It doesn’t take a Harvard MBA to figure out how to improve your financial well-being.  In fact, even becoming rich isn’t that complicated.  The process is downright simple.

Spend less than you make.  Invest the excess intelligently.  Maintain the pattern.

That’s right, becoming wealthy is a matter of three core principles.

The last component, which is really a matter of discipline, doesn’t get as much attention as it probably should.  That’s because it’s less about crunching numbers and explaining processes as it is about making a personal decision to manage your finances correctly.  It’s more a matter of psychology than one of finance.

The second component, smart investing, gets a lot of attention.  Everyone is looking for an edge and wants to find the best ways to put their money to work.  There is no shortage of investment advice.  We cover some of those issues here, and so do countless other analysts, advisers and finance-related resources.

The first component presents a very interesting case.  Spending less than you make actually involves two separate, but equally important, variables.  It’s a matter of expenses and income.

While the world at large is happy to offer up all sorts of advice about how to make more money (much of it little more than crazy schemes and pipe dreams that form the basis of bad late night infomercials), you don’t see that much of it in the realm of serious personal finance advice.

Instead, there’s a focus on economizing.  You’ll find much more wisdom (and craziness, for that matter) about cutting costs than you will about generating more income.  When you remove investment advice from consideration, there’s very little real discussion about how to make more money.

Why is that?  What’s the cause of that imbalance?

First, the highly individualized nature of earnings makes it difficult to offer solid “make more” advice.  What might work for someone who’s working in pharamaceutical sales is unlikely to have a great deal of transferability to someone who’s working the night shift in a retail environment.  You can’t really explain how doctors can make more money and hope it resonates with contractors.  Sure, there are some common principles, but individualization really reduces levels of applicability.

Economizing, on the other hand, is something everyone can do.  The CEO of a company can cut down on gasoline use by checking her tire pressure.  So can a plumber.  It doesn’t matter if you own a professional sports franchise or if you sell popcorn at the game, using the library is going to be cheaper than going to Barnes & Noble.  You get the idea.  Economization is universal, earnings are individual.

That’s a sound reason for those in the personal finance niche to focus more on cost-cutting measures.  However, I think we sometimes run the risk of neglecting earnings.  Even if universally applicable advice isn’t available, encouragement and reminders are.

You work on both sides of the equation in order to live within your means, which will then set you up to do what it takes to insure your financial well-being.  You can spend less.  You can also earn more.

That bears repeating.  You can earn more.  A commenter at Free Money Finance correclty observed:

So many people say “live within your means, don’t spend more than you earn” is that discounting you life or restricting you from feeling the fullfilment of dreams. I agree with the putting a bit of the $$$ away into forms of investment and continue growing future wealth. The problem I have, is with the thinking that people are restricted to how much they can earn. There are so many possibilities for motivated individuals to create opportunities for themselves.

So, while you’re spending time poring over your budget and researching investment opportunities, make some space for thinking about your earnings situation, too.  Making money is no more difficult than spending less of it.  Economizing is great.  If you do it well, you can be on your way to a fantastic financial future.  Imagine what you could do (and how much more quickly you could do it) if you were coupling those cost savings with an improved income?

Recently, the U.S. dropped the yield on four-week Treasury Bills to 0%.

That’s right.  ZERO percent.

When you consider the fact that some level of inflation is always afoot (even over a four week stretch), investors would be losing money by buying those T-Bills.

So, you might think that the rate drop resulted in an immediate drop off in T-Bill sales.  If that’s the case, you’d be wrong.  Reports indicate that it was actually tough to fill all of the orders.

What would possess anyone to sink their money into an investment that guaranteed zero gain and that brought with it some risk of minimal loss?  Why would you or I even consider buying a Treasury Bill that wasn’t going to make us a single penny?  What’s going on here?

