Smart On Money

Personal finance topics including budgeting, debt reduction, investing, income creation and saving.

Main Menu

Archives for March 2014

Your Grocery Bill Could Rise with Dairy Prices

By 1 Comment

One of the items that consumers have to contend with is inflation. Prices are always going up — even if wages are stagnating. Recently, one of the areas that has seen some rather dramatic inflation is dairy. According to Marketwatch, dairy prices rose 0.7 percent between January and February of 2014, and milk has risen by 10 cents a gallon since September 2013.

What does this mean for your grocery budget? It means that you could be spending more at the store. Rising dairy prices mean that you pay extra for more than just milk. Cheese, butter, cream, and other items also cost more when dairy prices rise.

If you are looking for a little inflation protection when it comes to your food budget, here are some things to consider:

grocery-bill-dairy-prices

Cut Back Your Dairy Consumption

One of the easiest ways to reduce your dairy costs is to cut back on your consumption. This might be easier said than done for some people, though. I enjoy dairy, so it's hard for me to cut back. Consider less expensive alternatives, and do your best to find ways to reduce what you are spending on dairy. If this isn't an option, though, you do have other choices.

Reduce Other Grocery Costs

Another option is to make up for it by reducing other grocery costs. According to the Marketwatch article, you probably won't pay more than $1 per item extra as a result of higher dairy costs. If this is the case, it might be possible to cut back in other areas to keep your grocery costs low. Consider cutting back on treats and junk food. You can also make an effort to find coupons and sales. This can be a way to reduce your grocery costs without cutting your dairy consumption.

Consider Local Sources for Dairy

Even though the average cost for dairy has risen in recent months, I'm not actually paying more for these products. This has a lot to do with the fact that most of my dairy is locally sourced. I get milk straight from the dairy up the road, so increased transport costs and other problems don't affect my milk costs. I also get cheese from the same dairy, and from a local cheese outlet.

While I expect prices to rise eventually on the dairy items I buy locally, the good news is that the price increases generally lag behind national trends. So, I have more time before inflation (at least on dairy products) kicks in.

Pay Attention to Inflation

It's a good idea to pay attention to inflation in other aspects of your budget as well. Prices continue to rise, and your income might not keep pace. It makes sense to track your spending, and make adjustments as necessary. You might need to earn more money (perhaps a side gig) or cut costs in order to avoid becoming a victim of inflation. Whatever you do, though, it helps to stay on top of the situation before your budget is busted. Pay attention and create a plan that works for you and your situation.

Can You Trust Your Tax Preparer?

By 2 Comments

My tax preparer is a life saver. Ever since I formed my LLC and began investing, my taxes have been a bit on the complex side. As a result, an accountant prepares my tax returns each year (one for the business, and one for my husband and me, plus our state tax return). This makes my life easier, since I don't spend hours filling out the forms and tracking down the latest information on tax law changes.

I'm fortunate because I trust my tax preparer.

My accountant will represent me to the IRS free of charge if I'm audited, and he makes it a point to go over the return with me before we send it in. I'm pretty sure that he's doing what he should, and he keeps to the requirements of a CPA.

Not everyone is so lucky, though. A relative of mine recently found out that his tax preparer was engaging in some shady practices. Now he's being audited, and the tax preparer is refusing to represent him — unless he pays even more.

After reading a recent article on CNN Money, it seems as though my relative isn't alone. Apparently there is a rash of poor tax preparers that can land you in hot water.

Lack of Regulation

While many of us grumble at the regulatory requirements of bureaucracy, there reality is that, in some cases, regulation can protect you. Regulations that require lenders to disclose your “real” interest rate before you sign on the dotted line, and that require transparency as to the full cost of your loan, can help you better understand your commitment. This protects you and allows you to make informed decisions, since, in the past, lenders had taken advantage of the general public's ignorance on some topics in which they lack expertise.

One of the issues with tax preparation is that there aren't many regulations that require tax preparers to be properly licensed in some states. According the CNN Money article, there are 46 states that have more regulations for hairdressers than tax preparers. In many cases, a brief course is all it takes to become a tax preparer. And, technically, I could start offering my services as a tax preparer. All I have to do is fill out your tax return.

However, it's not just a lack of expertise that can be problematic. Your tax preparer might be making honest mistakes due to a lack of knowledge, and that is frustrating, but it isn't malicious. What's hard is when you run into tax preparers who are little more than scammers. They engage in questionable tactics to save you money (as with my relative) so that you will keep coming back, with little regard to IRS guidance.

Others are outright scammers, stealing your identity and promising huge tax refunds. These refunds are usually the result of adding fake children to boost your EIC and exemptions, deducting things that shouldn't be deducted, and engaging in other activities. When these things happen, you are charged penalties and could be in bigger financial trouble.

Carefully vet your tax preparer. Solid credentials are a good start, but they aren't everything. Be wary of preparers that charge a percentage of your tax refund, rather than a flat fee, and watch out for those that talk of “special government programs” and “grants” you can apply for through your tax paperwork. Such things don't exist. If you feel uncomfortable with your tax preparer, heed your gut and go elsewhere.