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529 Alternatives

Have you found pregnancy positive? How does it feel like the moment you get to know that you will be responsible for the entire life of the cute little being in another few months. As a responsible parent the first thing that comes to our mind is 529 plan for your kids education. 529 alternatives does not necessarily rule out the 529 investment opportunity. The goal of this post is to talk about pros and cons of many different investment options that parents have at their disposal if they are hesitant to consider 529 as investment option for kids future education savings option as this is a mutual fund option same as 401K retirement option that comes with market risk exposure. Check out to see what works best in your budget, thoughts on your kids future etc. Lets start with 529 plan and discuss the alternatives one by one
529 Plan Details – This is a traditional plan that came into existence around late 1980s. As per IRS a 529 plan is a plan that can be set aside for beneficiary. It can be child, grand child. The amount that goes as a contribution towards 529 plan can be used for qualified educational expenses. This amount can be used for college and post-secondary education expense.
Who does operate the 529 plan?
529 plan is operated by state, educational institution
Are 529 plans tax deductible?
Nope. 529 plans are offered on post-tax basis. Main tax advantage come into existence when the distribution earnings are used for qualified educational expenses that can be one of the following:
Tuition
Books
Fees
Board Rooms
Starting 2010 following items are eligible educational related expenses under 529 plan:
PC Computer
Computer related peripheral equipment – This includes keyboard, mouse
Computer software
Peripheral equipment like printer
Internet access
These earnings are 100% federal tax free as well as 100% state tax free
Some exceptions to this include states like NYC offering upto $10000 state tax deduction if married and filing jointly , $5000 as single. Check with your state to see if you qualify for state tax deduction. With changing rules the maximum deduction on state can be $10000 and see if availing this option can be beneficial. For NYC criteria is that account holder should be NYC state tax payer. If you work at NYC and lie in states like CT, NJ you still qualify for this
Is there a maximum contribution limit on 529 plan?
If the contribution and any other gifts to a particular beneficiary exceed $14000 there comes gift tax consequence. However, there is no limitation on number of 529 plans one can setup
Why should I think about 529 plan alternative?
In a real-time scenario say your kid becomes entrepreneur and does not end up going to college. In this scenario you end up paying 10% penalty, state tax, federal taxes. Henceforth, it would be appropriate to look at alternatives before zeroing down on 529 plan
529 plan alternatives:
Custodial Account – Also called the uniform gifts to minor act UGMA account/UTMA account this account offers minors to own securities without the need of trust to be governed by an attorney. The major difference between UTMA account and 529 is that there is no stipulation on how the amount in this account is to be spent as opposed to 529
Rental Apartments – This is an out of the box thinking. I’ve come across lots of blogposts and financial advisors talking about cash on cash return of more than 22% with real estate investments. As a matter of fact, I stumbled on a financial advice recently. according to him the wealthy community think about 18% to 22% return on an average in their investments every year. According to them warren buffet does consistent 20% return each and every year on his billion dollar net worth. If you choose to invest in rental units now, except for the down payment the rest is taken care of by your tenants
Pros of owning rental in my view:
Your child will have financial freedom from day 1 of his life, career and will not have to think about his abode investment to start with
Your child will inherit all your property without any issues
You will enjoy tax depreciation on rental, can deduct all expenses in taxes that you can count on during the big rainy days
Cons of owning rental in my own view:
If the apartment is empty you will end up paying money from your pocket
The association fee in case of condo, townhouse which is preferred rental investment in most cases does come with fees. Also, property taxes should be taken into consideration. If you do quick math all these would add up to meet 1% rule. Henceforth, it would be extremely difficult to save more than $100 per month after all the rental expenses in expensive towns. It depends on how you finalize your deal, interest rate etc
Non-payment of rent will be additional stress and you will end up in eviction process which is a legal procedure involving attorney fees etc. This is another worst case scenario every landlord should keep in mind
You expect property and rentals to appreciate in your locality. This depends on luck, how well economy performs etc
I spoke to a realtor about rental investment. Based on his information I happened to learn that in case of rental we are expected to make more down payment. It is about 30% to 40% of property value as opposed to 20%. Also, your mortgage rates are going to be atleast 1% more than normal rates. So, take to mortgage broker, shop around before you calculate rental deal and net profits
Saving Bonds from government
I’ve recently come across an information that talks about Series EE savings bond whose interest earned is tax exempt both federal and state tax exempt if being used for higher education. I did some research on this and found that these bonds are reliable, low-risk, government backed financial products whose interest rates happen to be fixed interest rate for about 30 years. Interest rate of new EE bonds is announced by US treasury every May 1st, november 1st. As of November 1st 2016 the interest rates on bond happens to be 0.10% which is taxable if not used for education purpose. Instead we can choose to invest in online banks like allybank, barclays, everbank that yield 1% APY per year, that happens to be more than this. Series I bond again yield less than the banks. So, I’d not recommend any of these bonds at current interest rate. You can choose based on your needs and preference. I’m not endorsing any of these banks and express my views that are 100% personal
Roth IRA For Educational expenses:
Typically Roth IRA contributions are after tax and the earnings are tax-free when withdrawn after 591/2 years of age. However, for qualified educational expenses they can be withdrawn tax free. One limitation is that you should have contributed over past five years to make use of this for educational expenses. IF you dont use it for education, this can be used for your retirement

