Your Money Questions Answered

Commonsense solutions to your financial concerns
By Lea Ann Knight, CFP

Few Americans are without money woes—whether it’s planning for retirement, deciding what to do with a windfall or debating a switch to an online bank. Here, certified financial planner Lea Ann Knight, author of the weekly blog Financially Fit After 40 and owner of Garrison/Knight Financial Planning in Bedford, Mass., takes a stab at some frequently asked financial questions. 

Make the Most of Extra Cash

Q. I received a raise a few months ago and have been using the extra cash to pay down my new mortgage. Should I be doing something else with the money instead? 

A. Because mortgage rates have been at historic lows recently, consider putting those extra dollars to work somewhere else. The average return in the stock market has been around 8%, so one good alternative is to invest what’s left over from your paycheck each month in a basic stock-index mutual fund at a low-cost brokerage house. Or you could add the money to your retirement savings. But if you feel like you’re on track financially and you have surplus cash, then paying down debt with a low interest rate can be a smart move.

Maximize Your Retirement Savings

Q. My company is now offering a Roth 401(k) in addition to the traditional 401(k) plan. What would be the financial benefits of switching my 401(k) contributions to the Roth version?

A. The advantage of contributing to a Roth 401(k) is that, although you can’t take an annual tax deduction now, you will be able to withdraw your money tax-free in retirement. If you think you might be in a higher tax bracket when you’re older, a Roth 401(k) is a good idea. But if you like having that pretax deduction each year, you might prefer to keep your money where it is. Alternatively, as long as you are single and earn less than $110,000 yearly (or your combined annual income if married is less than $173,000), you may continue your traditional 401(k) plan at work and contribute up to $5,000 per year to a Roth IRA as well. Having both types of accounts in retirement will give you more flexibility with withdrawals and help you minimize taxes in your golden years.

Decide if an Elderly Parent Still Needs Life Insurance

Q. My dad has retired but is still paying premiums for a large life insurance policy. His house is paid for, and all his children are independent. Does he still need this insurance?

Insurance (Photo credit: Christopher S. Penn)

A. Assuming there will be no financial obligations for his estate to meet in the event of his death, your father might no longer need to keep paying for the insurance policy. If that’s the case and his is a term life insurance policy—which provides coverage for a set amount of time—with no cash value, he can simply stop paying the premiums to end his coverage. If, on the other hand, it is permanent life insurance, the policy might have a cash surrender value, meaning he could cash it in (and pay income tax on the proceeds) or use the cash value to start paying for his premiums. The latter option is appealing if he wants to keep enough value in the policy to help pay for his burial expenses or wishes to leave the death benefit to his heirs. Before he acts, however, he should review his choices with a financial planner to determine which option makes the most sense for him.

Consider Additional Disability Coverage

Q. My company benefits plan includes some disability coverage, but not at my full salary. Should I supplement with private disability insurance?

A. Many employers offer long-term disability plans that cover 60% to 70% of your salary if you become unable to work. Private policies can be pricey, so decide how much of your paycheck you need to meet your monthly expenses in such an event. If it’s within the employer-covered amount, you likely don’t need a private disability plan, but if you’re the sole breadwinner with young kids and a big mortgage, it might be a good bet. Also consider how close you are to age 65, when many such policies terminate anyway.

Weigh the Pros and Cons of Online Banking

Q. I’ve heard that online banks offer great interest rates, but I’m not sure if they’re safe. Are there any other drawbacks?

A. Before you switch, confirm that your account will be FDIC-insured, meaning your money will have the same protection as it would at a brick-and-mortar institution should the bank fail. And recognize that although many online banks can offer a higher interest rate because they don’t have the same overhead as traditional banks, it will take longer to get your hands on your money in an emergency and—if you must make deposits by mail—for checks to post to your account. Also think about how often you need services such as certified checks—which might not be as easy to obtain online. Consider two accounts: your local bank for day-to-day needs and an online one for savings. That way you’ll still have easy access to some of your money but will earn higher interest on what you don’t need today.

Adapted from the Aug. 24, 2012 issue of All You. © 2012 Time Inc. All rights reserved.

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2013 May Be the Year You'll Need to Hire a Professional

By Dan Caplinger

It's hard enough doing your tax return in normal years, when tax laws look a lot like they did the year before. But with the massive changes that the just-in-time fiscal cliff compromise legislation created in the tax code, this might finally be the time to get a professional tax preparer on your side.

