Stretch022012

S T R E T C HS T R E T C HPUBLISHED BY SOUTHWEST NEWSPAPERS

FEBRUARY 2012Spend Smart - Save MoreSpend Smart - Save MoreSpend Smart - Save MoreSpend Smart - Save More

Tax Time Tax Time AgainAgain

Tax tips you can Tax tips you can use now and all use now and all

yearyear

Credit Credit ScoresScores

Good scores mean Good scores mean good creditgood credit

Plus:Plus:Keep Your MoneyKeep Your Money

Frugal FoodieFrugal Foodie

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Page 2 • February 16-18, 2012 • S T R E T C HS T R E T C H

DepartmentsKeep Your Money ..................... 3

Frugal Foodie ........................... 8

FeaturesTax Time AgainIn our annual look at taxes, we offer year-round tips, plus tax preparation ideas you can use now ........................................ 4

Credit Score 101Good scores mean good credit ... 6

Advertising Sales Director: Jennifer Sorenson

Editor: Angelo Gentile

Designer: Renee Fette

Contributing WritersNancy Crotti, Mollee Francisco, Kristin Holtz

Stretch is produced by:Southwest Newspapers327 Marschall Road, Suite 125PO Box 8Shakopee, Minnesota 55379

Advertising Information952-345-6477

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S T R E T C HS T R E T C HSpend Smart - Save MoreSpend Smart - Save MoreSpend Smart - Save MoreSpend Smart - Save More

Vol. 3, No. 1 Feb., 2012

1814

95

Serving all of the South Metro area

S T R E T C HS T R E T C H • February 16-18, 2012 • Page 3

KeepYour

MoneyIdeas for spending smart and saving money

Water heater rebatesDid you know that water heating in the home is typically the second largest energy consumer after heating and cooling? It’s true, according to the experts at Xcel Energy, who advise that a new natural gas water heater can help save energy and money. Xcel’s 2012 water heater rebate pro-gram is designed to help offset your initial costs, and an efficient unit can offer sav-ings throughout the life of the equipment. Xcel Energy offers five tiers of rebates, including tankless water heaters. Benefits of Xcel’s program include:

• Rebates that will lower the initial cost of the equipment;

• High efficient equipment that will cost less to operate; and

• Units that use less energy to operate, which is good for the environment.

Who qualifies for this program? Xcel Energy customers who receive residential natural gas service from Xcel in Minnesota. Getting

started is easy. Follow these steps:

1. Find a registered contractor.

2. Purchase and install a new, qualifying water heater between Jan. 1, 2012 and Dec. 31, 2012.

3. Download the rebate application from Xcel’s website or ask for one from your installing contractor.

4. Customer applications must be postmarked by July 31, 2013, and include a dated invoice. It takes about six weeks to receive a rebate check.

For more information, visit Xcelenergy.com.

Save on baby expensesThe Thrifty Frugal Mom at Parents.com lists a range of ideas for

reducing the costs of caring for your baby. Here are just a few examples. Read more at Parents.com/blogs/thrifty-frugal-

mom/2012:

Borrow as much as possible from friendsLydia Beiler, who writes the The Thrifty Frugal

Mom blog, says, “We live in a smaller townhouse built in the 1800s, and while it is full of character it really lacks stor-

age space.” So, she and her family have

benefitted from “borrowing items from our friends who offered their baby things. Some of the things we borrowed were a bouncer seat, a swing, a cradle and even some clothing. Not only did this save us from having to buy these items, it also freed us up from having to store them in our little house!”

Take advantage of inexpensive clothes at yard sales, consignment shopsBeiler says she rarely bought new clothes for her first child, her now-3-year-old son. “In fact the only things I can think of are a couple of pairs of shoes, a pair of boots and maybe two pairs of pants. Between baby gifts, yard sales, consignment sales and borrowing a few things from family and friends he’s been able to have a great wardrobe for very little cost! And trust me, I’m picky about what I buy—used clothing does not have to look used.”

Make your own baby foodBeiler: “This is such a simple thing to do and is not only cheaper than buying baby food but also typically healthier.”

Don’t buy big ticket items newBig ticket items like cribs, strollers and chang-ing tables are some of your biggest expenses when you are gearing up for a new baby, Beiler says. “The good thing is that they are also fairly easy to find used. I suggest looking for these items at yard sales, consignment shops” and in the classifieds of this newspaper.