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Ebates offers hefty cashback during Tax filing




Tax season is the favorite season to talk more on money, taxes, savings, Wouldn’t it be interesting to get rewarded for paying your taxes appropriately in the form of cashback. Now, ebates does offer fantastic cashback for simply starting your tax filing from within ebates. Choose from one of the many different taxstore options available, shop around and start tax filing
Ebates a popular cashback site literally offers free money for starting the purchase from their website. This free money comes in the form of cashback. I started using this last month. I got my first cashback cheque yesterday. Today morning I started shopping around for best fee with tax filing software inside ebates website. Interestingly I found lots of interesting cashback bonuses while using tax filing software from within ebates
Here are the cashback percentage that are calculated on total amount spent towards tax filing as fees before taxes while your taxstore shopping starts at ebates
H&R Block – 9% cashback
e-file.com – 31% cashback
FreeTaxUSA – 25% cashback
TaxAct – 10% cashback
e-smart Tax – 10% cashback
intuit Payroll – upto $22.50 cashback
Note that taxes for 2018 are due april 17th 2018. File taxes, save money as cashback today from ebates




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Walgreens prescription history for taxes




Now, it is possible to access your prescription records as well as you past payment history online form Walgreens. This is an interesting feature offered for free by Walgreens Pharmacy
Why do I need to access these records?
You can access details on prescription, payment history that can be used for filing your taxes
If you own HSA (Health Savings Account) account if there is an audit this comes handy
FSA (Flexible Spending Accounts) reimbursements mandates prescriptions that can be accessed from here
If you would like to share details on your health with family, friends this comes handy
How do I access my prescription records and payment history?
Navigate to the website of Walgreens Pharmacy
Register for free and access details




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Best budget mattress




Are you interested in purchasing a new mattress? Are you confused as to how to go about this process. Every task can be successfully accomplished through great planning. Plan perfect to achieve great is the strategy. All you have to do is prepare a checklist (even write it down in a piece of paper) before starting a mattress search
1) What is your budget ?
Maximum budget and minimum budget should be fixed. It is always possible to have a tolerance of +/-5% of this budget. Cheaper you make it best is the deal. This helps us locate the price range and look out for mattress easily
2) When should I go for a mattress?
Always look out for season deals. This is the halloween, thanks giving, christmas season and best time to look out for great deals. Have the list of major websites listed and search for deals online. Some stores offer interesting deals with shipping and handling free if the purchase is above certain limit. Read the instructions carefully before finally using the credit card to checkout the mattress. It is best time to get $200 and more money saved through deals. Use this money for bedding sets, and mattress maintenance
3) Is mattress financing good?
If you want to purchase a product look out for 0% interest financing. this helps us pay our money in installments at no extra cost. Most mattress makers and dealers offer financing as less as 6 months to about 2+years at 0% interest rate. This depends of cost of the mattress you purchase. This helps a lot. You can invest the money in Fixed deposits/CDs and make interest in that tenure. Be careful and see when the deal expires. If you miss it interest rate could go as high as 12%.Have an eye on it.
4) What type of mattress should I go for?
Having fixed everything else this is a important step – tempurpedic, latex foam, spring are the types. Pick the right one
5) Do I need a peer review?
Nothing is as great as peer review. If you don’t get a chance to try the mattress in shops ask for peer review. This helps us take good decision.




