Money Issues For Singles
Introduction
This article will highlight some of the money issues faced by single people and has some practical suggestions for overcoming them. As we will explore soaring property costs, excessive tax burdens, holiday surcharges and illness can all create financial difficulties for single people.
1. Live at Home, Rent or Buy?
Many developed countries including the US and UK have seen soaring property prices. At the same time more and more people are choosing to stay single or get married later in life. In the UK for example, property prices are so high that it is virtually impossible for single people on average salaries or wages to either rent let alone buy a property. Unlike married couples with dual incomes single people are forced into an increasingly narrow set of options.
There has been a significant increase in friends pooling incomes to buy properties together and whilst this may be a great idea on the surface, it can lead to complex legal dilemmas over property rights should the friendship sour.
Potential solutions
a) Whilst living at home may not be an ideal solution it can be an invaluable means of enabling you to save some money for a larger deposit on your future house, which can reduce your monthly payments to more manageable levels. Staying at home for an extra 2-3 years can make quite a difference to your future purchasing power in the housing market.
b) If you are desperate to leave home then buying a property with a friend is a good option providing you take the time to invest in a written legal contract which makes clear that the property is co-owned. This can save you lots of time and money in the future if things go wrong.
2. Taxes
Different countries have different approaches to collecting taxes from the general population to fund Government expenditure. In the UK the local governing body of a specific area, known as a council, is permitted to raise taxes through Council Tax. In essence this is calculated based upon the value of your property. Single people constantly face discrimination in this area as they have to pay the full tax bill even if they are the only occupant. This is clearly a significant financial burden particularly when dual income relationships are able to share the cost.
Some Governments also offer tax incentives for married couples or civil partnerships and to parents with children residing at a given property. Whilst these are clearly valuable measures, single people often face the full burden of the tax system because they have chosen a separate lifestyle.
3. Holidays
A further area that is acutely apparent as presenting a money issue for single people is in relation to holiday charges.
Package companies and hoteliers like to maximise their profits by ensuring that they get the most out of their facilities. Single room supplements regularly apply to individuals taking a holiday alone and often add a substantial amount to the final cost.
Potential Solutions
Ask a friend to join you on holiday, that way you can avoid a surcharge on your room booking and both enjoy a holiday in the company of a good friend.
If this isn’t an option don’t be afraid to haggle with a travel agent over waiving the fee or reducing it, suggest that you may take your business elsewhere if they are unable to reach a satisfactory agreement.
4. Illness
We all get ill from time to time but some forms of illness can be more serious than others. Single people do not have the luxury of having another person to rely upon to pay the bills. If they are unable to work and are saddled with significant financial commitments illness can tip the balance.
Possible solutions
a) Consider taking out insurance policies on mortgages, like Critical Illness or Income Protection. Whilst these can add between $60-80 dollars per month to repayments they can be invaluable if you are unable to work and will pay your mortgage during a period of illness.
b) If you are reluctant to take out extra insurance policies in case of illness, consider saving between the equivalent of 3-6 months salary as a safety net should you be unable to work.
Summary
This article has sought to examine some of the fundamental money issues faced by single people and suggest practical ways to deal with them. Recognition is given to the difficulties faced in relation to soaring property prices and the often inequality of tax systems which penalise those living alone. Finally single people also face significant money issues connected to excessive holiday surcharges and difficulties when inflicted with illness and unable to work.
source:searchwarp.com
What is a Charitable Trust?
By Rita Lambros-Segur
A charitable trust is designed to create a path whereby your assets may be converted into a life long stream of income and not a source of governmental revenue though taxes. Your taxes are lowered, what you pay now is lessened and what your heirs or your children pay will be lessened too when the time comes to pay estate taxes.
In recent years a charitable trust setup has become far more popular because they provide a valuable advantage to us in terms of what we pay currently and those taxes we will pay in future years. They permit us to provide for those causes or people who are important to us. These trusts are irrevocable and will not generate capital gains and estate taxes immediately.
The establishment of a charitable trust will halt the capital gains paid on immediate sales of your assets, lower your estate taxes sometimes as much as 50% of what your children or other heirs might have to pay after your death. Further advantages are that it will reduce what you currently pay for income taxes and this, in turn, will increase your income throughout the remainder of your life. It will additionally make a very positive future gift for your charity and increases those assets that your heirs receive after your death.
