Little Things Add Up: Responsible Money Moves During Your Vacation

This summer, it seems a little more feasible to step out of our homes and travel to a new destination. Whether you’re taking a flight across the country or hopping in the car for a four-hour road trip, you should want to have a general idea for how much money you can expect to spend from departure to arrival and back. Below are some tips on how to make sure you don’t overspend on a vacation, while also enjoying your trip.

Know Before You Go

Before you leave for your trip, obviously take a peek at your bank accounts and decipher how much money needs to be allotted from savings to checking. If you have a local bank, find out what the different rates are for ATM withdrawals. If you bank with a larger national bank like Chase, research for ATMs nearby where you’re staying.

Money Talks

In a world where people use credit cards and money exchange services like Venmo, sometimes old reliable cash still holds its weight. By having hard cash in the form of traveler’s checks, you have a visible fixed amount and once it’s spent, there’s no more money to spend on that given day. Sort the cash out per day and allot it per person as well if it is a family vacation.

If traveler’s checks don’t sound like your cup of tea, a responsible move to make sure you stick to the budget is to write down what you spend when you’ve spent it.

Research Your Destination

If you hadn’t done it prior to booking the vacation, be sure to research some of the popular tourist attractions and what the costs of them are. When researching the area or areas, make note of the difference in prices between the weekday and weekend rates, as they might be different for some attractions.

Also, with differences in weekday and weekend prices, certain times of the day might be cheaper than others. For example, a mini-golf course at 2 p.m. on a Tuesday might be significantly cheaper than 8 p.m. on a Saturday.

Track And Weigh

With online banking, it’s incredibly easy and user-friendly to log into your account and see how much you’ve spent and where you’ve spent it at.

Another thing to consider is weighing your opportunity cost while on vacation. There are always those small little unforeseen costs such as parking that can pop up at a moment’s notice. Planning ahead and weighing these costs can be an easy way to stay in line with your budget.

Organize And Attack

Making budgets and sticking to them can be a combination of overwhelming, anxious and nerve wracking. That’s why here at Donohoo Accounting Services, we have trusted associates that can help you with any and all financial needs.

From making a small budget to extensive accounting work, we have been helping clients resolve their tax and financial issues for more than 20 years. If you’re ready to get a handle on your finances but need some help, visit our website and schedule a free consultation today! For more tips and our latest updates, check us out on Facebook, Twitter or LinkedIn!

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Six Credit Score Myths You Need to Know

If you’re like most people, you know the basics of what a credit score is for and how it works. Your score is a make-or-break determinant of whether you qualify for a loan and there are key things to know, and to avoid, concerning your score. Let’s debunk a few of the myths around credit scoring to put control in your hands, and avoid any potential harm to your score.

CREDIT MYTH #1: There’s only one credit score

There are actually thousands of formulas for calculating credit. Depending on what score your potential lender uses, your score could vary. However, FICO scores are most common, and widely available online.

CREDIT MYTH #2: Checking your credit score can lower your score

Only hard inquiries from lenders can lower your score. When you check your credit score, there is no impact on your credit. Hard inquiries, however, are flags on your account when a lender accesses your credit history, and can lower your score because it indicates you may be increasing the amount of your credit. Do this too often and you can be seen as a risk to financial institutions.

CREDIT MYTH #3: Lowering your debt will immediately raise your score

It depends on the type of debt you pay off, and your credit limits. Paying off debt is important, and often high debt can result in a lower score. Keeping your credit card balances low, for example, can help to keep your score high.

CREDIT MYTH #4: Your job impacts your score

The job you have and how much money you make a month has no direct impact on your credit score. However, the bank or loan company may want to see your proof of employment and a few paystubs to ensure that you have a steady source of income. This can help people who are building their credit score by proving they have the funds available to pay off the loan.

CREDIT MYTH #5: Closing your credit cards will raise your score

Potential lenders are more concerned with how much credit you are using rather than how much you could be using. Closing a credit card could actually lower your score because it decreases the amount of credit you have. Remember, your credit score is all about giving lenders a blueprint for how you manage your money. If you have nothing to show them, they can’t draw up a plan.

As a leading accounting services firm in Cincinnati, Donohoo Accounting Services strives to make our clients feel comfortable discussing their tax situation and finances. Still have questions about your credit score, and how you can improve it? Let’s get you on track! Contact us today or give us a call at 513-528-3982 to schedule a free consultation! For more tips and our latest updates, check us out on Facebook, Twitter or LinkedIn!

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Mortgage Refinancing 101

Even before you’re ready to replace your current home loan with a new loan, you may be asking yourself, “Where do I start? Who should I talk to? What documents will I need?” In other words, the mortgage refinancing process may seem a bit overwhelming. The good news is there are steps to refinancing that are simple to follow. Take a look at the five steps below to begin your walk down the path to refinancing your home mortgage.