Reduce your taxesFirst, take a look at the feature on tax prep that you can find elsewhere in this issue of “Stretch.” Second, visit Money.cnn.com/maga-zine/investing/smartest/ and read about the “50 Smartest Things to do With Your Money” for 2012. The article covers a range of topics, including several smart options that are tax-related. Here are two:

Reduce your taxable incomeFund a flexible spending account at work. Your boss deducts pretax money from your paycheck, which you then use to pay for medical expenses rang-

ing from insurance deduct-ibles to aspirin to acupunc-ture. Every $1,000 you put in (you can contribute as much as $5,000 a year) cuts your tax bill by about $300. Sign up in open enrollment every fall.

Monetize that spare bedroomStart a business from your home, however small, and magically, expenses rang-ing from Internet access to plumbing repairs can become at least partly deductible. There are rules, of course: You have to use your home workspace exclusively for work, among other things.

Print out Publication 587 from www.irs.gov for details. Just don’t read it when you’re tired.

Source: CNNMoney

Send us your ideas. At Stretch, we’re always looking for ideas for sav-ing money and/or spending smart. Send your ideas to Angelo Gentile at [email protected] or call 952-345-6676.


By Nancy Crotti

Tax time isn’t just a few days in April. A couple of local experts say there are ways to prepare all year long to maximize your savings while abiding by the law.

To keep more of their income, people tend to focus on 401k contribu-tions, which are not taxed until you begin making withdrawals, ide-ally after age 59-1/2. (Before that age, you’ll pay a penalty for each withdrawal). Even when you’ve hit the magic age of no penalties, you’ll still pay taxes on 401k money once you withdraw it, accord-ing to Jason Hombach, a financial advisor with the Jordan office of Edward Jones, a national financial services firm.

Hombach prefers to advise clients on the notion of tax diversifica-tion, or more simply, to think of putting their money into three “buckets” – taxed investments such as mutual funds, stocks and bonds; tax-deferred investments, such as the 401k; and tax-free investments, such as a Roth IRA, municipal bonds and life insur-ance.

Since the financial crisis began, many people began to keep more cash in their savings accounts, where it’s safe from the vagaries of the stock market but not earning much interest. What they tend to forget is the power of inflation—at 3 to 4 percent per year—to erode the value of that money, according to Hombach. He advises clients to keep no more than six to 12 months’ worth of cash in savings to cover emergencies or short-term goals, such as tuition payments or buying a car. The rest, he says, should go into stocks and bonds, divvied up according to the investor’s age, risk tolerance and longer-term financial goals, such as retirement.

Hombach frequently advises eligible clients to sock money into tax-free Roth IRA accounts. Single filers earning less than $122,000 in modified gross adjusted income and married, joint filers who togeth-er earn less than $179,000 can contribute to a Roth IRA, Hombach said. Those under 50 can put $5,000 into such an account every year, while those over 50 can contribute $6,000 annually.

Those who earn more should check if they can contribute tax-free to a Roth IRA through their employer’s 401K plans.

“That’s why it’s imperative for people to be reviewing their 401k plan on a regular basis,” whether it’s with a financial advisor or their employer’s 401k representative, Hombach says.

The earlier people consider which buckets to put their money into the better, according to Hombach. “At the end of the day it’s what you keep versus what you earned,” he says. “That’s why it’s really vital that people work with an investment professional or a financial advisor.”

With tax time looming, there are several things people can do to prepare, whether they hire someone to fill out their tax forms or go solo. The first thing is to organize pertinent documents, according to Cathy Steigerwald, owner of Carver Tax Service in Carver. Those documents include W-2, 1099 and 1098 forms. If you itemize, add on charitable contributions, real estate taxes, car registration tax, employment expenses and large medical bills, Steigerwald says.

“If it says ‘important tax information’ that’s really the key,” she says. “The other thing they need to decide is, can they do it them-selves or do they need help? It’s better to err on the side of getting a little help and not getting into trouble…If they do decide to do it themselves, there’s a lot of good help for them on irs.gov, and a lot of links. I even go there sometimes.”

Those who do want help preparing their tax forms should ask for recommendations and make sure the tax-preparer they select has a federal tax preparer identification number. “People should be aware that there are a lot of people out there doing taxes who sign returns and don’t have these numbers,” Steigerwald says. “They’re breaking the law if they do.”

A tax preparer handles a lot of sensitive information. He or she must be trustworthy and available all year long, not just in the weeks leading up to April, according to Steigerwald.

Tax Time

AgainDiscover year-round tax tips,

and tax prep ideas


Whether doing it yourself or having help, taxpayers will notice that this year’s tax forms have a few changes. For instance, the Making Work Pay tax credit, which was worth $400 for single filers and $800 for joint filers, has been eliminated and replaced with a 2 percent reduction on the FICA tax, which goes toward Social Security and Medicare.