How does a charitable trust work?
Here is what happens. You transfer all cash, bonds, securities, and property that you own into the charitable trust. This is an irrevocable transfer. In other words, you can't do it today and change your mind tomorrow. The value of your estate is substantially lower than it was prior to now and as such so are the taxes as well as the estate taxes to those whom you designate as heirs. Based on what you want to do with the money when you are gone, you pick a kind of charitable trust to build. At the end of the trust, all assets are given to a charity that you will select. Some trusts permit you to choose more than one charity while others do not permit that.
Charitable trusts take some very skillful drafting to make them completely legitimate but they are most assuredly worth your time to look into. Some legal specifications apply, of course, to what end you can and cannot do. There are excise taxes which are given for acts of what is termed self dealing, meaning any type of transaction between the charitable trust and an individual who is termed a disqualified person such as a family member or the family of a contributor.
Others might be a loan between the charitable trust and the person who established that same trust. Such transactions, however, might cause a penalty in the form of an excise tax to both the recipient and the charitable trust.
Learn the pros and cons of a charitable trust arrangement at: http://www.charitabletrust101.com Charitable Trust.
Article Source: http://EzineArticles.com/?expert=Rita_Lambros-Segur
A Quick Guide To Understanding Your Individual Retirement Account
It's never too early to begin preparing for your retirement and one of the best ways to prepare is to set up an Individual Retirement Account (often referred to as an IRA).
The purpose of an IRA is to serve as a personal tax-qualified retirement savings plan. Anyone who works, whether as an employee or self-employed, can set aside a set amount in an IRA, with the earnings on these investments tax-deferred until the date of distribution. In addition, certain individuals are permitted to deduct all or part of their contributions to the IRA. Plus, as of 1998, certain individuals can also set up Roth IRAs, to which contributions are not deductible, but from which withdrawals at retirement won't be taxed.
It doesn't take much to set up an IRA. The trustee (or custodian) can be a bank, mutual fund, brokerage house or other financial institution. You cannot be your own trustee. An IRA can be established and a contribution made after year-end, no later than the due date for filing the income tax return for that year, not including extensions. This generally means that you have until April 15th of the following year to make the contribution and deduct it on your tax return.
The most you can contribute to an IRA in any single year (as of 2006) is the smaller of $4,000 or an amount equal to the compensation includible in income for the year. Those 50 years old and above will also be allowed to make additional $1,000 catch-up contributions to an IRA each year to help them save more for retirement.
The same limit applies even if you have more than one IRA, or more than one type of IRA. When both you and your spouse have compensation, you can each contribute the maximum, which means $8,000 total ($10,000 if you are both 50 or over). In 2008, IRA contribution limits will be raised to $5,000, while the catch up contribution for those 50 years old and above will remain at $1,000.
You do not have to contribute the full amount allowed every year. You may skip a year or even several years. You may resume making contributions in any subsequent year, but you cannot add additional funds to make up for those years when no contribution was made.
Contributions must be from compensation. This can be from wages, salaries, commissions and other sources of earned income. Contributions do not include such things as deferred compensations, retirement payments, or portfolio income from interest or dividends.
You can contribute more than the allowable amount, however, a 6 percent excise tax penalty will be assessed.
No contributions may be made to an inherited IRA, in a form other than cash, or during or after the year in which the individual reaches age 70.5.
You must begin taking distributions from an IRA no later than April 1st of the year following the year in which you reach age 70.5, or the year in which you retire, whichever is later.
This is a quick and general overview of IRAs. The rules are slightly different for Roth IRAs, which have their own contribution and distribution limitations. Before setting up an IRA, take the time to talk to your banker, accountant, or financial advisor to make sure you have a firm grasp on your options and set up the IRA which best serves your personal needs.
You can learn more about IRAs online from the Internal Revenue Service here: http://www.irs.gov/taxtopics/tc451.html
Article Source: http://www.kokkada.com
D. Silva is webmaster for Individual Retirement Account Solutions, where you can learn more about IRAs, Roth IRAs, Traditional IRAs, and more.
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