From www.irs.gov, many parents and college students will be able to offset the cost of college over the next two years under the new American Opportunity Tax Credit. This tax credit is part of the American Recovery and Reinvestment Act of 2009.

Here are six important facts the IRS wants you to know about the new American Opportunity Tax Credit: MORE

Have you ever thought about where your money goes?  I am sure you have some kind of idea when it comes to what bills are due at what time, etc.  However, I am talking on a deeper level. It is pretty easy to split your spending into two categories:  Money that is spent on assets (things that increase in value) and money that is spent on expenses (things that will decrease in value).  Do you ever wonder how the rich get rich?  They spend more of their money on assets than they do on expenses. 

I know it is impossible to not spend your money on things that decrease in value.  However, it is possible to limit it to things that are necessary.  I also know that the housing market here in California (and across America) has taken a bite out of our confidence in home ownership. 

But, do not let that sway you.  I remember watching a national morning news show one weekend morning and they had a guest on that said something that really resonated with me.  He said if you want to be rich, start with owning a home. 

With all that said, here are a few steps I recommend to start heading in that direction.

• Pay attention to how you spend your money.  Limit your expenses to the necessities.
• Try to live below your means.  By doing this, you will find you have more money in the bank (which always feels good).
• I realize home ownership may not be in the cards for everyone right now, but that does not mean it is out of the picture forever.  If you have the dream of owning a home again, make it a priority now by saving money for a down payment and/or rebuilding your credit.
• Before you spend your money, think about how it will affect you or your family in the future.  Does it have an effect at all?  If you feel the effect will be negligible or  negative, you may want to rethink the purchase.

Think before you spend…

From www.irs.gov, summer is a time many Americans take their fishing poles and gardening tools out of storage. Hobbies – such as woodworking, stamp collecting and scrapbooking – are often done for pleasure, but can result in a profit.

If your favorite activity does make a profit every year or so, there may be tax implications. You must report income to the IRS from almost all sources, including hobbies.

Here are eight questions that will help determine if your activity is a hobby or a business.

1. Is the purpose of your activity to make a profit? Generally, your activity is considered a business if it is carried on with the reasonable expectation of earning a profit.
2. Do you participate in your activity just for fun? Hobbies – also called not-for-profit activities – are those activities that are not pursued for profit. 
3. Do you depend on income from the activity? If so, your activity is likely considered a business.
4. Have you changed methods of operation to improve profitability? If so, your hobby may actually be a business.
5. Do you have the knowledge needed to carry on the activity as a successful business? People who carry out hobbies just for fun, often don’t have the business acumen to turn their not-for-profit activity into a profitable business venture.
6. Have you made a profit in similar activities in the past? This may indicate your activity is a business rather than a not-for-profit hobby. An activity is presumed carried on for profit if it makes a profit in at least three of the last five tax years, including the current year – or at least two of the last seven years for activities that consist primarily of breeding, showing, training or racing horses.
7. Does the activity make a profit in some years? Even if your activity does not make a profit every year, it still may be considered a business.
8. Do you expect to make a profit in the future from the appreciation of assets used in the activity? This indicates your activity may be a business rather than a hobby.

If your activity is not carried on for profit, allowable deductions cannot exceed the gross receipts for the activity. If you are conducting a trade or business you may deduct your ordinary and necessary expenses.

More information about not-for-profit activities is available in Publication 535, Business Expenses, available on the IRS.gov Web site or by calling 800-TAX-FORM (800-829-3676).

Sports seem to thrive in the summer months.  Between baseball, swimming, soccer, cheerleading and football, you can get worn out physically and financially. 

• Try limiting each child to one sport at a time.  This will not only help keep their sanity, but yours as well. 
• See about getting your uniforms second hand or passing them down from one child to the next. 
• You do not, necessarily, need to buy new shoes for each sport.  We bought football cleats for my oldest son last year for football…funny, they worked perfectly fine for baseball the following spring (as long as they still fit okay).  Obviously that is not always going to be the case, but keep it in mind if the budget is tight. 
• To save on gas, find out if other children in the neighborhood are on the same teams and set up a carpool. 

This may seem like very basic advice, but sometimes people are so set in their ways, they don’t seem to realize the little things they can do that will make a big difference.

This could potentially save your child’s life, but it will also give you peace of mind knowing they are safe around water.  Here in the Sacramento Valley it averages in the mid-90’s during July and August.  There are lakes, rivers and swimming pools everywhere. 

I have found many parents do not know which direction to go when it comes to swim lessons.  Make sure you research your options.  I have done both the city swim lessons and the private.  Private works better for my children, but I have run into the problem of the swim instructors being a little flakey.  If you know a good private swim instructor, share that information with your friends, it is very valuable information.

Private lessons work better for some children, but they tend to be pricey.  I have found they average $1 per minute.  For a 30 minute session with one child, it is $30.  Check out what your city or town has to offer.  Here in Roseville, you can get nine 30 minute group sessions for around $50.

Summertime is a fantastic time of year to plan your travel.  The kids are out of school, the weather is nice and you have probably been itching to get out of Dodge.  I think one of the biggest mistakes people make is that they tend to plan their vacations on one of the three big weekends during the summer, Memorial Day, Fourth of July and Labor Day weekends. 

I know it is a lot of fun to be out on the lake with lots of like minded people.  But, seriously, it could be costing you a bundle!

Plan Travel Around the Holiday Weekends – Have you ever noticed how gas prices seem to increase during the summer, especially around those holiday weekends?  I am sure you are aware of the fact that is not a coincidence.  Instead of taking that road trip you were planning on Memorial Day Weekend, go in mid-July when it is not a peak weekend.  You might find better deals all around if it is a low point in the season.