First, you have to understand that these four-week bills aren’t designed for folks like you or me.  You and I wouldn’t consider purchasing a bill with no yield.  We’d be silly to do something like that when we could put into a checking or savings account and earn at least some nominal interest (with FDIC insurance behind it).  There’s absolutely no reason for you or me to place an order for a no-yield T-Bill.

Second, there are reasons for others to make the purchase.  Generation X Finance explains:

Treasuries are where institutions play. When it comes to big money market funds, and cash/income components of various mutual funds or other investments, these institutions are usually buying up treasuries. Especially with money market funds, since safety is paramount, these securities are the go-to place to find safety. That being said, this is where billions of dollars are traded. Yield, or rate of return isn’t as much of a concern as protection of principal, so the 0% rate is of little concern.

That post goes on to explain that foreign banks (including China’s) will park money in these T-Bills during periods of economic turmoil as protection against downturns.  Pension funds will also make purchases simply to protect their assets in the short run as they strive to “keep up with paying current retirees”.

What makes sense for you and me doesn’t necessarily match the needs of large insituations, foreign banks and pension funds.  They can find a reason to lock in four weeks of solid protection.

Third, some buyers might be motivated by fears of a long-term recessionary economic climate.  At least that’s how Kathy Lien at Seeking Alpha reads it.  She says, “[t]he only reason why anyone would buy Treasury bills at negative real return is if they believe that recession will deepen, driving bond prices higher and yields further below zero.”

Fourth, unlike you and me, the big boys don’t have a real alternative.  One of Lien’s readers explained this fairly eloquently in a comment.  It’s not like you can stuff billions of dollars into a mattress.  You must put the money somewhere.  If huge investors dumped their cash into those FDIC-protected accounts regular individuals used, or in other common “safe” investments, the money would end up spread over other options including the very T-Bills they could’ve just purchased in the first place.  Basically, once you reach a certain size, cash is not an option and even a 0% bill can make sense.

The moral to the story?  There is a possibility that the purchase of no-yield T-Bills foreshadows continuing economic problems, but the primary reason these Bills are purchased has very little to do with the presence or absence of interest opportunities.

Seeing headlines about ZERO percent T-Bills might be a little unnerving, but it’s not something that should probably bother everyday investors.  There are plenty of better reasons to be concerned about the economy.  If anything, the lack of a yield on these bills is one of the least frightening symptoms of the illnesses our ecoomy is currently battling.

Adding insult to injury.

Kicking a guy while he’s down.

Leveling capital gains distribution taxes on mutual fund owners this year.

They’re all peas in a hateful pod.

You’d think that the surest way of avoiding a capital gains tax liability would be not having any freaking capital gains.  Hey, that makes sense.  Even the sneakiest IRS creep can’t come up with a way to tax you for losing, right?

Not so fast.  We’re talking about taxes.  Your logic has no place here.  There are thousands of Americans who, after losing as much as 40% on mutual fund investments, will be stuck with an additional tax liability on top of that devaluation.

How does that happen?  It’s called a distribution.  Gail Marks-Jarvis summarizes the situation:

Because investors are becoming discouraged about their losses, mutual fund managers are being forced to sell some of their best stocks to raise cash for the investors who are fleeing. That means the mutual fund incurs a capital gain on profitable sales of stock. Under federal law, those gains, plus dividends, must be passed on to the people who have money in the mutual funds. They are called “distributions,” and must be reported on tax returns.

Basically, if your fund bought one of its many stocks at $5 years ago and sold it recently for $15, you’re going to be on the hook for some of the capital gains tax liability associated with that sale.  The fact that the stock was worth $30 last year is a moot point.  The fact that every other stock in the portfolio may have lost money this year?  Also unimportant with respect to this particular element of the tax code.

This can translate into some serious coin, too.  Consumer Reports explains how some of the biggest losers among mutual funds this year are still on the hook for big capital gains taxes:

But some funds will pay out huge. Vanguard Precious Metals and Mining (VGPMX), for instance, has lost 64 percent of its value so far this year, but will send out long-term capital gains distributions equal to about 15 percent of its share price. T. Rowe Price Spectrum Growth (PRSGX), which is down 43 percent year-to-date, is expected to pay out 9 percent of the fund in taxable distributions.

