note that not all states have sales tax. Alaska, Delaware, Montana, New Hampshire, and Oregon are the only five states in the U.S. that do not have a sales tax.

 

Image result for sales tax

How to Calculate Sales Tax

To calculate sales tax use this formula: Total item price x 1 + sales tax rate = total sales tax

For example, let’s say you are buying an item priced at $10.00 and the sales tax rate is 7%.                                                                                          The $10 total item price x 1.07 = $10.70

As you can imagine, the final cost of your bill can increase dramatically if you are buying a large quantity of items. That is why it is always very important to make sure that the money you have not only covers what is on the price tag but what is on the receipt after sales tax has been included. One of the most embarrassing things you can do as a consumer is forget to take into consideration the additional cost of sales tax. If this happens you may not have enough money to afford everything in your shopping cart or on your  restaurant bill. That is why taking sales tax into consideration is extremely important for anybody wanting to make smart financial decisions and ultimately be a savvy consumer.

Image result for shopping

What are Tax Holidays?

A tax holiday is a temporary time period in which tax is either dramatically reduced or eliminated. Oftentimes tax holidays are the best times to shop or clothing or school supplies because sales tax is no longer added to the total cost of these products. Tax holidays are usually put in place by state or local governments to give consumers and businesses a temporary tax relief.  For example, the state of Texas has implemented a tax free holiday. In 2020 this tax free time period is between August 7th through 9th. During this holiday most clothing, footwear, school supplies and backpacks (sold for less than $100) are tax free. To find out if your state or local government offers a tax free holiday go to the Sales Tax Institute.

 

 

 

Let’s Talk About Loans

February 25, 2020 / / 0 Comments


Let’s Talk About Loans


Written by: Brianna 

Let’s face it, dealing with loans is a complicated process that nobody wants to deal with. Realistically being a college student dealing with homework, school activities, outside hobbies and maybe even handling a job at the same time can be real stressful. Here are some practical tips that I genuinely thought would help make your gradual process a bit easier.

Loans…something we need to know more about before college.


I know you don’t want to hear this but, the truth is, the longer you put off paying toward your student loans, the higher your payments will be. So to avoid this problem it’s important to plan ahead and understand all the uninteresting details now.  For instance, if you have student loans, understanding your interest, monthly payment amount, how long steady periods are and when repayment starts is important to figure out your budget. 

That being said, you’ll need to earn enough income to afford your monthly payment. You should definitely consider making in-school payments to offset increasing interest. Even small payments of $25 a month while you’re in school can help save money over the life of the loan.

Think about it in the long run, yes, in this moment I know spending your paycheck is probably on your mind right now, but you will thank your future self for starting early. Here are some tips that you can start working on now!

  •  Instead of spending everything you earn, you can consider making full or some payments to cut down on interest
  •  Put the amount of your monthly payment into a savings account so you’re used to budgeting without that money.
  • The bonus is that you’ll have a bunch of savings to rely on should you have a month when money is tight.

    I hope that some of this information, it will help you make easier decisions regarding paying for school, and will help you with planning your first years in the working world. 

 

Edited by: Kristina

#Finance #Money #Loans #CollegeStudent

 

4 Personal Finance Apps You Need

February 20, 2020 / / 0 Comments

It can be intimidating to think about budgeting, saving, and investing. Thankfully there are great apps available that make these things easy in painless, right in the palm of your hand! Here are four great apps that are very simple and helpful in helping you make good financial decisions.

  1. Mint
    • Free
    • Available on iOS and Android
    • This app allows you to create your own budget, track your spending, and will even send you reminders to pay your bills. You can connect your bank and credit card accounts, and even your bills, so that all of your finances are conveniently on this app. Once your accounts are connected, Mint will automatically track and categorize your spending and transactions in order to help you handle your money. Mint is even able to show you your real-time credit score.
  1. Acorns
    • $1 a month or FREE for college students with a valid .edu email
    • Available on iOS and Android
    • Clueless about investing? This app will help you get started. How it works is, you connect your card, and every time you make a purchase, Acorns rounds up your purchase to the next dollar, and invests that change into an account that is set up for you. For example, if you buy a coffee that is $4.25, 75 cents will be invested for you.

 

  1. Qapital
    • Free
    • Available on iOS and Android
    • Similar to Acorns, once you connect a checking account, every time you make a purchase, Qapital rounds up the transaction to the nearest dollar. That extra change is put into a new FDIC-insured account that doesn’t require a minimum balance or any monthly service fee. Through this app you’ll be able to easily save money without even realizing it. The account is also able to earn a small amount of interest.

