I somehow managed to complete my taxes and file them electronically despite having two toddlers crawling on my head the entire time, using me as a de facto jungle gym.

So, if I’m audited, I can always blame it on being a little distracted during the process. Unfortunately, I don’t think the Internal Revenue Service will gives out breaks on interest and penalties for toddler tax-time interference.

At any rate, if you haven’t filed, you’ve got about 48 hours to do so. If you’re planning to e-file, do it NOW. The longer you wait, the higher the chance the IRS’ servers are going to be tied up with the thousands of other last-minute filers.

Don’t forget that, for the first time, you can file your taxes for free on the IRS Web site at irs.gov. This service is available to everyone, regardless of income levels.

The IRS Web site can help you, too, if you need to file an extension, as can such major tax software packages as TurboTax. But don’t think that by filing an extension, you can delay paying what you owe. If you owe for 2008, you’re still expected to make an estimated payment.

If you’re scrambling around looking for additional deductions to take, there are several articles out there pointing out lesser known – and sometimes just plain weird – tax deductions available. Newsweek, at www.newsweek.com/id/192900, lists six of the weirder deductions.

Yes, it’s possible to write off your kid’s clarinet lessons provided you can get a doctor’s note stating the lessons are helping your child’s orthodontia.

Seriously.

The Consumerist at consumerist.com/5196958/3-last+minute-tax-tips also has helpful tips on deductions that can help you lower your tax bill.

So, after reading this column, you’ve got roughly 47 hours and 45 minutes to get your taxes done. So get busy!

Romi Carrell Wittman is a writer and the communication services director for Trico Electric Cooperative. E-mail: romi.wittman@comcast.net.

With the stock market behaving better, investors finally have been able to get up, dust themselves off and contemplate the long road to recovery.

An old proverb comes to mind – the one about a journey of 1,000 miles starting with a single step.

The trek back seems to stretch at least 1,000 miles, if not longer. In terms of the Dow Jones industrial average, the market is still more than 6,000 points below its old peak, requiring a near-doubling of stock prices to get back to the former level.

Better bring an extra pair of sneakers, a hat and a good walking stick.

There won’t be many reliable mileage markers along the way, either. Nobody knows exactly how much the road will twist and turn, how long the trek might take or even whether most of us will get there. But here are some things to ponder along the way:

• Recognize that the road back will be anything but predictable.

Investors already are trying to predict how long it will take the market to recover. In a survey released by Charles Schwab last month, 55 percent of investment advisers predicted client portfolios would need up to three years to recover, while 35 percent think the process will take between three and five years. It might take longer.

Not only is the road uneven, but a lot of the journey will need to be covered at night and during foul weather, when the economic backdrop still looks bleak.

• Make up ground faster by staying on the trail.

The route back should be the same one you took to get here. If your portfolio took some hits from stocks, then stocks offer the preferred path back. Bank deposits and money-market funds just don’t yield enough to cover the terrain quickly.

Yet plenty of investors cut their stock holdings after the market tanked, and they likely will recover more slowly. A study by Dalbar Inc. that analyzes mutual-fund cash flows by shareholders said that investors routinely lag the stock market because of timing mistakes.

“While those (market) returns are, in fact, theoretically achievable, the reality is that investors are not rational and make buy and sell decisions at the worst possible moments,” said Lou Harvey, Dalbar’s president.

• Don’t worry about reaching those old mileage markers right away.

While it’s human nature to compare your current results against where your portfolio stood at the peak, it’s not always relevant.

“It is a disservice to pick an arbitrary date of October 2007 as the reference point against which all future gains must be measured,” said Jeff Young, an investment adviser at First Financial Equity Corp. in Scottsdale.

If you’re obsessed with the old high, you probably feel remorse now and might make unwise decisions such as getting too aggressive in hopes of rebounding sooner.

Investors can still succeed, Young adds, even if they don’t sell at the top.

“It is not at all necessary for one to exceed or even match former highs to have a portfolio that generates enough income to live a retirement in dignity (or meet other objectives),” he said.

• Try to reach your destination early.

If you invest regularly, your portfolio could recover before the market does. Why? Because you would have been putting money to work along the way at low prices using a dollar-cost averaging strategy. That could mean you don’t have to wait until the Dow returns to its former trading peak around 14,280 before you hit a new personal high.

But the key is to invest regularly and reinvest all dividends and distributions. Dividend reinvestments are a powerful force, often overlooked, accounting for perhaps one-third to one-half of overall returns, depending on the period studied.

• Expect a downhill grade and a tailwind.

Although the journey back won’t be smooth, it probably will be better than it has been in recent years. Why? Because market results “revert to the mean,” or hover around a gradually sloping upward line representing long-term growth in the economy.

Put more simply, long periods of poor results usually are followed by lengthy periods of good gains. In the past, when stocks delivered an average annual return below 5 percent over a 10-year stretch, they’ve followed with average annual returns of 13 percent over the next 10 years, according to an analysis by the Davis Funds.

It’s notable that the past decade has been one of the worst stretches ever.

“While we cannot know for sure what the next decade will hold, it is highly likely to be far better than what we have suffered through in the last 10 years,” the company said in a report.

Not to be the bearer of bad news, but April 15 is, well, about 15 days away. That means you’ve got just two weeks to get your tax returns completed and filed.

As you’re preparing your taxes this year, there are some things to keep in mind that might help you save on your taxes – or at least reduce the amount you must pay – this year.

Congress approved some 500 changes to the 2008 tax code in response to the economic collapse. You may be entitled to more tax breaks than you previously thought.