Most of us will shake our heads in dismay at the idea of taxing someone for capital gains after they barely survived the biggest stock market freefall we’ve seen since folks were living in Hoovervilles.  Luckily, we’ll probably avoid the tax liability, though.

If your mutual fund investments are in a 401k wrapper or are part of an IRA, you won’t have to worry about the distribution.  You can be sickened by the dementedness of it all, but at least you won’t be compelled to pay capital gain taxes on positions that lost money.  Only those who have made mutual fund investments outside of the tax-protected account types will get stuck ponying up for the distributions.

This approach to kicking a guy while he’s already down has been the subject of criticism even before this year’s weird state of affairs.  Bruce Bartlett railed against the distribution approach while providing an alternative back in 2000, writing on the National Center for Policy Analysis site:

Obviously, a simple way of relieving taxpayers would be to treat mutual funds the same way that individual stocks are treated for tax purposes. Mutual fund investors would only be liable for capital gains taxes when they sell their mutual fund shares. Reinvested gains would be treated as unrealized gains for tax purposes.

Now that investors will be paying distributions for accounts that lost a great deal of value, it might be time to investigate options like the one posited by Bartlett.  There must be a better way to handle the taxation of mutual funds than rubbing salt into open wounds.

Back in 2005, a study indicated that over 40% of us didn’t have an emergency savings fund.  Including the number of those who had some, but not enough, money socked away would undoubtedly up that number to an even more jaw-dropping level.

If you have any concern whatsoever for your own financial well-being (and I’m guessing that you do, considering that you’re reading this), you must put aside adequate savings.

We recently discussed the value of adequate savings, noting that it had value as a hedge against unforeseen emergencies and actually contributed to the ability to successfully engage in wealth-building investments.

The value inherent in the peace of mind a buffer provides would probably be enough justification for putting aside a stack of cash absent the other advantages.  When you add those other perks to the mix, it’s clear that arguments in favor of saving for emergency circumstances are just too strong to ignore.

So, how much of a stash do you really need?  That depends on who you ask.

Noted financial talkmeister Dave Ramsey says everyone should start by putting aside a thousand bucks.  That isn’t much and it isn’t the extent of savings you’ll need.  It’s just the first step in his plan.  He recommends eventually building a heftier account.  After you prove you can save some money and “get the ball rolling”, most experts will say that you should pile up the equivalent of between three and six months earnings.

Please note that this savings process should come before other excursions into personal finance activity.  You want to lock that cabbage in the basement before you worry about which stocks to buy or anything else.  Keep your bills current and save.  There will be time for wise investment after you have created that security cushion.

Sounds great, but the reason so many people don’t save isn’t their drive to find good investment opportunities.  The fact of the matter is that many people are barely making ends meet.  Many of those who do have enough income to stay well-fed and sheltered have horrible spending and money management habits.  Regardless of the causes, the fact is that most people don’t end up with extra money to put into savings at the end of the month.

That means that many of us will have to learn how to save.  It’s a simple concept, but it can be hard to implement.  It involves beating old habits and making a concerted effort to create (and stick to) a budget.

If you haven’t done a full household budget yet, get on the ball.  You need to do it, as it’s going to be the base of your overall financial plan.  Those numbers are also going to show you exactly how much you can afford to save.

It might take awhile to save the equivalent of three to six months pay, but it’s worth the wait.  You’ll be better protected against the unforeseen and you’ll feel more secure.  You will have learned how to live within your means, which will give you a boost when it comes time to start making those investments.

If you’re wondering what it’s going to take for you to take care of your emergency fund needs, take a look at this calculator.  If you’ll go through the effort of inputing accurate data, it will come up with a pretty darn accurate savings plan for you.

You know that saving is essential.  Now it’s time to get started.

Let’s say you could get a loan with a 7% interest rate.