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Can i pay taxes with credit card




I filed my taxes yesterday and chose to pay the taxes using my Chase Freedom credit card instead of direct ACH transfer from my bank account. The CPA was against this as he had mentioned that I’m making a foolish decision by wasting 1.89% towards processing fees. Here is what I explained him that I’d like to share as money saving tip today
1) I applied for chase freedom credit card last month after doing rough math of my taxes. Chase freedom card comes with $150 cash back bonus that can also be redeemed in form of Chase ultimate rewards that can be used for many different purposes including travel. In my earlier post I’ve given full details on why I’m maintaining my Chase Sapphire reserve credit card inspite of paying $450 annual fees. The ultimate reward points that I earn towards meeting this spending limit can be redeemed towards travel 1.5 times its value as ultimate reward points can be combined and transferred from Chase freedom card onto Chase Sapphire card. The equivalent cash value becomes $150 x 1.5 = $225
2) In addition to this I earn 1% cashback on my spending in Chase Freedom credit card
3) Chase freedom comes with 15 months 0% APR on purchases. So, I dont have to repay this amount in full. Typically if I repay the minimum balance with $1 extra every billing cycle for next 15 months it is more than sufficient
4) I can park this money in safe instruments like one-year CD. Currently the average rate on one year CD is 2.10%. With 15 months interest it comes around 2.15% APY
Now, let us do simple math on processing fee and see if we make more
Processing Fee = 1.89%
Income Earned by Parking in CD’s = 2.15%
Cash back rewards = 1%
Cashback rewards + sign-on bonus rewards towards travel = 1.5 times $150 plus your tax bill
As a whole I save 0.50% minimum towards this if I make use of Chase Freedom credit card. You can apply for Chase Freedom credit card and get this approved today. Interestingly there is no annual fee ($0 annul fee) on Chase Freedom credit card




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NRI Invest in India different investment options




NRI, the non-resident of India is the status obtained as soon as a person leaves India and visits a foreign country as a temporary employee, business men with Indian citizenship, student visa (with some exceptions) , temporarily posted in foreign nation by state and central government agencies such as banks, IMF (International Monetary Fund). Note that visitor visa doesnt entitle you to obtain NRI status.

So, as an NRI can I invest in India?

The simple answer is yes. You as an NRI are entitled to invest your hard earned money in India. Here are some popular ways to invest your hard earned money in India

1) Fixed deposits – Open a NRE, NRO , FCNR, RCF fixed deposit that gives constant yiels monthly, quarterly, annual basis or upon maturity. The interest earned is taxable at rate of 30%. It is interesting to note that if you are an NRI you can utilize the double taxation avoidance agreement the treaty that Indian government has with some countries that helps you have your returns taxed at a lower interest rate of 15.45% (includes tax deducted at source popularly called the TDS, education tax, cess)

2) Gold deposit – Have your money remitted to your relatives in India and ask them to purchase gold coins, gold bars, gold jewellery in banks, reputed jewellery stores, popular shops like TATAS tanishq. Gold has tax at the time of purchase after which there is not tax upon sale

3) Mutual Funds – As opposed to popular belief that NRI’s can invest in all the mutual funds, only chosen few funds are open to general public. The income earned on mutual funds are taxable

4) Fixed maturity plans – This is a popular option similar to mutual funds. Some popular reputed mutual funds are operated by best bank SBI and other private sector bank like ICICI, HDFC, Kotak Mahindra, Birla group, Reliance etc

5) Real estate – The best ever enticing investment is the real estate. This includes investment in land, home under construction, second hand home, apartments and NRI’s are eligible for tax upto  5 crores based on level of income. It is to be notes that the rental income earned needs to be filed as income tax in India.




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Ebates cashback sweet spot on purchase




I wanted to utilize the promos, coupons , deals that come as part of St.Patricks day this year. It’s been a while I’ve purchases my handbag, before six years to be exact. Also, I bought an affordable comforter for our family before 7 years. I thought it would be better for me to make bedding set purchase as well as handbag purchase this year
As a first step, I logged into ebates a cashback website that I did enroll this month. This is a totally new concept. Now-a-days I see that most of the online shopping on major brands like walmart, kmart, target, krogers, 1800flowers, JCPenny, even travel websites like expedia, travelocity, orbitz, hotel booking website hotels.com, booking.com and much of the top brands that sell their service online has partnered with cashback websites like ebates.com
When I mean by cashback, note that you need to do the following to earn money in the form of cash. Currently ebates has an option to ship the physical cheque to your home address as per their cycle. For my purchase made yesterday in the month of march, I got an email confirmation saying that I’m going to get this cheque in the month of May. This is my first try and I see ton lots of positive reviews about the credibility of ebates, they have been in business so long and I’m sure that I’ll get this cheque in the month of May 2017
Adding to this I did chat with JC Penny online store customer support to make sure I’ll get rewards if I start the shopping from ebates. They confirmed that I’m going to get my money from them
To start with here are the simple things to earn free money on your purchase
1) Create an account at Ebates website. IF you click on the banner below, you will earn $10 during your first purchase. So, dont miss $10 worth of free money
Ebates Coupons and Cash Back
2) Once you signup your free account, you can login and perform the search based on categories as well as keywords. I wanted to purchase bedding and did a search on that. I got a list of stores with their current coupon details. I found JC Penny offering coupon that will save me 20% on my purchase sitewide on any purchases over $100, 15% purchase below $100. Also, JC Penny offers free shipping for orders over $100. I did choose to utilize the opportunity and clicked on SHOP button from ebates website
3) In JC Penny website I made a purchase and finalized the order. I placed the order and to be double sure used the email address that I did make use of to create my ebates account. Typically the link tracking should work fine, but I did not want to take a chance. EVen if they do email comparison I will have credibility of being loyal to ebates
4) Immediately I turned back to ebates website to see what is going on. I did not see any cash back. This was yesterday night
5) Today morning exactly after 3 hours of making purchase I got the cashback credited in my ebates account. I’ve set my email alert in ebates, that did notify me of this