And the energy tax credit, which was worth $1,500 for the past two years for people who made energy conservation upgrades to their homes, has also been eliminated, Steigerwald says. “There are always a lot of changes every year,” she adds. “I think that these are the two that I will get asked most about.”

Other common questions taxpayers may have include:What do I do if there’s a mistake on my tax form? (Answer: File an amended form, called the 1040X.)

I owe taxes. Is there anything I can do to mitigate that? (Answer: Until April 17, you can contribute to a tax-deductible IRA or indi-vidual retirement account.)

In the second example, the problem is usually one of not having the government withhold enough money from one’s paycheck, according to Steigerwald. This is easily remedied by increasing the withholding on their W-4 form at work.

If all of this is confusing, Steigerwald says that’s normal. “I know people think, ‘I should be able to do this myself and I should be able to understand this,’ but to be honest, it’s a full-time job to keep up with everything,” she says. “They shouldn’t feel bad if they can’t do it themselves.”

Nancy Crotti is a St. Paul-based freelance writer.

• Do I really need Life Insurance?• What can I do to protect my retirement money?

Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. South Metro Federal Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.

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By Kristin Holtz

You know your social security number, and you likely could rattle off half a dozen phone numbers. But chances are

you don’t know your most important fiscal number: your credit score.

Bankers, landlords and salesmen use credit scores to determine your risk as a borrower: how likely you are to pay off your loan on time. Your score determines whether lenders will loan you money and at what rate.

“The higher the score, the better rate you’ll receive,” says Terees Rector, a loan officer with South Metro Federal Credit Union in Prior Lake.

Credit scores typi-cally range between 300 and 850. A score above 720 will usu-ally qualify you for good rates.

Scores are based on your credit history:

whether you’ve paid creditors on time, how much debt you’ve taken and how often you (or creditors) peek into your credit history.

Anything derogatory–late rent, utility bills, credit card payments, medical collections, unpaid checks, judgments, bankruptcies–can negatively impact your rating.

“I don’t think some people understand how not paying their basic day-to-day bills affects their credit,” Rector says.

Darryl Dahlheimer of Lutheran Social Services of Minnesota’s financial counseling service calls credit scores “snapshots” of your credit history as reported to one of three U.S. credit bureaus–Experian, Equifax and TransUnion.

The biggest positive impact on your credit score is simply paying off your debt.

“Being on time each month really helps people build a good score,” Dahlheimer says.

Rector recommends keeping open long-term credit references, especially if they’re clean. “The longer you have credit and the longer you pay well on credit, the better your score will be, as well.”

Using credit wisely also means not max-ing out credit cards or applying for too much credit. Too many inquiries into your credit report could indicate finan-cial distress and cause your score to plummet, says Rector, noting three to five pulls a year is normal.

Monitoring your credit report is an easy way to stay atop your score. By law, Americans can receive a free copy their credit report once a year from each of the three credit bureaus. Annualcreditreport.com is the only authorized source.

By pulling the report, consumers can review potential negatives and dispute any items that might not be theirs.

The free credit report, however, does not include your credit score. The only way to get that number is to buy it or, if you’re denied a loan, request it, Dahlheimer says.

Thanks to a Federal Trade Commission rule, creditors must provide a “credit score disclo-sure notice” whenever they deny a loan or give less-than-favorable terms, Dahlheimer says. The notice explains how to write for your free credit score.

Rector and Dahlheimer advise against paying companies to monitor or repair your credit. Not only have some been known to use shady tactics, but why pay someone to do some-thing you can easily do yourself, Dahlheimer advises.

Recently, Rector has seen the average cred-itworthiness of customers depreciate. She attributes it to the depressed economy forcing people to make decisions between bills and the fading stigma attached to bankruptcies or walking away from loans.

Those negatives, however, remain on your credit report for seven years and can make renting an apartment or finding affordable auto insurance more difficult, she says. “It’s becoming harder and harder to do anything without good credit.”

But even if your credit score is poor, don’t despair. Rebuilding credit takes time, but it can be done.

“It doesn’t matter where you are, it matters which way you’re headed,” Dahlheimer says. “That’s really an important attitude to look at it.”

Kristin Holtz is a writer and editor for Southwest Newspapers.

Credit score 101The higher your score, the

better your credit rating will be

Darryl DahlheimerTerees Rector


How to improve your credit scorePay all creditors on time: “The most important thing by far is to get some credit, use it, pay it perfectly and pay it down,” Darryl Dahlheimer of Lutheran Social Services of Minnesota says.

Review your credit report once a year; contact bureaus in writing about inaccuracies.

Pay down debt; contact creditors to set up payment plans.

Avoid using more than a third of your credit limit.

Build credit using savings secured loans.