Let’s say you could find an investment that would earn 10% interest.

What should you do?

The math is pretty easy.  You should take out the biggest loan anyone will give you (that you can afford to service in the short run) and sink it all into the investment opportunity.  Your interest earnings swamp the rate on the loan.  Every penny you borrow is a little profit generating machine.

The logic is unassailable.  If you’re presented with a scenario like that, the math points you to a clear answer.  Borrow.  Borrow.  Borrow.

And let me tell you, everyone and his or her dog would love to find that situation.  Finding anything that guarantees a reasonable rate of return over loan interest is impossible to resist and hotly pursued.

Which is why people come up with ideas like borrowing money (whether it be via a home equity loan or a standard margin buy) to buy stocks.

Everyone is telling us that it’s a buyer’s market.  We all know that today’s beaten stocks will rise like the Phoenix to recapture most, if not all, of their previous glory.  We can get them for pennies on the dollar right now.  It’s the perfect time for a shopping spree.

If you can dig up a decent loan from any source, you should be throwing that money at the market with both hands as fast as you can.  That’s what some people seem to believe, anyway.

I think it’s crazy.

The math only works on our hypothetical because of the word “guaranteed”.  It makes sense to load up with maximum debt if you really and truly cannot lose.  Cannot.  Can’t.  You know, as in “it would be impossible to lose money”.

That’s a lot different than the belief that the stock market will rebound.  One is a guarantee, the other is what people think.  If you haven’t noticed lately, what people think and what they get are often quite different.  People had great thoughts about the market a year ago and now they open their 401K statements with one eye closed.  Sen. Lautenberg and Steven Spielberg had great thoughts about Bernie Maddof.  We’ve seen how that worked out.

Basically, the idea of saddling yourself with a high debt burden in order to purchase (or to leverage the purchase of) stocks evinces a kind of hyper-optimistic assessment of the markets that completey ignores the potential downside of miscalculation.

If you take “guarantee” out of the plan and replace it with a smart assessment based on the current state of the markets, the idea of borrowing money to buy stocks borders on pure goofiness.

The proof of that, by the way, is all around you.  Grab a paper from last month when people were starting to sing this chorus of “buy value stocks while they’re cheap”.  Now, pretend like you took out a second mortgage on your home to buy stock in your five favorite companies.  Pull out today’s paper and get an idea of where you’d be.

Unless you’re one helluva a stock picker or a liar, it’s probably a scary propostion.  If you’re still not convinced, ask the people who tried this technique in 2007, before the markets went tumbling.  How do you think they’re feeling these days?

Look, no one is sure of the bottom right now.  There are many historically stable industries who are staring down the barrel of disaster.  Meanwhile, the markets are insanely volatile, bouncing up and down like a Cirque performer on a pogo stick.

This is not the time to risk a bigger and badder debt load (if you could find a lender in the first place) on a hunch that things are going to get better in a hurry.

No one is stopping you from buying stocks, mind you.  I’m not opposed to that.  I’m opposed to risking your home, credit rating and assets in pursuit of a loan that carries significant short-run risk and a potential of long-run problems, too.

It’s probably true that stocks are a long-ranger winner.  If you could service a loan properly and have great stock picking skills, you probably could make money by borrowing cash for stock buys.

It just wouldn’t be worth the risk.  You have to measure upsides against downisdes.  This time, the downside is just too darn ugly.

Let’s start by putting Bernie Madoff’s escapades into context.  The Big 3 auto giants created a tsunami of controversy when they originally came a-beggin’ for $25 billion in bailout money.  Bernie Madoff managed to screw people out of nearly $50 billion.  That’s enough to underwrite a pretty big fleet of Impalas, don’t you think?  

Mr. Nasdaq did it the old-fashioned way, too.  He wasn’t all that tricky.  He didn’t come up with something new or exciting in the field of scammery.  He kicked it old school with a strategy that was in use long before its current namesake came up with a postage scam scheme.  Bernie went straight Ponzi.