The money factor is only one part though.  When I was younger, I loved going camping on those big weekends.  I always used to feel the more the merrier.  Well, now I am older.  All those people just really stress me out!  Not only is traffic a complete nightmare on the road, but if you are camping or boating the nightmare does not end on the roads.  I remember waiting for more than an hour just to get a shower at a camp site.  Not to mention how dangerous the lakes were with all those crazy boaters on the water at once. 

It will be much cheaper and less stressful if you find a nice weekend around the holidays instead.  There will be fewer people and it should cost much less. 

Happy travels!

Summertime childcare…This is a tough one.  There are several things you need to take into account when looking into summertime childcare.  Things like:

• Your families budget
• Your personal preferences
• Child care availability
• Hours available
• Parents intuition

Yes, I do have your intuition on there.  You talk to any mom (and maybe dad’s too, but I can only really speak from a mom’s perspective), they will tell you they know almost immediately if they are comfortable leaving their child somewhere. 

I have had more than one mom tell me they left a child care facility without leaving their child there because it just did not feel right.  So do not underestimate the power of a parent’s intuition. 

Taking all these factors into account, it is important to take my fourth step into account.

Start Researching Summer Child Care Options Early – As the mother of school aged children, I know the summer can be a difficult time.  You have to make the decision of where your children will spend their summer. 

Some people are lucky enough to work from home and can have their children home with them.  If you fall into this bracket, you should probably take into account that you might not be quite as productive with the children home. 

Also, don’t forget those meetings outside the office, those hourly daycare centers are fabulous for that situation; just don’t forget to factor that into your budget. 

Other people do not have the option of working from home, so then what?  There are city run facilities that have great field trips and activities, but they tend to be expensive.  You can also look into some in-home daycare options or look into a nanny. 

Each option is a very personal decision for each family, not only financially, but only you know what is right for your children.  If you start researching early, you will not feel forced to make decisions under pressure.

Do you ever find summer rolls around and your cash is gone?  Whether you have children or not, you will find that summer is just more expensive…period.  From little things like gasoline going up to bigger things like wanting to take a family vacation or the cost of putting your children in summer camp, it just costs more. 

Tip number three in my series is to: 

Establish a Separate Savings Account for Your Summer  – Rather than trying to scrounge up the money at the last minute, go to your bank and create a savings account just for your summer season.  You can earmark this money for anything summer related.  With online banking now, you can even change the name of the account to “Summer Savings”.  This will take some of the heat off you when many of your expenses have increased.  Take a percentage of your income every pay period and put it into that account.  You have to be consistent about it though.  If you establish the account and don’t put anything in there, it really isn’t going to do you any good, is it?  It doesn’t have to break the bank, start with just 1% of your take home pay.  You will be amazed at how your money grows throughout the year.

 Little steps like this can make an enormous difference and it is really not that hard to do.  Just think of all you will be able to do during the summer knowing you have it covered.

Yesterday I told you to take a vacation in order to survive the summer financially.  Hopefully you have discussed this with your family and have made the decision to go…somewhere.  Trust me I understand money can be a concern, so, today I have decided to give you some advice on how to go on vacation with a budget in place.

The first and most important thing you need to do is take a good look at your finances.  See where you can plug some holes to make it happen.  Once you do that, put a budget in place.  Recently my husband and I gave ourselves a $1,000 budget to go to San Diego for the weekend.  We are going this weekend for our 10^th wedding anniversary.  I will share with you later how it all goes. 

Here are some tips on how to get great travel deals.

Research Your Vacation Options – If money is a concern to begin with, I don’t want you to stress yourself out more with an expensive vacation.  Here you have a couple of options.  If you are a do-it-yourself kind of person, the internet is your best friend.  Surf the web to find the best deals around.  Depending on the economy, you will want to book your vacation way in advance, or the night before you leave.  With the economy in the state it is now, I have heard of a few people booking flights to Europe a few days before and getting screaming deals.  A friend of mine booked a weekend in San Francisco the day they left and were shocked at the enormous discount they were able to get because they were booking it on the spur of the moment. 

If you are more like me, you get a little overwhelmed researching all that information.  I am a big fan of travel agents.  If you find a good travel agent, you can call them with some ideas of where you want to go, when, for how long and give them your budget and you are set!  The best part is this service does not cost you a penny.  Travel agents do this for a living, so, they know the best places for the best prices.  It really is a win, win for everyone.

How do you feel when you pay the bills?  Are you excited at the prospect of checking off some items on your to do list?  Are you subconsciously thanking your creditors for allowing you the opportunity to use their money for the month?  Or, are you completely overwhelmed with the task?  Do you procrastinate until you can procrastinate no more?  Are you overwhelmed and exhausted by the time the process is over? 

If you are miserable when you pay your bills, my guess is, your money is managing you.  You will not have financial freedom as long as that is the case.  I remember when I would pay my bills and I felt like a bird taking a bath.  There was money and paper flying everywhere, not sure where it was going, but it sure was not staying in my bank account.  Since then, I have put in some steps that take that feeling away.  They are:

• Have a specific place you pay the bills
• Make sure you have all the items you will need to take care of everything in one sitting -  If you have to get up to get something, chances are you will find another project to take your attention and the bills will not get paid. 
• Clear the space - You do not want it messy, that just adds to the confusion. 
• Select a day and time each week to pay your bills – If you put it on your calendar, you are more likely to keep the time carved out for that particular task.  If you try to squeeze it in somewhere else, it is much less likely to happen.
• Create a checklist – This way, you make sure you take care of all the things you need to do at one time.  Things like paying bills is obvious.  However, something you might forget to do is transfer money to savings or donate to your favorite charity. 

Hopefully some of these tips can help you create serenity while paying your bills.  I know that sounds like a dream, but you hold the key to making it a reality.