Taxes (Photo credit: Tax Credits)

Choosing the right preparer could greatly increase your refund by finding tax deductions, tax credits, and other benefits you might miss -- but picking one isn't always easy.
Below, we offer some tips on how to pick your pro. But first, let's look at all the reasons why having an expert on your side makes sense this year more than ever.

Changes at the Edge of the Cliff
Until politicians in Washington managed to come to their last-minute agreement, tens of millions of taxpayers were facing potentially huge tax increases.

In particular, the alternative minimum tax promised to wreak serious havoc on millions of families' returns. The AMT was originally intended to prevent the very rich from using loopholes and credits to avoid the tax man altogether. But time and inflation expanded the number of people who fell under the AMT enormously -- or would have, had lawmakers not annually passed a temporary "patch" to the AMT that adjusted it for inflation.
Thanks to the partisan wrangling in Washington, though, the last temporary patch had expired at the end of 2011, and -- had no fiscal-cliff deal been reached -- initial estimates put the number of new AMT payers this April at upwards of 30 million, with an average tax hit of around $4,000 and some taxpayers seeing even larger increases of up to $8,000.

The fiscal cliff compromise actually solved the AMT issue permanently, and extended low tax rates for the vast majority of taxpayers. But in the process, it brought back some confusing provisions to the tax code. For instance, the measure extended a tax break for charitable contributions made from IRAs. But since the new law didn't take effect until after the ordinary deadline for 2012 contributions, the IRS had to issue special rules to allow taxpayers to make charitable distributions in January, but have them treated as applying to the 2012 tax year.

Looking ahead, things will get even more complicated for many taxpayers. Although the highest ordinary income tax rates only take effect above $400,000 of taxable income for single filers and $450,000 for joint filers, several new provisions apply at lower income levels. Those include the new Medicare surtax of 3.8 percent on investment income, which applies to income above $200,000 for singles and $250,000 for joint filers. Also, phase-outs of itemized deductions and personal exemptions are also back, meaning that, after enjoying several years of temporarily favorable rules, millions of taxpayers will see those tax breaks fade away.

Getting an expert tax preparer to help you now will not only make it easier to get your 2012 tax returns filed but also help you get a head start on planning for 2013's taxes. But you have to find the right tax professional for you.

Who to Hire and When Not to Bother
Most of the advice you'll find on getting a professional tax return preparer in your corner focuses on qualifications. As when hiring any professional, it's important to check on background, experience and quality of service, to get recommendations from friends, and to weigh your particular needs against each candidate's strengths and weaknesses.

But it's equally important to find a tax preparer with whom you're comfortable on a personal level. Like a doctor or lawyer, your tax preparer will learn sensitive personal information about you, and you'll need to feel able and willing to tell him everything necessary for him to file a complete and accurate return.

Moreover, make choices based on the level of difficulty of your taxes. If your only income comes from your job and you typically file a 1040-EZ, you don't have to waste money on a high-powered tax attorney or accountant. But if you're dealing with special tax rules this year, going to the mall to work with a novice preparer at a national chain can cause unnecessary anxiety.

Most importantly, don't wait too long. By the time April rolls around, the best tax return preparers will already be swamped, and you may well find yourself out of luck trying to find one to help you.
So if you're among the roughly 60 percent of taxpayers who'll get expert help on their returns this year, procrastination is the enemy. Go out and find someone to fight for your biggest possible refund now.

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• Expiring credits, deductions extended by Congress (news.yahoo.com)
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Money Management in 15 Minutes or Less

Get your financial life in order by squeezing in a quarter of an hour for these easy but effective moves.

Stephanie AuWerter; Real Simple and Money editors

With longer workdays complicating the already Herculean task of juggling job and family, you probably don't have a minute to spare. And financial tasks all too often fall to the bottom of the to-do list. According to government time-use studies, the average American rarely gets to money-management chores; those who do will spend a scant 15 minutes a day on them.

Failure to make time for your finances, however, can be detrimental to your future. Fortunately, you don't need more than a coffee break to make some smart moves with your money—moves that can cut your expenses, potentially boost your savings and help protect your family's finances. "The key to meeting long-term goals is to break them into short-term steps that are easier to accomplish," says Carnegie Mellon economist George Loewenstein. Even if you have less than an hour to spare, these small steps may result in a big payoff.