Take Peter’s money.  Pay Paul with it.  Then go find some other Apostle and shake him down for enough to cover the bills on Peter and Paul the next time around.  Ad infinitum.  It’s nothing new.

I’m sure that Bernie had to be extra good on the not getting caught front, but the core plan was the model of criminal simplicity.  He also had a big advantage over most of the hucksters out there–name value.  It was good enough to load the coffers with money from smart former Senators, Elie Wiesel and even Steven Spielberg.  Madoff’s “hedge fund” attracted big dough from the smart guys, so he must have been wrapping that Ponzi scheme up in some very pretty paper.

I’ve found a few lessons in the tale of Bernard Madoff.  

First, don’t trust a guy just because he’s been around and has name value.  That’s especially true when the name recognition is in a field that flat-out rewards greed.

Second, don’t assume that the smartest guys inthe room have any real idea of what they’re actually doing.  Bernie Madoff gathered up $50 billion from bright, wealthy people and highly-regarded companies.  Many of those folks had equally bright (if not smarter) aides and advisers on the payroll and they still wrote those checks to Madoff.

Third, Gordon Gecko was a goofball.  Greed is good?  Yeah, he had a point.  The profit motive is a big thing and the desire to accumulate wealth is a big part of why a market-based economy can work.  But it has a downside and we’re seeing it etched in the facial expressions of those who just found out that their charitable organizations have been robbed of almost every last dime.  Greed has an upside, but Bernie’s tale reminds us that it can blind otherwise reasonable people to the truth.

Now that we’ve seen big-timers on the receiving end of a scam and realize that getting taken for a ride is possible even for those smart enough to delete incoming Nigerian moneymaking emails, todays headlines are all about how the rest of us can avoid getting trapped in a Madoff-like rip-off.

Here are a few of the best pointers I’ve encountered:

Diversify.  This is a perennial nominee for most overused personal finance cliche , but it’s not a good idea to put all of your eggs in one basket.  Everyone knows that.  Sometimes, however, they forget and decide to hand over everythig to Bernie Madoff.  Resist the urge to go “all in” and spread your risks.

Beware of Smooth Sailing.  The market bobs and weaves.  Things go up and down.  There are very few long straight lines in the world of finance.  Bernie Madoff, however, showed investors/victims consistent rates of return year after year regardless of the larger economic context.  That should scare the bejeezus out of anyone who’s thinking of making an investment because it’s so outlandish.

Verify.  It won’t hurt you to have a third party expert review your statements and what’s ostensibly happening with your cash.  Pony up a few bucks to have a certified financial planner or someone else who can spot the red flags you might miss take a look at your investments.

I consider myself a relatively bright guy.  I know things.  I went to school.  I even did well in school.  I can generally figure things out.  A few things, however, utterly and completely mystify me.  One of those Great Mysteries is the price of gas.

You can tell me that it’s just like everything else–that supply and demand dictate prices.  I’ll believe you in a very big picture theoretical sense.  I just won’t “get it”.  

Gas prices are set in a variable-rich environment and that makes the supply and demand indicators a little more difficult than average for guys like me to interpret.  I’m okay with that, but I’m still not convinced that any confluence of events that manages to fly under my radar can provide a rational or logical explanation for what I see with respect to fuel prices.

CNN/Money reports that AAA has noticed two-consecutive days of gas price increases after a streak of more than 80 days that saw prices at the pump falling.  Some think that we may have reached the bottom with respect to gas prices.  

This makes sense to me.  The drop in fuel prices felt way too fast in light of the fact that nothing all that consequential was actually happening in terms of actual supply or our relatively inelastic demand for gasoline.  I can understand a bump as part of a market correction following a too-fast decline in gas prices.

Here’s what I don’t understand.  Why would gas in one part of Missouri bob ten cents per gallon overnight?  AAA noted an increase of less than 1/10 cent per gallon.  What’s happening in the Show-Me state to justify a increase that’s more than 100 times the national trend?