Set Your Re-fi Goals

Just like any other journey, the route to mortgage refinancing must have a destination. Some common refinancing goals include lowering your monthly payment, paying down the principal, withdrawing the equity in your home to pay off high-interest debt, and shortening the term of the loan. If you’re planning to move in five years or more, you may have other goals like re-investing the equity in smart improvements to increase your home’s resale value.

Know Your Credit Score

Having a great credit score usually translates into securing an excellent interest rate. That’s why knowing your credit score before you refinance is important. Does your credit score need some work? Take the time and effort to improve it. You may save yourself thousands of dollars over the term of your mortgage by earning a lower interest rate. A full credit report including your credit score is usually available free of charge from your bank and from many online resources.

Determine Your Home’s Equity

Before you refinance, call your lender to determine the payoff on your current mortgage. Then, have a trusted real estate agent show you a list of comparable properties (similar in size, age and updates in your neighborhood) that recently sold. Knowing the current market value of your home and subtracting what you owe on your current mortgage will help you determine the equity you have before you refinance.

Research Interest Rates

Knowing in advance the interest rates offered by various lenders will give you an advantage when you decide to refinance. Rates often differ by what seem like small amounts, but those fractions of percentage points add up over time. As well, depending on the type of loans you may qualify for, different home loan programs, such as VA, FHA, USDA and conventional offer different interest rates. Do your homework: research the best mortgage loans with the lowest rates that meet your needs.

Gather Your Money and Documents

Before applying to refinance your home mortgage, collect the necessary documents and data about your debt and assets, including income tax returns, W2s, bank statements, credit reports and personal identification. Also, be ready to pay closing costs by setting aside money in advance (about two to five percent of the appraised market value of your home).

With more than 20 years of experience helping individuals, small businesses and non-profit organizations with their finances, Donohoo Accounting Services is here to help you with your tax planning, tax filing and accounting needs. If you would like to set up a free consultation, contact us at 513-528-3982. For more tips and our latest updates, check us out on Facebook, Twitter or LinkedIn!

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How Tax Filing Will Be Different In 2021

The coronavirus pandemic brought unforeseen challenges to all aspects of business around the world, so it should be no surprise that it will impact this year’s taxes as well. Coronavirus legislation and inflation adjustments changed some of the most influential tax rules. Here is what you can expect to be different when you file your taxes this year.

February 12 is the opening date, and April 15 is the deadline

The first day to file in 2021 is February 12. We were all given a tax filing extension last year, but we’re back to April 15 for 2021. That doesn’t mean you can’t get an extension; but remember that being granted an extension only gives you more time to file your taxes, not more time to pay what you owe.

Charitable Deduction

The CARES Act allowed taxpayers to deduct up to $300 in monetary deductions in 2020 even if they chose to take the standard deduction. This was the IRS’s way to encourage Americans to contribute more money to charity during the pandemic.

Higher HSA Limits

Contributions limits for HSA-eligible workers who elected to participate in high deductible health insurance policies increased by $50 for self-only coverage (from $3,500 to $3,550) and by $100 for family coverage (from $7,000 to $7,100).

Higher Retirement Account Contribution Limits

Some workplace retirement accounts have higher contribution limits in 2020, so be sure to check yours. To illustrate, 401(k) plans had a base contribution limit of $19,000 in 2019, but that increased by $500 to $19,500 in 2020. For those who are age 50 and older, the catch-up contribution limit increased by $500 also, from $6,000 in 2019 to $6,500 in 2020. This means that if you are age 50 or older, you could potentially contribute a total of $26,000 ($19,500 + $6,500) to a 401(k) plan in 2020.

Higher Standard Deductions

Each year the IRS adjusts the standard deductions for inflation. This reduces the amount of income that is subject to federal taxes. In 2020, the IRS raised the standard deduction by anywhere between $200 and $400. The breakdown is as follows:

  • Married filing jointly: (+400 from 2019) – $24,800
  • Married individuals filing separately: (+$200) – $12,400
  • Head of household: (+$300) – $18,650
  • Single: (+$200) $12,400

Donohoo Accounting Services realizes these changing tax rules are hard to understand and stay on top of. When it comes time to file your 2020 taxes, you don’t have to do it alone. We are here to help you realize and take advantage of every tax deduction you are entitled to. We have been filing tax returns for individuals and small businesses for more than 20 years, so we are well versed in tax laws and rules and can help save you money, time and headaches.

If the thought of filing taxes fills you with dread or stress, please call Donohoo Accounting Services at 513-528-3982. We can handle the details and ensure you are receiving the tax credits, deductions and refunds you deserve. For more tips and our latest updates, check us out on Facebook, Twitter or LinkedIn!

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