Get on Track for Retirement

Believe it or not, you can devise a smart investing plan for retirement in just 15 minutes. And the potential reward is huge: A 2011 report from banking giant HSBC found that people who have even a rudimentary plan for reaching retirement goals are ending up with up to three times as much money as those without one.

The information contained herein represents the opinions of a third party and does not necessarily represent the opinions of Platinum Financial or Susan S. Lewis Ltd. and are unaffiliated with any of the entities referenced above.

Step 1. Figure out your monthly contribution target by taking five minutes to input basic info, like your projected retirement age and current contribution rate, into an online income calculator. 

Step 2. Coming up short? Use the remaining 10 minutes to pump up your 401(k) contributions on your plan's Website. If you can't invest as much as the calculator recommends, commit to automatically increasing the amount you're contributing at the time of your raise—a feature many large employers offer.

Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.

Know the Score

The 2011 National Foundation for Credit Counseling reports that only four in 10 Americans know their credit score. A good reason to be among them: This number determines what interest rate you'll get on loans and credit cards. 

How to check. Pony up $20 to get your score at MyFICO.com. The FICO scoring model, the one most commonly used by lenders, ranges from 300 to 850. A score of 740 or higher entitles you to the best rates; if yours is lower, there are a few steps you can take to quickly boost your number. 

Start by getting a free credit report from each of the three agencies that track consumer credit at AnnualCreditReport.com. Read the reports carefully, looking for mistakes. Any errors—about one in five has them, according to a May 2011 estimate from the Policy & Economic Research Council—could be costing you points. Report any problems to each of the bureaus and the lender (there's a form at each Website). 

Next, call your card issuer to ask for an increase in your credit limit, because how much you tap of your available credit is a key factor in determining your score. The more unused credit you have, the better you look—ideally, you should use no more than 10% of what's available to you. 

Target Your Savings

Want to save money for a rainy day or a sunny vacation week but never have enough leftover cash to stash for these goals? Have the money taken directly from your paycheck, so you'll never miss it. Only about 20% of workers split their paycheck among multiple accounts, though many employees with access to direct deposit can do so, reports electronic-payments industry group NACHA. In 2010 the association found that those who take advantage save $90 more a month than those who don't. 

How to do it. If you don't have dedicated savings accounts for each of your goals, set them up. Opening accounts online takes 10 minutes tops. Next, contact your payroll department to see if you can split your paycheck; if so, figure on filling out a form, adding another five minutes. Not an option? Set up automatic transfers from your checking account so that the money is moved on payday.

Download a Shopping Buddy

Coupons can reduce the bite groceries and other household goods take out of your budget—25% of take-home pay for the average family—but you can't spend hours perusing the Sunday circulars. Fortunately, there are apps for that. Download these:  Coupon Sherpa. Delivers coupons to your phone for in-store scanning (free for iPhone and Android). ·         CardStar. Stores your merchant loyalty cards on your phone so you won't miss out on points or discounts (free for iPhone, Android, BlackBerry, Windows Phone).

Adapted from the December 2011 issue of Real Simple. © 2011 Time Inc. All rights reserved.

For more Naperville retirement planning information, contact us today!

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Your Credit Score, Demystified

Know what actions may harm your rating

By Vera Gibbons 

Everyone wants your number: Insurance companies, cell-phone providers, utility companies and even landlords routinely solicit that three-digit score to find out if you’re financially responsible. Your FICO credit score can help them make that assessment, says John Ulzheimer, president of consumer education at SmartCredit.com, a credit-monitoring site. 

The FICO score, the number used by most lenders to determine your credit risk, is calculated by three national credit bureaus—Experian, TransUnion and Equifax—that track your credit history. Scores range from 300 to 850, with a median of about 710, according to FICO, the company that developed the credit-scoring system. 

If you don’t know your score, go to MyFico.com to request a copy (for a $20 fee). If it’s 760 or higher, relax. Most consumers in that range are generally considered reliable borrowers, says Ken Lin, chief executive of CreditKarma.com, a free credit-management service. If your number is on the bubble or lower, you’ll need to take action. (And if you see a mistake in your report, like a supposedly missed payment that you actually made on time, contact the credit bureau and say, “I dispute the accuracy of this information, so please correct it,” suggests Ulzheimer. Then follow up with a letter requesting the same.) 