And what in the hell is happening in South Bend, Indiana.  As Notre Dame prepares to play a bowl game in Hawaii, the golden domers are forking over 25 cents per gallon more for fuel than they were a week ago.  And no one seems to have an explanation.

Gather’s frugal living site has commenters who’ve noticed increases of 15 cents per gallon in their areas.  Does this seem normal to you?  Is there some sensible reasons to see such fast and significant fluctuations?

I suppose it’s possible that these seemingly bizarre changes are a perfectly normal part of the fuel market.  We’re all a little more attune to gas price changes during economic times like these, and it could be that I just happen to be paying attention to it this time.

Even if these rapdily-moving prices are normal, however, that doesn’t mean they make any sense.

I refuse to believe that there was any rational reason for gas to plummet from nearly $5 per gallon to a buck and a half in less than three months.  I certainly don’t understand why today’s cheap gas would suddenly be worth a quarter per gallon more for folks in Indiana.  You can explain supply and demand curves to me all day long and you still won’t persuade me that there’s a solid justification for gas to go up a dime overnight on one side of Missouri while the stations in KCMO haven’t budged upwards yet.

I’d like to join in the chorus of people who are making gas price predictions.  It would be fun to feel confident in saying that we’re going to see substantial price spieks this summer or that gas is likely to go up fifteen cents per gallon overnight.  I’d like to feel secure enough in my gas price prognostication skills to tell you that gas is going ot go up to around $3 per gallon.  

I don’t feel that certain, though.

In fact, I don’t have a clue about gas prices.

And I’m beginning to wonder who, if anyone, does.

If there’s one thing you can count on every time the economy suffers a downturn, it’s hearing a chorus of voices advocating investment in gold.  Gold is touted as a hedge against economic instability and an incomparably stable investment option.  Advocates of gold investment argue that precious metals offer a solid investment during tumultuous times.

You can count Dr. Steve Sjuggerudd as a member of the pro-gold chorus.  In a recent article in his online Daily Wealth newsletter, Sjuggerudd comes out strongly in favor of gold.

He argues that the price of gold is likely to increase dramatically over a short period.  He argues that gold is safe and that it won’t undergo the kind of ugly devaluations (and even governmental seizures) that can plague other options.

Sjuggerud maintains that owning physical gold is a great idea and he specifically argues in favor of purchasing 100 year-old gold coins.  According to Sjuggerud plain “bullion coins” (which are basically worth their melt value) are in short supply and that there are bargains to be had in the area of collectible gold coins.  He also sees a two-track way to prosper with old gold coins:

So I much prefer the rare gold coins… the 100-year-old ones in near mint condition. With bullion, you only make money if gold goes up. But with rare gold, you can make money two ways… if gold goes up and if the “collector’s premium” over melt value goes up.

His argument seems to be representative of a large group of analysts and observers who believe that gold coins are a good investment.

But is this advice you should be following?

There’s no doubt that there is value in gold coins.  It’s also true that investors have long used gold as a hedge and that it’s part of many well-diversified investment portfolios.  However, gold may not be all its cracked up to be by folks like Sjuggerud.  Consider these factors:

Exaggeration. Pro-gold arguments often begin with a very optimistic assessment of future values.  Sjuggerand begins by observing that gold is currently trading at $1,000 per ounce and hints that $5,000 per ounce gold may be on the horizon.  The only problem with that?  You won’t find many analysts who really predict a 500% increase in gold prices and as of the time of this post’s writing, gold is trading at $828 per ounce.

History. It’s true that gold hasn’t wildly dropped in value over the years.  It’s also true that gold tends to perform well during tough economic times.  When you look at the bigger picture, however, you’ll find that returns on gold have been wildly outpaced by stocks.  One source maintains that over 175 years, gold averaged an annual return of .06% while stocks averaged a 7% growth rate.  Gold, unlike a business, won’t file for Chapter 13, but the market seems to offer better returns historically.  If you want a slightly more in-depth analysis, check out this examination.

