Tips for travel savings

This was originally published on Monday, May 7, 2017, in the Pacific Daily News.  Click here to subscribe to the PDN.

Relaxing and creating family memories on summer vacation is a lot of fun, but they also can carry a hefty price tag. Your dream vacation is not out of reach if you budget well in advance.

To know how much to budget you must plan your trip. Package deals, reward programs and being flexible are some great ways to start. Here are more budget helping ideas to consider:

  • Travel with a large group. Make it a family vacation or travel with friends. Invite along those you would love to spend time with. Large groups can get discounts and share costs. You can split the cost of food if you buy in bulk and cook. Many attractions, including theme parks, offer group rates. You can even rent out large vacation homes that have many rooms that are comparable to hotel rooms.
  • Lodging. Hotels are expensive, but there are some other options. The most inexpensive option is staying with family or friends. You can satisfy the obligatory visit and save on lodging at the same time.

If you are staying in a location for a while, find an extended trip hotel that offers suites you can rent by the week or month. They are usually cheaper than hotels and offer all the amenities of a home, including a fully functioning kitchen.

You may also look for a hostel, a budget-oriented dorm room, usually with shared amenities. You may also try camping in our nation’s parks like the Grand Canyon or renting a home or condominium. Look for kid friendly hotels that offer free lodging for children under a certain age.

  • Eating. Food is one of the biggest expenses while traveling. If you booked lodging with a microwave and refrigerator or kitchen, prepare your meals in your room. Going to the grocery store can be exciting, trying products that you can’t find on island. I’m always amazed at the freshness, variety and options when I go to grocery stores in the U.S. Look for a farmer’s market and get fresh produce. Some grocery store chains even offer meals at their deli which are usually priced much lower than going out.
  • Alternative transportation. If you are going to the mainland, Europe or any large state or country, why stick to flying from one destination to another? Consider taking a bus or train. What better way to take in the scenery than letting someone else drive? You may also consider renting a motor home. It has all the amenities of a house.
  • Use your privileges. If you belong to an organization such as American Association of Retired Persons or the American Automobile Association, go to their websites and look at what discounts and vacation packages they offer.
  • Military discounts. Many times the discount isn’t advertised, but you will be surprised to see how many companies will thank you for your service. Check local morale and recreation offices for discounted tickets. Some amusement parks even offer discounted tickets. If you plan in advance, you can use military lodging, which is available worldwide. Take a look at www.dodlodging.net/ to view all locations. You may also want to consider flying military space-available flights. It may take a little longer to get there, but it will save you a lot of money.
  • Remember the small stuff. Tips, fees and taxes all add up. Stay away from hotel, airport or amusement park stores, because they cost much more. Know how many bags each person can take and maximum weight to avoid extra fees. International and domestic flights differ on the number of bags and weights. Consult your airline carrier.

If you obtain clothes, toys and more during your travels, consider mailing it all home. Look for areas with free WiFi. Talk to your cellphone company about roaming rates. You may consider leaving your cellphone on airplane mode during your trip. You can also purchase prepaid cell phones from many of the large retail chain stores or cell phone carriers.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com

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Don’t miss deductions and credits

This was originally published on Monday, March 27, 2017, in the Pacific Daily News.  Click here to subscribe to the PDN.

As the tax deadline quickly approaches, be sure that you are getting all of the deductions and credits for which you are eligible to help lower your tax bill. Many deductions are overlooked because people are unaware of them or don’t want to take the time to see if they qualify.

Here are some tax tips for the 2016 tax year:

  • Charitable contributions. If you attended a charity benefit or event, you may be able to deduct the dollar amount. The benefit or event must have taken place in the tax year. The type of donation and the type of organization can limit your charitable deduction. Donations to assist victims of natural disaster can be included.

If you donated clothing, toys, furniture, or other household items to charity, you can use the fair market value of the items donated. If you contributed to a church, use the Schedule A form. The IRS requires that you keep a written acknowledgment or receipt from the church for any contributions.

  • Estate and gift taxes. You can generally give money or property to another person without any tax consequences, provided the amount does not exceed $14,000 per year. If this amount is exceeded, it must be reported on a gift tax return.
  • IRA and retirement. There is no additional 10-percent tax on early withdrawals up to $10,000 in your lifetime from an IRA if you are buying a first home for yourself, your children or your grandchildren. There is also no additional 10-percent tax if you are paying higher education expenses for yourself, your spouse, your child or your grandchild.

You can contribute up to $5,500 to your IRA (or $5,500 to your spouse’s IRA if married filing jointly). Each taxpayer age 50 or older is eligible to make an additional $1,000 “catch-up contribution.” Learn more about IRA and retirement accounts at the IRS website.