Read on to learn about the moves that can wreak havoc on your score (plus a couple that won’t hurt it a bit). Although you can’t easily or quickly boost your credit score, steering clear of these money-related behaviors will ultimately have a positive effect on it. 

AVOID AT ALL COSTS 

Repeatedly making late payments. 

Payment history accounts for a whopping 35% of your score, so “this is one of the worst things you can do creditwise,” says Lin. The more severe the delinquency, the more damage it can do to your score. 

Deduct: Up to 200 points for three or more missed due dates within a year 

Maxing out credit cards 

Having a high debt-to-credit-utilization ratio--the percentage of available credit you’re using compared with your credit limit--damages your score. Make sure that at least 90% of your credit is freed up at any given time. 

Deduct: About 100 points 

PROCEED WITH CAUTION 

A hard inquiry 

When you apply for a credit card or a loan, the institution asks about your credit to determine your borrowing eligibility; this is called a hard inquiry. It’s fine to open one new credit card, but don’t open several within a few months, says Ulzheimer. 

Deduct: 30–40 points for excessive inquiries 

Closing old cards 

Since your debt-to-credit-utilization ratio is used in calculating your score, be careful about reducing the number of cards you have, as that may lower your overall available credit. Try to keep open those accounts with the largest credit limits—unless there’s a card with an annual fee that you rarely use. 

Deduct: About 100 points 

NO NEED TO FEAR 

A soft inquiry 

This is a request made by you or, say, a utility company that is not related to a lending decision, so your score won’t take a hit.

Shopping for an installment loan

If you’re in the market for a mortgage, a home-equity loan or a car loan, FICO realizes that many inquiries will be made. It will lump the requests together, as long as the banks or other lending institutions look up your score within a 45-day period. So don’t drag out the loan search too long or your score may go down, since each request will be viewed as a separate, hard inquiry. 

From the August 2011 issue of Real Simple. © 2012 Time Inc. All rights reserved.

Contact Naperville Financial Services Advisors at Platinum Financial, where help is just a phone call away.

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How to Save More Money Now

Tricks to help you make, save and potentially grow some green.

By Jayme S. Ganey

The economy is in flux, but that doesn't mean you're destined for a downward financial spiral. The following tips will help you manage your bills, stash away savings and set yourself up for the future.

Place Your Bills on a Budget 

Utility payments, along with mortgages and car notes, are typically one of the largest monthly payments. Opt for budget billing: You pay a preset monthly amount based on your annual average energy consumption, advises James Petty, senior vice president of Regions Mortgage in Atlanta. If your home consumes more energy than the budgeted amount pays for, the difference can be added to a single bill or split over several months. If you use less energy, your account will be credited. Call your utility company for details. 

Negotiate a Better Credit Card Rate

Don't pay 23% interest on credit cards. Visit CardRatings.com and search the comparison list for a better deal with lower ongoing rates and perks like airline miles, cash back and gas rebates. Keep in mind: Most introductory rates of 0% can expire in six, 12 or 15 months, so pay your bills on time and build up positive credit to negotiate a decent rate.

Pay Your Mortgage Principal First

While mortgage interest rates are low, Jordan Goodman, personal finance expert and author of Master Your Debt: Slash Your Monthly Payments and Become Debt-Free, advises that you apply extra payments to the principal to build equity in your home. Owing less on the principal means less interest over the life of the loan, which eventually equals smaller mortgage payments and more money in your pocket. You can also consider borrowing money against the equity in your home to pay off higher-interest-rate loans. For example, you can take out a home-equity line of credit (HELOC) and pay your credit card, student loan or auto loan out of it, since, as of February 2012, HELOC rates were averaging approximately 5% interest, according to Bankrate.com, vs. the higher interest rates on other loans. HELOCs, which are revolving lines of credit at variable rates, can sometimes be refinanced or converted into fixed-rate loans. To get started, you need positive cash flow, sufficient equity and a high credit score. Visit TruthInEquity.com for more information. Keep in mind that you put your home at risk of foreclosure if you can't make the required payments. 

