Step 1: Start an Emergency Fund

You’ve probably heard that you should have an emergency fund.  This is one of the first steps you should take in your journey to financial freedom. 

Most people don’t understand why they need an emergency fund, or how much they should have in one. 

There are several reasons why you should have an emergency fund, including:

* to meet unexpected expenses, such as medical bills, car or house repairs, etc., without having to resort to using credit cards or taking on any other debt

* to cover living expenses during a short-term unemployment period due to layoff, disability or other unusual circumstances

I’m on Work at Home Moms Talk Radio!

I was interviewed by Kelly McCausey of Work at Home Moms Talk Radio this week about how to save taxes by hiring your children in your taxes.  Visit Work at Home Moms Talk Radio and click on Show # 186 to listen!

How Can Hiring Your Kids Help You Save on Income Taxes?

A reader recently asked how hiring their children in their business could help save on income taxes.  Here’s an example:

In 2006, you could pay your child up to $5,150 (the standard deduction amount) without either of you incurring a tax liability. Suppose you’re in the 28 percent tax bracket and you pay your 15-year-old son (Junior) $5,000 over the course of a year to perform office-related tasks.

You get a business deduction for the wages paid to Junior, saving you $1,400 (28% of $5,000). If you’re a sole proprietor, you save even more in taxes because this reduces the amount of profit that is subject to self employment taxes (15.3% of $5,000 = an additional tax savings of $765).

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