Transaction Costs. Sjuggerad and others advocating the purchase of physical gold often fail to mention the built-in transaction costs associated with gold ownership.  You can expect to pay at least a 5% premium on many gold purchases and you’ll have to deal with shipping and storage expenses.  You’ll also need to pay someone to appraise those old coins.

Regulatory Deficiency. If you’re playing the stock market, you know that there are a few referees in the game.  Buying and selling old coins, however, isn’t subject to the same kind of oversight and regulation.  There’s a greater degree of regulatory protection in other investment niches.  There’s a reason why we have the SEC and a series of other acronyms running around policing the markets–people will try to screw you if they can.  You don’t have a shield against that kind of predatory scamming when you’re dealing with gold coins.

There’s nothing wrong with gold or coins.  If you think we’re on the brink of a financial apocolypse and it makes you feel a little better to have some gold hidden somewhere, go for it.  If you love coins and numismatics and can find joy in coin collecting, feel free to pick up a few of those 100 year-old coins.  Who knows, you might even get lucky and pick one up that you can later sell at some profit.

If, on the other hand, you’re interested in maximizing the values of your investments, you probably don’t need to involve yourself in the coin collection business.  There are better ways to make more money.

I could be wrong.  We might be heading toward $5,000 gold.  Historical trends and tendencies could reverse themselves at any moment.  The world is a crazy place, after all.

When it comes to finances, though, it’s usually not a good idea to bet on crazy.  And it’s probably not a good idea to liquidate all of your assets to go after a bag of old gold coins.

Being a smart insurance consumer is a great way to improve your bottom line.  You can save a great deal of money by shopping for the most competitive rates for coverage that meets your needs.

When you find a new carrier who offers a better deal than your existing insurance provider, you’ll need to cancel your existing policy.  The cancellation procedure and requirements may vary based upon where you are and with whom you’re doing business, but in many cases you’ll need to send a letter expressing your desire to cancel.

While that task might be easy for some folks, others could really use an insurance sample cancellation letter template to help guide their efforts.  The simple model letter in this post covers all of critical insurance cancellation bases:

It provides the company with accurate contact information. That’s important because some situations may call for additional follow-up to effectuate the cancellation.  Additionally, you’ll want to recover any portion of your already-paid premiums due to you, so it pays to make sure the insurance company knows exactly where to send the check!

It clearly expresses your desire to cancel. You want to lay it out in black and white.  This insurance sample cancellation letter is unambiguous and straightforward.

It demands confirmation. You can’t fire off a letter and then simply assume that the insurance company will do the right thing.  Mistakes happen, papers do get lost, etc.  This model insists that the insurer verifies policy cancellation.

It contains necessary information. The model letter identifies the policy and your policy number.  Again, you want to be certain that you’ve provided all necessary information to guarantee a timely cancellation of an unnecessary policy.

Here’s the model cancellation letter:

DATE

Cancellation Department

Name of Insurance Company

Mailing Address for Insurance Company

Re: POLICY CANCELLATION

Your Name

Your Policy Number

Please cancel the above-referenced insurance policy effective immediately.  I do not want to maintain this policy.  You are no longer authorized to bill me or to access my bank accounts for payments associated with this policy.

Send written confirmation of the cancellation to the address below as soon as possible.  Please use that address to send a refund of the unused portion of my already-paid premium, as well.

Thank you for resolving this matter quickly.

Sincerely,

Your Name

//Your Signature//

Your Mailing Address

Your Phone Number

Please consider the following when writing a letter requesting policy cancellation:

• Sign it and use ink. Add your handwritten signature to the letter and do it ink.  Better safe than sorry.

• Keep a copy. Make a photocopy for your own records, just in case things get confused.

• Don’t neglect the date. The date is important.  Don’t leave it out.