Start building credit at age 18: “[Interest rates] are based on risk and someone with no credit is a high risk,” Terees Rector of South Metro Federal Credit Union in Prior Lake says.

Don’t close out long-term credit references.

Where to start? Free credit counseling: Lutheran Social Services of Minnesota, (888) 577-2227 or visit lssmn.org/debt

Tips for disputing inaccuracies on credit report, Federal Trade Commission, ftc.gov/bcp/menus/consumer/credit

How do credit scores work: FICO, myfico.com/CreditEducation/CreditScores

While each credit bureau has its own score name, all are based on FICO credit scores and determined by five main factors:

Timeliness of payment history, 35 percent35 percent

Amount owed, 30 percent30 percent

Length of credit history, 15 percent15 percent

New credit, 10 percent10 percent

Mix of credit, 10 percent10 percent

Source: Darryl Dahlheimer, program director LSS financial counseling services

What is your credit score based on?

Growing together in our community

We’ve seen a lot of changes in our community—and even more for the families in it. It’s a privilege to watch the families in our community grow and change, knowing we are here when they need us. We’re here to help you protect what you value most.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNERTM and federally registered CFP (with flame design) in the U.S., which it awards to individuals who successfully complete the CFP Board’s initial and ongoing certification requirements. For additional important disclosure information, please visit Thrivent.com/disclosures.

Richard J. Kirchoff, FIC Financial Representative

Andrew Frank, FIC Financial Representative

Ryan Ash, CFP®, FIC Financial Consultant

23795A R9-11 © 2011 Thrivent Financial for Lutherans 201103672

Keystone Group16154 Main Ave SE Suite 110-C

Prior Lake, MN 55372

952-447-1090

952-492-2300 223 1st Street East, Suite 100, Jordan

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Frugal Foodie

By Mollee Francisco

Seal and freeze your way to savingsFor this issue of Stretch, we’re obsessed with the money- and food-saving benefits of vacuum sealers like those offered by FoodSaver, Rival, VacMaster, etc.

For a minimal investment of around $100, these machines can pay for themselves in no time at all. The idea is to place food into thick plastic bags where the air is then sucked out and the bag sealed. The food can then be frozen to last significantly lon-ger than food in bags where air remains.

Vacuum sealers come in super handy when meat goes on sale in large quantities because it can be divided up at home and then sealed away in smaller por-tions.

We’ve also seen the sealers used to freeze leftover soup and chili. When you’re ready to reheat those items, just pop the sealed bag into a pot of boiling water and warm through.

The sealers work well for cookies, too, meaning you can bake up extra large batches of goodies and pop what you won’t eat right away into the freezer for later use. We’ve even heard of some people that get their Christmas cookies done months in advance using this method.

For gardeners with fruits and vegetables to spare, produce can last throughout the winter with a little extra effort before vacuum sealing and freezing. Experts recommend harvesting fruits and vegetables at peak quality. You should avoid over-handling to pre-vent bruising.

Most vegetables need to be blanched (a technique that involves plunging produce into boiling water and then following up with a cold water bath) to help stabilize their color, flavor and texture and lock in nutrients. Sealing and freezing the same day as harvested will also help keep produce in tip top shape.

Meals for a monthYou can also combine those veggies with various meats and spices to create entire meals that can be frozen. For busy families, one day of heavy prep work can produce a whole month’s worth of meals or

more–saving both money and time.

Simply assemble the ingredients for stir-fries, pastas or crock pot dishes into a freezer bag, vacuum seal, label (including the dish name, date and any cooking direc-tions) and toss into the freezer.

(Advice: place the bags on a flat surface in the freezer and allow the bags to freeze com-pletely so they are stackable.)

Countless recipes are out there for meals that freeze well and there are bloggers

who have practically turned this into an art form. You can find them easily under the Food & Drink section at Pinterest.com or head to your favorite Internet search engine and type in “freezer meals.” Be prepared to be amazed at all the nifty dishes you could prepare ahead of time.

Just be careful not to overload your freezer with a bunch of unfrozen items all at once as it will take longer for the food to freeze, and could make things like veggies mushier when you go to use them. Produce should be thawed in the refrigerator before opening.

Frugal Foodie columnist Mollee Francisco is a staff writer for the Chaska Herald.

RETIREMENT. No more waiting for Fridays. Jumping when the boss calls you. Or fi ghting with a six o’clock alarm. Sound nice? Then take a step to make it happen. Call your MetLife representative and ask about retirement plans. We’ll get you started on the road to meeting all your aspirations.

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Aspire to retire.

Richard MukomelaFinancial Services Representative7900 International Dr S-700 Bloomington MN 55425(952) [email protected]

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Stretch022012