Make Your Kids Match Your Money

Paying for your children's college tuition is an investment, so treat it like one, says Ellie Kay, author of The 60-Minute Money Workout: An Easy, Step-by-Step Guide to Getting Your Finances Into Shape. When you invest, you seek to have your stocks work for you and you expect a regular report on progress. So think of your students' contribution as your 401(k) company match: Tell them they need to match your investment with their own money from a work-study job, scholarship or part-time gig to help pay for books, meals and gas. They also need to provide you with a report of their performance. A bonus: They'll be more invested in doing well if they're paying for part of the ride.

Move Your Money Around

If you think you’re paying too much for loans, you probably are. With the low interest rates currently available, you should shop around for the best deal. Adrian Nazari, CEO of CreditSesame.com, which helps consumers optimize their loans, recommends charting all of your loans: home, auto, student, credit cards. Write down whom you owe, what you owe, the current interest rate and the terms. Optimizing your loans allows you to move money where it is needed. If you have a credit card with an 18% interest rate, for example, consider transferring the balance to a lower-interest-rate card, which will allow you to pay down the balance faster.

Adapted from the January/February 2012 issue of Essence. © 2012 Time Inc. All rights reserved.

It's Tax Time, and the Naperville Tax Preparation experts at Susan S. Lewis Ltd, can help you make certain you are getting all the deductions you deserve. Contact us today!

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When Mom and Dad Move in

If you set up the right space, living under one roof with your parents won't break the bank-- or drive you crazy.

By Sara Max

Last year, Charleen and Chris Tivnan were looking to add a second story to their 1,200-square-foot ranch home in Holden, Mass., to make space for her parents. Then they came across a larger, four-bedroom colonial nearby that had a first-floor in-law suite. The new house cost $420,000, almost twice as much as their ranch house. But given that the planned renovation would cost $275,000, the Tivnans realized that buying was a no-brainer. Charleens mom and dad are happy too. Now we can go away for the winter without worrying about our pipes freezing, says Charleens mother, Pauline Erickson.

These days roughly 16% of the population is living in a house with at least two adult generations, up from 12% in 1980, according to the Pew Research Center. Thats the highest level in 50 years. The economy has played no small role in this increased familial bonding. Given the aging boomer generation and the expected growth in home ownership among Hispanics and Asians, for whom multigenerational living is more common, the trend will probably be with us for a while, says Kermit Baker, chief economist for the American Institute of Architects.

To be sure, living with your parents or your in-laws can offer plenty of benefits: You get help with household expenses and maybe child care; the older generation can live independently longer. That said, finding a place to live that accommodates two or more generations comfortably can be a difficult and expensive proposition. To do it right, follow these steps.

MAP OUT YOUR IDEAL SPACE

No matter how close you are to your parents or in-laws, both generations should maintain some privacy, says Sharon Graham Niederhaus, co-author of Together Again: A Creative Guide to Successful Multigenerational Living. The ideal layout depends on the current health of your or your spouses parents and on your time horizon. If they are in good health, a second-floor or a basement suite might be the best solution, at least for now. But its worth keeping in mind that Mom and Dad might not be able to navigate stairs someday, so a home with a first-floor apartment might make more sense for a long-term arrangement.

Finally, think about how you and your parents or in-laws will interact on a daily basis. Plan to eat dinner together every night? Then you can probably forgo two complete kitchens and instead opt for a breakfast bar with a sink, a fridge and a microwave for them, says Scottsdale, Ariz. architect Tim Dodt.

RUN THE NUMBERS ON A REDO VS. BUYING NEW

To get the setup you need, you have three options: converting your existing home, adding on to it or moving to a new space. If you are looking to expand or remodel, the first step is to check the zoning rules in your area; many have restrictions that may prevent you from adding an in-law apartment. Next, ask an architect or a contractor to give you an estimate of costs (find one certified as an aging-in-place specialist at nahb.org/caps). Putting in a bathroom can cost about $40,000; a new master suite could easily run six figures. As a rule, converting an existing space within a house or garage is anywhere from 50% to 75% less expensive than increasing your homes footprint or building up, says Bend, Ore. design consultant Thomas Carson.

Once you know what it would take to redo your house, compare it with the prices of homes for sale in your area that already have the layout you need; you may, like the Tivnans, find that its cheaper to move.

Regardless of whether you remodel or buy, youll need to factor in higher ongoing expenses, such as property taxes and utility and grocery store bills. Decide up front who will pay what, says Niederhaus.