• Reasons for cancelling? You’re generally under no obligation to explain why you want to kill the policy.  However, you may want to explain your rationale briefly if (a) you feel a need to explain why you’re taking your business elsewhere or (b) you want to open the door for the company to pitch you on some alternative policy or to offer you a lower rate after the cancellation.

• Make sure you want to cancel. Getting out of a bad policy or shifting to a new carrier with better coverage and/or lower rates can be a smart move.  Getting out of a policy you really do need in order to free up a little extra cash, on the other hand, isn’t.  If you’re cancel a policy, do so for the right reasons.

• Don’t just stop paying. It’s true that the insurance company will cancel a policy if you don’t pay the premiums.  However, this may result in unwanted bills and/or negative information on your credit report.  Additionally, ceasing payments won’t give you a chance to recover money that might be due back to you.

• Know the requirements. Different policies, jurisdictions, and other factors may create additional cancellation requirements.  Be certain you know what you need to do to get out of your policy correctly.

If you’re going to be itemizing when it comes time to do your taxes, you’ll want to make sure you claim every possible thing you legitimately can from the expansive list of tax deductibles.

While some deductions are obvious (qualified medical expenses and charitable contributions come to mind), others are a little more “out there”.  Consider a few of these deductions people can take–if they can document them and if they have any idea they even exist.

Travel laundry service.  Seriously.  If you’re traveling on business and you need to have your clothes laundered, save the receipt (and keep a currency converter handy).  That dry cleaning bill you rang up in Russia after the unfortunate borscht spill is deductible.  If your white blouse ran into some BBQ sauce in Memphis and you let the hotel cleaners take care of it, you can write it off.  The government is willing to cut a break for your sloppy co-worker who can’t avoid the whole mustard-on-the-tie problem at conferences.

Job-hunting food. If you were out looking for a job and decided that you’d do better interviewing on a full stomach, you should’ve saved the receipt.  You can claim 50% of dining expenses directly related to your job search.  Moral to the story?  You may just be able to afford to super-size that value combo if you’re on a job hunt.

Larger breasts. It’s possible to deduct breast augmentation surgery expenses–even when they’re not anywhere close to being a medically necessary procedure.  Wait–you shouldn’t necessarily book a date with the plastic surgeon for you or a loved one.  The torso receiving the boost needs to belong to an exotic dancer.  Under those circumstances, the enlargement becomes a valid business expense.

Cat food. Don’t get excited.  You’re probably not going to be able to put Snowball’s meal tab on your list of tax deductibles.  It can happen, though.  The IRS gave the green light to this write off when a scrap yard owner claimed that cats were the only way to keep the joint free of dangerous snakes.  He needed to keep cat food on hand to attract an army of snake killers.  Snake-eating cats are a legitimate business expense in some areas.

Clarinet lessons. The late, great Artie Shaw would undoubtedly approve of this one.  At least one family was able to convince the IRS to allow them a deduction for their kid’s clarinet lessons.  No, the IRS agent wasn’t a music lover.  The deduction went through because the clarinet lessons were shown to be a medical expense.  Apparently, this particular woodwind can help alleviate an overbite.

There you have it, a list of five tax deductibles that you probably won’t hear while H&R Block helps you complete your returns.

Interestingly, I learned that there is an urban myths of sorts surrounding a certain tax deduction.  There are many people out there who think they can get a deduction for donating blood.  People ask about this regularly and some off-handedly mention it as if it’s on the first page of the Tax Code.  It isn’t.  Nor is it on page 14 or page 943.  It’s not in there.  Not only is it absent, the IRS is actually up-front about saying you can’t do it.

Whether you like it or not, giving blood won’t improve the bottom line number on your 1040.  The expenses of whaling captains involved in sanctioned whaling activities, however…  Well, that’s a different story.

There are literally hundreds of valid tax deductions hidden throughout the Code.  You probably won’t be able to use many of these, but you and your accountant should check carefully for every break to which you’re actually entitled, even if you’re not a whaling captain with cats on a boat riddled with snakes.