  1. Clarity Money
    • Free
    • Available on iOS and Android
    • Clarity is useful in many ways but is best known for tracking your subscriptions and cancelling any unused subscriptions, so you’re not throwing away your money. Clarity can also help you track your spending habits. By connecting your bank accounts, Clarity is able to organize your expenses, break down your spending by category, and track your transactions at a glance. In this app, you can also grow your savings by opening a High-Yield Marcus Online Savings Account.

 

All four of these apps can be very useful and helpful in your financial journey. They do all of the hard work for you! We hope you give at least one of these apps a try and find them helpful.

 

 

Edited by: Brianna

Car Talk: Leasing-Pros and Cons

February 19, 2020 / / 0 Comments

Image result for Car clip art

Written by Garrett Borden

What is a lease?

In short, you are paying a dealership to rent a brand new vehicle.

lets break down the components of a lease. A dealership will offer leasing deals which are generally 24-48 months long, require a down payment, and  your payments will often be lower than if you financed the car through a bank or credit union. The reason that you are not going to pay as much for a car per month on a lease is because you are paying for the depredation of the car, not the total value. Think of it like this, you lease a $20,000 car, and it is projected to be worth $10,000 in three years. Your payments are going toward that $10,000 lost in depreciation, not the total value of the car. This model protects the dealership from loosing money in that depreciation when you turn the car in. If you so choose, you can opt to buy the car out from the dealership at the end of your lease. This would entail you financing the remaining retail value of the car.

What are the upsides?

Image result for little blue coupe

Not only does leasing a car often offer a lower monthly payment, because you are not taking a loan out on this depreciating asset, you do not develop negative equity. Second, dealerships often offer “no deposit” and or “no money down” deals. “No deposit” waves the $2,500-$5,000 deposit often required to enter a lease, where as “no money down” waves that deposit and other associated fees at the dealership prior to starting your lease. Thirdly, because of the short nature of leases, you vehicle will often stay within the limits of its factory warranty, meaning that any defects in your car will often be covered by the dealership.

What are the downsides?

Well, you saw that many leases require a deposit, ranging anywhere from $2,500 to $5,000. This often inhibits younger people from entering a lease due to a lack of saved monies. A second negative comes when its is time to turn in your vehicle, because you never really owned the car in the first place, any damages or mileage over your limit will result in you paying penalties to the dealership.  Make sure when negotiating your lease terms, that you calculate your average annual driving distance. Many leasing programs offer options from 10,000 to 30,000 mi/yr, as your limit increases, so does your monthly Payment.

See below the terms and conditions I copied from the Toyota website. I have highlighted the important information many people over look.

OFFER DETAILS

"Lease a new 2020 RAV4 2WD 5Dr. Wagon LE L4 8AT Model 4430: $269 / for 36 months / with $2,999 DUE AT SIGNING. NOT ALL CUSTOMERS WILL QUALIFY. Amount due at signing includes DOWN PAYMENT of $2,730 and FIRST MONTHLY PAYMENT of $269. Security deposit required with exception of prior Toyota Financial Services (TFS) financing history and/or TFS tier rating in which a security deposit may be waived. Tax, title and license are extra. Based on Model 4430, TOTAL MSRP $27,290, including delivery, processing and handling, and NET CAPITALIZED COST of $24,482. Excludes official fees, taxes and dealer charges. LEASE END PURCHASE OPTION is $17,739 plus tax, title and license. Customer is responsible for disposition, excess wear and tear fees and $0.15 per mile over 10000 miles each year. Dealer participation may affect final negotiated price and applicable taxes. Monthly payment may vary depending on final price of vehicle and your qualifications. Must take delivery from dealer stock. Dealer sets final price. Offer valid 02-04-2020 through 03-02-2020 for vehicles purchased from Toyota dealerships in AR, LA, MS, OK, TX regardless of buyer's residency. See dealer for vehicle and lease program details."

Pro Tips:

  • Look out for $0 down leasing specials frequently!
  • Read the fine print, that $250 payment may look good, until you discover that you need $4,000 down and can only drive 8,500 mi/yr.
  • Don’t be afraid to haggle a little

 

 

Edited by Marcus

So You Want a Credit Card?

February 12, 2020 / / 0 Comments

Written by Kristina

You’ve reached the point in your life when you decide it’s time to get a credit card. But what exactly does that mean?

“The most important thing to understand about a credit card is that it DOES NOT increase your buying power as a consumer. If you can’t afford those shoes with cash, you can’t with a credit card. If you don’t think with this mentality, you run the risk of developing large amounts of debt.”