KEEP AN EYE ON RESALE

While you are not likely to recoup the cost of an expensive conversion, the good news is that as baby boomers age, multigenerational homes are increasingly popular, says Worcester, Mass. real estate agent Lisa Westerman. Still, the ideal space is one that can easily be repurposed," she says. So before you build or buy, talk to a local real estate pro about what sells well in your market. In college towns, for example, an in-law apartment may appeal to buyers looking to rent to grad students. In resort areas, houses with dual master suites tend to attract buyers.

In the Tivnans case, the sellers of the home they bought had had multiple offers, so the couple feel confident about their investment. Its worked out perfectly, says Charleen.

From the November 2011 issue of Money. © 2012 Time Inc. All rights reserved.

Turn to Naperville Asset Management Team of Susan S. Lewis Ltd. for more information on stretching your assets.

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Cumulative Returns vs. Average Annual Returns

To help you understand a fund’s historic performance, fund companies often present both cumulative and average annual returns in their profiles. So how do you know which one has more significance to retirement investing?

Cumulative returns show the total returns, assuming that all earnings are reinvested in the fund and compounded over time. If you want to know how much an investment would have earned during a specific time period, cumulative returns can be useful.

However, if you want to compare the performance of a fund against its benchmark or other similar funds, average annual returns present a clearer picture of a fund’s track record by taking compound earnings out of the picture. Average annual returns make it easier for investors to compare two different funds’ performances side by side during the same time periods. 

Need to know more? Contact Naperville Investment Services provider, Susan S. Lewis, she helps you keep more of your hard earned money.

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How to Pay Off College Debt

One thing you never learned in school: how to pay for it. Educate yourself on the best ways to reduce—or eliminate—student loans.
By Vera Gibbons

The most expensive college in the United States—Sarah Lawrence College, in Bronxville, N.Y.—charges $44,220 a year for tuition. And that doesn't include fees and room and board, which can cost an additional $14,000. Even more disturbing is that the annual cost of a college education has risen by 130% in the past 20 years, according to the College Board. As a result, Americans have racked up about $1 trillion in education debt from both federal and private student and parent loans.

"People are borrowing twice as much as they were a decade ago because grants and scholarships are not keeping up with the escalating costs of college," says Mark Kantrowitz, the publisher of FinAid.org and FastWeb.com, free online financial-aid resources. To wit: Graduates of the class of 2011 have an average of $27,200 in debt, up from about $17,600 in 2001.

If you're on a tight budget, it may be difficult to steer any additional cash toward education debt. But you should try to pay it off as early as possible; otherwise it might stick around for a decade or more, which could prevent you from saving enough for retirement. Here are five steps to paying off any lingering loans of your own—and to helping your children settle theirs down the road.

1. Pay off variable private loans first.
If you or your recent grad has this type of loan—which makes up 15% of total U.S. education debt—this may seem like an odd move. After all, the interest rates on variable private loans (given by banks and credit unions) are currently lower than the fixed rates on federally backed and private loans. But historically this situation is unusual, and if the economy improves, interest hikes are probable. "Rates could climb 5% to 6% over the next four years, making your monthly burden unmanageable," Kantrowitz says.

If you can, pay twice the required amount until you have eliminated this debt and make only the minimum monthly contribution toward your fixed-rate federal loans, since those rates cannot increase.

2. Choose the right repayment plan for federal student loans.
When it comes to Stafford, Perkins, PLUS, and Direct Consolidation loans—which make up 85% of education debt—there are five repayment options. They range from the standard plan, which requires a minimum payment of $50 every month for up to 10 years, to the new, income-based plan that caps your monthly payments at a "reasonable percentage" of your income (determined by the federal government) and forgives any debt remaining after 25 years. So which schedule is best for you?

"People often make the mistake of going with the option that has the smallest monthly payment, which causes them to pay thousands more in interest over the loan's life span," says Lauren Asher, the president of the Institute for College Access & Success, a nonprofit that works to make college more affordable. Aim to put 10% of your gross (that is, pretax) income toward your education debt. Go to studentaid.ed.gov to calculate which repayment plan fits your budget.

