Don’t Make This Costly Mistake!

We’ve talked before about how the current credit crisis has a lot of people searching for new sources of money. That may well be you, especially if you have an adjustable rate mortgage (ARM) and your payments have increased.

So what can you do? Please read on, because this is very important.

With housing prices falling, tapping into your home equity (which we generally don’t recommend anyway) is no longer an option for many. Credit card companies — hard as this is to believe — are actually being tighter with their credit. (You know it’s serious when that happens!)

As a result, more and more people are withdrawing money from their retirement accounts or borrowing from them. At first glance, this seems like a perfect solution, doesn’t it? You get some much-needed cash and then pay yourself back instead of a lender!

The truth is, it’s a lot more complicated than that… and we mean a lot!

Time for a little Dolan straight talk: Taking a hardship withdrawal or borrowing from your 401(k) is a drastic move.

When you withdraw money from a qualified account, you’re mortgaging your retirement! You absolutely must consider all of the consequences before taking this step.

We have put together an important video to help you do just that and make the best decision for your money. Click here to watch the video now and discover the only two situations we believe it’s OK to borrow from your 401(k).

  Our #1 Question

We love to get questions from you here at Dolans.com as well as from listeners to our national radio show. Hearing from you gives us a really good sense of what money concerns folks are struggling with.

The number-one question we’re getting right now revolves around credit cards. Specifically, people want to know what we think about transferring credit card balances to those “0%” offers.

Here’s our answer: Be careful!

That 0% interest rate is a teaser introductory rate that doesn’t last forever, so transferring your balance makes sense if you do it only once and if you can pay off the balance before the 0% rate expires.

Constantly switching from card to card with a balance actually hurts your credit score.

Every time you open another account, the new creditor makes an inquiry, and a notation is put on your credit history. That notation stays on your history for one full year. Inquiries give the impression — true or not — that you might be having trouble paying your bills.

Roughly 10% of your credit score is based on lender’s inquiries, so you could be hurting yourself with this strategy.

  Top 5 Insurance Sales Pitches

Did you know that some people who sell life insurance get trained to play on your emotions? They learn how to persuade and even “guilt” you into buying the policy they want you to buy, not necessarily the policy you really need.

For example, we’ve heard of agents actually saying to customers: “Make sure your children don’t sue you for not looking out for their inheritance.”

Please.

We don’t want you to fall victim to these outrageous and immoral tactics, so arm yourself now by learning their game.

Click here to discover the top 5 life insurance sales pitches and how you can fight back!

Sincerely,

Ken & Daria Dolan

If you work at home, you may be entitled to a tax deduction. Assuming you have a specific designated area for your office, even if it’s only a corner of your family room, there are likely a number of expenses that you may deduct.

First, determine the size of your home office area and what percentage of your home this area is. That is the percentage you may deduct when calculating the overall cost of owning and maintaining your home. You can also deduct that percentage portion of repairs made for the benefit of the home, such as a new roof. But not a sauna in the bath!

Discuss these deductions with your tax advisor before you take them because taking home office deductions may affect your taxes, when you sell your home.

To deduct basic phone service, you must have a second phone line dedicated exclusively to the business. Otherwise only long-distance calls for business may be deducted.

Keep all utility, mortgage and tax bills to justify your deductions. If clients come to your house, be sure to keep an appointment log.

For more tax tips, watch our video, 7 Simple Tax Moves for 2008, and be sure to check out our Taxes section at Dolans.com.

Congrats to Margaret Klubben of Mead, Washington, which is just ouside of Spokane. She’s a loyal member of our Dolans.com family, and she also listens to our national radio show in Spokane.

Margaret correctly answered our last trivia question, and I (Ken here) called her on behalf of Daria and me to congratulate her. We had a very nice conversation. I learned that she and her husband Fred have been married for 39 years, are the parents of three children, and are very busy! Fred is an engineer at an aluminum plant in Spokane, and Margaret is an instructional assistant in Special Education in Spokane.

I was thrilled to hear Margaret say how much she loves Dolans.com and how her family has benefited from our advice…nothing is more gratifying to us. We also talked about some credit card issues, including which credit card balances to pay off first.

Keep up the good work, Margaret!

We all do, of course! And no, you don’t have to be a contestant on the TV show to do it.

We’ve seen it happen to many people, and you may be surprised to learn how quickly you can hit the seven-figure mark. Click here to use our Dolans.com calculator to find out exactly how long it will take you and how much you’ll need to set aside each year.