6) Ebates promised 3% cashback on my purchase. I see that the cashback earned is before taxes after applying JC penny discounts to the products. As such I got 20% + 3% 23% discount on the entire sale yesterday
Ebates Coupons and Cash Back
Today I got an email from airlines loyalty program and they talk about earning 5 miles per $ spent in their airline reward program. I got much interested. I’ll keep publishing my analysis and findings on ton lots of money hacks, travel hacks, cashback, deals , offers and lots more including my case studies that did work for me
Ebates has an option to send you cashback in form of physical cheque to your address as well as your paypal account. To support us please click on this banner to register your ebates account for FREE and start earning money today onwards
Ebates Coupons and Cash Back




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Purchase snacks cheap




Who will say no to snacks? I’m no different and foodie ever since I was in my school days. Back then whenever I reach home my mom prepares snacks as opposed to what I do for my kids these days. I did a quick scanning of my grocery bill this month to see if I can save some good money in my grocery bill and found that nearly 18% of my spending goes towards snack purchase. Though this is not part of my monthly budget snack purchase happens in an erratic fashion as and when we feel like having something interesting.
I took list of snacks purchased over past 6 months and could see interesting pattern in snack purchase. Here is how I’ve figured out way to purchase cheap snacks
Pop-corn Bulk Cheap Purchase at Taldepot – All of us like popcorns. Ever since we decided to disconnect our cable connection, purchase netflix as a saving step in our budget, we make it a point to cherish interesting movies, shows enjoying popcorns. This has contributed a major portion of my grocery snack bill. I checked the price of popcorn online and could see cheapest price in Taldepot. Interestingly they offer free shipping on any purchase over $25

Save on chips and doritos by purchasing in bulk. Again the taldepot turned out to be clear winner
Ebates.com popcorn factory coupon – The popcorn factory offers lots of popcorn flavors, easter popcorn shells, popcorn basket, chocolate popcorn, raspberry popcorn and much more. Make the purchase from ebates.com for fantastic cashback on your purchase
Ebates Coupons and Cash Back




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Chocolate Loyalty Programs




How does it feel like to earn rewards as a return for the loyalty you show towards your chocolate purchase all these years? Too sweet to be rewarded on these chocolate loyalty programs isn’t it?
Russellstover Chocolates – Signup to receive 20% instant offer in your first purchase. Become a member in their Loyalty program to receive points that you can retain for lifetime. They have limited location availability. However, their unique online shopping cart makes it possible to have the purchase shipped to any location

Rocky Mountain chocolate factory – Signup for their newsletter to get sweet coupon deal, offers on birthdays and much more. Get a coupon that comes as part of email subscription welcome mail
Abbotts Chocolates – Signup the newsletter, get exclusive offers and promotions in your inbox. These handmade chocolates can be purchased online as well
Godiva Reward’s Club – This is a reward program from most popular chocolate brand Godiva. You can join their membership club for free and enjoy exclusive benefits. Reward club benefits include free birthday gift, early access to exclusive sales from godiva, signature truff and much more
Amber Lyn Craver’s Club – You can enjoy coupons and discounts by joining craver’s club
Kirkland Signature Chocolate – This is unique costco brand that makes your chocolate purchase a unique experience
David’s Cookies – This is a pastry online portal offering monthly club with seasonal deals. In addition to cookies they sell chocolate coated cakes, biscuits and many more. Join in one of their club to enjoy exclusive deals – cookie of the month club, brownie of the month club, dessert of the month club, cheesecake of the month club and many more. Check the specialty shops that offer desserts that are sugar free, gluten free, nut free, dairy free. They ahve ton lot of onsale, gift baskets at discounts and many more