3. Ask your employer to pay off your student loan.
A little-known way to eliminate college debt is to appeal to your boss for a compensation package. "Some midsize companies cannot pay the kinds of salaries that a large corporation can, but they may be inclined to offer lower wages in exchange for a onetime payout toward your loan," says Manuel Fabriquer, the president of College Planning ABC, a consulting firm in San Jose, Calif. Why? "It costs them less in salary payments in the long run." (Those in fields that require a special degree, like tech, finance, and nursing, are most likely to receive this benefit.)

If you're a recent grad looking for a job, bring this up during salary negotiations. Be willing to take a lower salary and to commit to staying at the job for a specific time period in exchange for a payment toward your schooling. If you're a veteran employee, raise the subject at your annual review by saying, "I've been a loyal employee for [insert time period], and I look forward to continuing to grow and learn here. As part of my compensation, can you put [insert amount] toward my loan?"

4. Consider consolidation.
If you or your child graduated before July 1, 2006, it pays to roll multiple federal loans into one—you'll lock in an interest rate that's lower than what you're paying on each separate loan. Earned a diploma since then? All federal student loans now carry fixed interest rates, so there's no financial benefit to consolidating. (And it's highly unlikely that you'll be able to combine any variable private loans.) Nevertheless, if you have trouble keeping track of payment deadlines and have been hit with late fees on occasion, go ahead and consolidate. (For more information, go to simpletuition.com or loanconsolidation.ed.gov.) You'll save some dough by doing so.

5. Sign up for auto-deductions.
You may have already realized that automatic online loan payments make your life easier. What you may not know is that all government and some private lenders charge a slightly lower interest rate (usually 0.25% less) if you make your monthly remittance this way. Over 25 years of payments, you'll reduce your repayment period by at least a year, says Reyna Gobel, the author of Graduation Debt. Best of all, you can sign up now, even if you've been repaying your loans for years.

Contact Susan S. Lewis & Associates a Naperville Accounting firm for tax benefits resulting in college loan payments, or for Naperville Education Planning Services, contact Platinum Financial, the sister company of Susan S. Lewis Ltd.

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Get Your Cell Bill Just Right

Once upon a time, your family plan didn’t cost a fortune. Try these tactics to bring it back to bearable.
By Zain Asher-Ejiofor

You knew joining the smartphone revolution would have repercussions for your monthly budget. Now that your whole household is hooked up, however, the sum total of overages, surcharges and usage fees has probably caught you by surprise. The average individual’s mobile bill is up by 31% since 2009, to $71 a month, reports J.D. Power & Associates. And for a family of four who all have smartphones, the tab can easily top $200. Get your clan—and costs—in line with these tricks:

Put Your Kids On Hold
Teenagers in particular can bulk up the bill: A 2010 Nielsen survey found that the average U.S. teen sends or receives 3,339 texts a month. An unlimited texting plan can solve that particular problem. But if your child goes over on other allowances too, ask your carrier about parental controls. You can cap texts, minutes, megabytes of data, even the amount spent on apps. Once your child exceeds the limits, he or she is cut off until next month. You can also have phones blocked at certain times—say, during school hours. (Settings can be tweaked so your kid can call home or 911.) Most carriers charge $5 a month per line for controls, but if you pay more in overages, it may be worth the cost.

Don’t want to be so rigid? Set up text alerts to keep tabs on your teen’s usage, says Sascha Segan, cell-phone analyst at pcmag.com. When your kid’s near the limit, impose restrictions.

Dial Down Your Data Usage
Going over your data allowance on your own phone? Each megabyte of overage can add $10 to $30 per line. Avoid streaming content—think YouTube or online radio—over the cellular network, as this hogs bandwidth. Also, program your phone to switch from 3G to Wi-Fi when a hotspot is available (in the settings menu). And, when Web browsing on the go, use a site’s mobile version instead of the full version (type “m” in place of “www”). Finally, change e-mail settings from “push” to “manual” so you get new messages only when you refresh your inbox.

Call (or Text) for Free
Some 17% of cell-phone users go over their monthly minutes, reports validas.com, a site that helps consumers cut their mobile bills. Extend your talk time by using apps like Google+ Hangouts or Skype. “These video chats can use Wi-Fi to make calls, and they’re typically free when you call someone with the same app,” says Jessica Dolcort of tech site cnet.com. (Apple’s FaceTime works the same way, but only with other iPhone, iPad or Mac users.)

Similarly, for texting, WhatsApp and GroupMe allow you to transmit free messages across devices. You’ll have to get friends to install the app too—but once you do, your bill will be better for it.