Applying for a credit card for the first time can be a bit intimidating and overwhelming. I know for me as a college student and young adult, I wasn’t really taught anything about the steps for applying for a credit card. Here, you’ll find a basic guide on what to expect when applying for a credit card and some helpful tips along the way.

Prepare Before Applying

It may seem as though you can jump into the credit card application process right away, but it isn’t that easy. Obtaining a credit card requires approval. Here are some tips to take into consideration before going straight to the application:

  • Make sure your finances are up-to-par
  • Make sure you are eligible
  • Do research on cards/banks that will best fit you
  • Don’t apply for the first card you see
  • Look at rates and benefits

Taking these tips into consideration before applying for your credit card may improve the chances of your approval.

Choosing the Right Credit Card

Going into it blindly, you may not know that there are different types of credit cards. This include unsecured credit cards, secured credit cards, cash back reward credit cards, and retail cards. These are only some of the options available.

  • Unsecured credit card: This is the most popular form of credit card which requires no security deposit to be approved.  When someone  says “credit card”, this is typically what they are referring to.
  • Secured credit card: This card is typically for those with no or damaged credit. This type of card requires a refundable deposit so it is less risky for the banks.
  • Cash back reward credit cards: This type of card offers a percentage of cash back on certain purchases.
  • Retail Cards: This card is specific to certain retailers (e.g. department store) and provides discounts or points for products. (This card is not recommended for entry level credit card holders).

To learn more about specific credit cards that may be good for credit, click here: https://wallethub.com/credit-cards/good-credit/ 

Submitting the Application

Now that you’ve done your research and prepared, you’re ready to submit your application. You have two options when it comes to filling out the application. You can either 1. Submit an online application, or 2. Fill out a hand-written application at your preferred location.

With filling out an online application, there is a possibility that you can see your approval or denial instantly. Once the application is done it is time to wait. And don’t worry if you don’t get approved the first time, many don’t! It may take several applications, but with the proper knowledge and effort, you’ll soon get there.

#finance #money #credit #application

 

Edited by Victoria

Finance Basics; Assets & Equity

February 10, 2020 / / 0 Comments

Finance Basics; Assets & Equity

Written by Marcus

Image result for tangible assset

For many young adults, the thought of managing their finances is intimidating. As a college student myself, I understand how stressful finances can be. Managing student loan debt, car payments, utility bills, rent and so much more causes many of us to feel overwhelmed.  Over the years, I have learned that finances don’t have to be stressful. In fact, being able to manage your finances with confidence is actually quite empowering.  Before you can take control of your finances and become confident in your money management, there are a few basic things that you should know.

What is an Asset?

An asset can have a multitude of meanings depending on the circumstance or context in which the term is being used. However, for the purposes of your personal financial accounting, an asset is any resource, tangible or intangible,  which is owned or controlled by you that can produce positive economic value.

Identifying Assets?

Assets can be classified into two separate categories, tangible and intangible. Tangible assets are physical and often easy to evaluate. Common tangible assets that a young person may have include vehicles, currency, furniture etc. Intangible assets rarely posses physical qualities and can be harder to evaluate. Common intangible assets that a young person may include patents, permits, brand names, domain names, licences, etc.

To identify whether an asset you have is tangible or intangible you can visit YourDictionary.com

What is Equity?

The word equity is most commonly found in the field of finance.  In terms of finance, equity is ownership of assets that may have debts or other liabilities attached to them. To calculate equity, you simply subtract your liabilities from the overall value of an asset. For example, your car is an asset and if the value of your car is $20,000 but, you owe $5,000 on the auto loan you used to purchase the car, you have 15,000 in equity.

Image result for Asset minus liability

Positive Equity Vs. Negative Equity

Equity can be separated into two different types. There is positive equity and negative equity. Positive equity is when you have an asset that is worth more than the liabilities or amount you owe, (owning a $20,000 car, but only owing $5,000 on the loan). Negative equity is when your asset is worth less than the amount you owe (owning a $20,000 car, but owing $25,000 on the loan). Negative equity is commonly referred to as being “underwater” or “upside down”.  If you are smart with your finances, investments, and money management then you can avoid accumulating negative equity.

Image result for negative equity

Why do Finances Matter?

As young people, managing your finances isn’t always the most fun or entertaining thing to do, but it is important.  As we transition out of our childhood homes and begin gaining financial independence, it is imperative that we understand how finances work so that we do not get taken advantage of and avoid making bad investments. Young people like myself are in an exciting stage of their lives. The financial decisions we make at this point in time can have significant impacts on our future, so being smart with your finances is crucial.

#Finance #Money #Assets #Equity

 

Edited by Garrett

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