  • Real estate property. Your home purchase can be a wonderful tax advantage. You may be able to benefit from itemizing your deductions. If itemizing, you can deduct payments such as mortgage interest, real estate taxes and most points paid by you or the seller in the year of purchase. The earlier in the year you purchase your home, the more months of mortgage interest you will have by tax time. Mortgage insurance premiums will be allowed as deductible interest on Schedule A, Itemized Deductions.
  • Military. If you are an eligible member who served in a combat zone, the IRS can exclude your income from taxation. Excludable income is your basic pay, re-enlistment bonuses, school loan repayments, imminent danger/hostile fire pay, discharge benefits and awards and other financial incentives. Non-excludable taxes are military pay earned while in combat zone, but they are are subject to Social Security and Medicare taxes.

The exclusion is for the months you served in the combat zone. Military members serving in a combat zone may qualify for a deadline of 180 days after returning for filing taxes. Contact the IRS and inform them of your situation.

The IRS excludes retired military receiving Department of Veterans Affairs education benefits as taxable income. Payments you receive for education, training, or subsistence under any law administered by the VA are tax free. Don’t include these payments as income on your federal tax return.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com

Deployed reservists can earn, save extra money

This was originally published on Monday, May 25, 2015, in the Pacific Daily News.  Click here to subscribe to the PDN.

Q: I am a reservist and I may be deploying soon. I have deployed before but found that it is very difficult to keep our family finances in order. Do you have any tips that could help us stay financially healthy during my deployment and maybe even save a little?

A: Thank you for your service to our country. I will say that I am not extremely familiar with military pay, so I asked a friend to assist me.

Our military members and their families constantly face many challenges. Some of these challenges could potentially place them in financial hardship. Service members move every two to three years. Spouses usually leave jobs creating less income, and of course, in defense of our nation, our military members have to deploy.

Leaving family and friends behind to defend our country in places far away in areas that may be in harm’s way is emotionally and physically stressful. Finances can become a huge stress factor. Because the service member is away, routine bills may not get paid on time. Families may have to find the balance between the deployed service member’s needs and the needs of those left behind. In the case of our reservist it could mean a loss of pay while deployed.

In certain situations, due to some special compensation, military members can actually save more money. Depending on how long and where they are deployed they could be eligible for certain special compensation.

Service members could be eligible for Family Separation Pay if they are deployed beyond a certain amount of time. In areas that are deemed unsafe they can receive Hostile Fire or Imminent Danger Pay and Hardship Duty Location Pay. Some areas can also be considered Combat Zone Tax Exclusion, which means the pay they earn while deployed is not taxed. Special compensation most of the time can be enough to increase income significantly.

Have a financial goal(s) you want to achieve while deployed. Before you start setting goals sit down with your Command Financial Specialist or administrative personnel to get a better understanding of the pay for which you are eligible. Get a rough estimate of how much you will be earning. It is good to know if you are being under- or overpaid. If you are being overpaid, put that extra money aside — you will have to pay back that extra money. Once you have an idea include any other income that you and your family will be receiving, sit down and start a budget together. Remember, this is a rough budget. Once you get your first full deployment paycheck you may need to tweak your budget. Review your Leave Earning Statement (LES) monthly to ensure your pay is correct on the MyPay website, https://mypay.dfas.mil. Your spouse can also log on if you create a spouse login.

Do you want to save for a family vacation, get out of debt or start an emergency fund? Make your goal realistic and get the whole family involved. Next lay out your plan. How much will you save every pay period? Are you opening a new account or using an existing one? Will you transfer the funds manually or through an allotment? The money should be saved in a way that it is out of sight and out and mind to resist temptation. Find a way to share your progress with each other while deployed. You can email each other, use shareable online documents, or even use budgeting software that has online access.

Here are a few quick tips to help you stay on budget:

• Live off your pre-deployment income — just because you are making more does not mean you need to spend more.

• Use your retirement plan to its fullest during deployments. You can adjust your percentage rate on your Thrift Savings Plan (TSP) at any time.

• Look into the Saving Deposit Program, http://www.dfas.mil/militarymembers/payentitlements/sdp.html

• Use the Servicemembers Civil Relief Act to help lower credit card payments, contact your nearest legal office or go to http://www.militaryonesource.mil/pfm?content_id=267394

Best of luck to you and your family and may you return home safely. Thank you to those men and women who serve to keep the many freedoms we enjoy today. On this Memorial Day, we remember those who paid the ultimate sacrifice. You will never be forgotten.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.