Adapted from the April 2012 issue of Money. © 2012 Time Inc. All rights reserved. 

Susan S. Lewis, a Naperville financial services guru can help with all your financial concerns, take advantage of her expertise today.

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Think Like an Appraiser

Knowing how these valuation gurus work can help you figure out what your home is really worth.

By Alison Rogers

When it comes to assessing a home’s value, real estate agents and homeowners tend to be an optimistic bunch. In the post-bust world, appraisers are a different story. They have to predict a realistic value for your home that the bank can use to extend credit to a borrower—and that number can make or break your sale or refinance. Appraisers say the following five areas are where homeowners often misjudge the worth of their abode.

The Outside
The appraiser sees: Overgrown bushes and chipped paint.
What he does: Slices as much as 3% off the value of an average-size home.
Why: Curb appeal is primo. And an unkempt yard is a sign that there may be other issues. “A good-looking lawn and bushes imply that you also take care of the internal systems in the house,” says Jonathan Miller, president and CEO of a New York City–based appraisal firm that works throughout the tri-state area.

Moreover, the more meticulous your neighbors are about grooming, the more your appraiser will downgrade the value of your home. “If a lot of the nearby properties are professionally maintained, the one that sticks out like a sore thumb will get a harder adjustment than in a subdivision where there’s more variation,” says San Diego appraiser Armando Ortiz.

Basic Systems
The appraiser sees: A brand-new roof.
What he does: Nothing.
Why: Just as a knee replacement won’t make you look 20 years younger, a new roof, furnace, or boiler isn’t considered an improvement to your home. That said, if your roof is in disrepair, replace it: Signs of leaks or discoloration can knock a significant amount off the home’s value. “When people buy a home, they expect the roof to be working,” says Columbus appraiser Mike Armentrout. “So while a new one isn’t an added feature, it will help your chances of a sale.”

The Basement
The appraiser sees: A recently finished basement with a half bath.
What he does: Adds about 2% to the value of the home.
Why: Yes, your finished basement adds value—but don’t expect it to count like first-floor space. The addition of a bedroom and quarter bath on the ground floor could increase your home’s value by up to 20%, especially if you’ve got only one other bathroom. “A below-ground basement normally isn’t included in the square footage of the house,” says Miller. The same rule applies to outbuildings like a pool-house casita, painting shed or studio.

The Market
The appraiser hears: Two nearby homes just went into contract above their asking prices.
What he does: Nothing.
Why: While a broker might pump up a home’s asking price based on the sense that the market is “hot,” by and large, appraisers are bound by the data of recent comparable sales.

What if prices are suddenly up in your area, and you’re nervous that your house won’t appraise for contract price? In that case, you might want to delay your appraisal until one of those recently contracted sales closes.

A Remodel
The appraiser sees: An expensive, custom-made, built-in entertainment center.
What he does: Makes a negative adjustment to the valuation.
Why: “Cost doesn’t equal value,” says Miller. Renovations that are at all trendy—or not in keeping with the historical period of the home—will be assessed at the cost of ripping them out. Timeless improvements, on the other hand, such as a deep sink or new wooden cabinets in the kitchen, will add value. So if you’re thinking of remodeling, ask a local real estate agent to tell you what’s on the wish list of today’s buyers.

Next on the List: Pump Up Your Appraisal
These small projects are likely to give you a dollar-for-dollar return on your investment—and make the home more salable.

Spruce Up Landscaping
Fill in lawn spots, add shrubbery, tidy borders and mulch.
Result: Up to $5,000

Buy Stainless-Steel Appliances*
Make sure you get brands similar to your neighbors’.
Result: Up to $7,000

Refinish Existing Wood Floors**
Sand, stain and apply polyurethane to an existing wood floor.
Result: Up to $3,000

Create a Walk-in Closet
Spend less if you aren’t moving interior partition walls.
Result: Up to $2,000

*Appliances are for a mid-range oven, refrigerator, microwave and dishwasher.
**Wood floors are for the first floor of an average-size home.

Source: Money research

Adapted from the August 2012 issue of Money. © 2012 Time Inc. All rights reserved.

Considering a home sale or renovation? Check with Susan S. Lewis, your Naperville Tax advisor to determine what tax benefits you may benefit from with your decisions.

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