It’s the holidays, so say goodbye to all your cash, right? But not necessarily. “Extra Credit” is our advice column that’s made for people who want to get their money right…now.
Pamela Capalad is a certified financial advisor, and luckily, she’s also the woman helping break down the mystery around money for us, as well as dispensing some advice on how to hold on to (and ideally grow) your moola.
Got a question for Pamela? Submit it HERE and we’ll answer it in an upcoming installment of “Extra Credit.”
I’m interested to learn more about personal investing. How and where can I start learning about how the market works, how to invest, best practices, and tools/tips? Thanks!
I love that you’re asking this! Many women shy away from investing, and I don’t blame us. It can feel like a foreign language, as we’re not all taught this stuff. You need to consider three things to start: Why you want to invest, how long you want to invest, and how much time you want to spend choosing your investments.
Is it for retirement, saving for a long term goal, or maybe just curiosity? Do you want to be able to use the money in five years, 10 years, or not until you’re 65? Do you want to research and pick individual stock or let a professional manage it all for you (not as expensive as it sounds)?
For instance, if you want to save for retirement and don’t want to spend a bunch of time researching stock, consider a robo-advisor (NerdWallet has a great list to choose from here).
They ask you some questions about your goals and how comfortable you are with risk and put you in one of their preset portfolio models. To understand more about what goes into putting together this kind of investment portfolio, check out this Girlboss piece.
In general, stock picking is a risky business. They say you shouldn’t put all your eggs in one basket, but in the world of investing, even 10 baskets, (or 10 different kinds of stock) is considered risky. The robo-advisors I mentioned above will have you invested in about 10,000 different companies. Now that’s what I call diversification (also, that’s actually what it’s called).
If you want to pick stock, make sure you choose an amount of money that you can stand to lose. Check out sites like Investopedia and Goldbean to get some education on how to start.
On my podcast, we’ve also done a number of shows on investing and open many episodes with a short investment segment. Start adding new vocabulary slowly and deliberately, and soon, you’ll find yourself fluent in investing.
I’m in some deep doo doo with my taxes. What are my options at this point? I’ve heard that the government actually offers low interest repayment plans. Aside from that, at what point should I consider working with an outside agency to help me deal?
You are not alone! I see this happen more and more often as folks make side income, take second jobs, and go full-time freelance. We were never taught about taxes when most of us were going to be employees, but times have changed so quickly in the last decade. A freelancers union study estimates that by 2020, 40 percent of workers will be freelancing and with that comes a more complex tax situation.
The first thing I would do is make sure your most current tax return is filed. Often that is the first thing the IRS will tell you to do before they are willing to address your past tax returns. I would also consider involving an accountant at this point to help you.
There is no special agency—most accountants are versed in being able to help you with back taxes and get you on a payment plan with the IRS.
Often, an accountant will have you sign a power of attorney so they can request transcripts of what was reported to the IRS. Those 1099 forms and W2’s you get are also sent to the IRS and if you don’t file your tax return, the IRS will file it for you. This means any expenses you can write off/deduct won’t be counted when they calculate your tax bill.
Once the accountant gets your tax transcripts, they can help you prepare the missing returns. You can go back up to three years and be able to take deductions/write-offs, potentially lowering the total amount you owe.
When you get the final tax liability you owe, you can negotiate a payment plan directly with the IRS based on what you can afford to pay back each month. My accountant tells me the fees and interest work out to about a 10 percent interest rate.
Also make sure you handle your state tax filings, if you haven’t done those. Ask your accountant to join you on the phone with your state tax agency and go through the same process. You will also be able to negotiate a repayment plan with the state if you can’t pay the total amount you owe.
This process can take months to complete, so I would start now before tax season gets really crazy!
Got a question for Pamela? Submit it HERE and we’ll answer it in an upcoming installment of “Extra Credit.”