For example, if you’re a first-time homebuyer and you bought said house after April 8, 2008, you can get a tax credit equal to 10 percent of the purchase price, up to $7,500. It’s actually a tax-free loan that you’ll pay back to the government over 15 years, beginning two years after the credit is claimed.

If you sell the home before you pay back the loan in full, you’ll be on the hook for the balance of the loan. Since it’s a tax credit, your tax bill is reduced dollar for dollar, which is a pretty sweet deal.

If you’ve experienced a foreclosure, there’s good news for you, too.

Usually when you sell your home for less than it’s worth (e.g., a lender-approved short sale) and your debt is reduced and/or cancelled, Uncle Sam considers the forgiven amount as taxable income.

But in 2007 Congress approved legislation that excludes up to $2 million of canceled debt if it is a principal residence.

Other deductions you should be aware of: deductions for teachers and educators to write off up to $250 for classroom expenses; deductions for qualified college expenses for taxpayers that earn too much to claim the Hope or Lifetime Learning tax credits; and, for unemployed folks looking for a job, you may be able to write off some of your job search costs, including headhunter fees, transportation expenses, etc.

Lastly, if you didn’t receive the full tax Recovery Rebate last year, you still have a chance to claim it under the Recovery Rebate Credit. The rebates were paid based on 2007 tax return information. So if your income dropped significantly in 2008, you may qualify for an additional credit.

Check out the following resources for more information:

The Internal Revenue Service at irs.gov; MSM Moneycentral at articles.moneycentral.msn.com/taxes/home.aspx, and, Kiplinger’s at kiplinger.com/features/archives/2009/02/how-to-get-stimulus-money.html.

Romi Carrell Wittman is a writer and the communication services director for Trico Electric Cooperative. E-mail: romi.wittman@comcast.net.

By Romi Carrell Wittman, Tucson Citizen

The White House economic stimulus plan was heavy on spending inducements but light on retirement incentives. Still, a few other carrots are dangling out there to encourage saving, especially in retirement plans, with more benefits on the way in 2010.

Whether you’re nearing retirement or remain years away, regularly socking away cash is the best way to be prepared. Here’s what’s happening with three key types of accounts – traditional individual retirement accounts, Roth IRAs and workplace 401(k)-style plans.

Traditional IRAs

IRAs let people invest on a tax-deferred basis, with taxes due when the money is withdrawn. Some investors can deduct their contribution, up to $5,000 a year (more for workers 50 and up).

Deduction eligibility depends on whether you have retirement coverage at work. If so, you might not be able to deduct anything if your income is too high.

IRA deductions for those with workplace coverage in 2009 start phasing out at income levels of $55,000 (singles) and $89,000 (joint filers).

Changes ahead:

Most Americans don’t contribute to an IRA, and many low-income workers miss out on the saver’s tax credit, worth up to $1,000 for singles and $2,000 for joint filers with modest income.

The White House’s 2010 budget aims to boost participation by offering a 50 percent, refundable saver’s credit on the first $1,000 in retirement contributions for families earning under $65,000.

IRAs and 401(k) plans are key places to invest saver’s-credit money.

Roth IRAs

Unlike traditional IRAs, Roths offer no deductions. Still, investment dollars grow tax-free, and taxes don’t normally apply on withdrawals.

If you think income-tax rates will rise in the future, it’s smart to have some retirement money in Roths. Plus, you don’t have to start withdrawing from Roths by age 701/2, as with regular IRAs.

Higher-income people face Roth contribution limits. For 2009, eligibility starts to end at $105,000 in income for singles, $166,000 for joint filers.

Changes ahead:

You can convert or transfer money from a traditional IRA to a Roth (and pay ordinary income taxes) if your income doesn’t exceed $100,000. But starting in 2010, the government is waving that $100,000 limit, which means higher-income people can open Roth IRAs with a transfer.

With most investments down in value, a conversion makes more sense now because the tax bite would be less. Plus, you can delay taxes on a conversion done in 2010 to 2011 and 2012.

401(k) plans

In terms of taxation, 401(k) plans work like traditional IRAs, with a front-end tax deduction (through salary deferral), tax-deferred growth of investment dollars and taxes payable on withdrawals. (Roth 401(k)s also are available but are fairly minor so far.) One key incentive making 401(k)s popular is the matching funds paid by employers.

You can invest more each year in a 401(k) than in an IRA, with money pulled conveniently from each paycheck.

Changes ahead:

Workers can invest up to $16,500 in 401(k) plans in 2009, $1,000 more than in 2008.

Despite their benefits, 401(k) plans have proved less popular among younger and lower-paid workers. To address this, the White House budget aims to boost participation by prodding 401(k) sponsors to enroll all eligible workers automatically.

Employers lacking a retirement plan would enroll workers in a direct-deposit IRA instead.

The White House economic-stimulus plan was heavy on spending inducements but light on retirement incentives. Still, a few other carrots are dangling out there to encourage saving, especially in retirement plans, with more benefits on the way in 2010.

Whether you’re nearing retirement or remain years away, regularly socking away cash is the best way to be prepared. Here’s what’s happening with three key types of accounts – traditional individual retirement accounts, Roth IRAs and workplace 401(k)-style plans.

Traditional IRAs

IRAs let people invest on a tax-deferred basis, with taxes due when the money is withdrawn. Some investors can deduct their contribution, up to $5,000 a year (more for workers 50 and up).

Deduction eligibility depends on whether you have retirement coverage at work. If so, you might not be able to deduct anything if your income is too high.

IRA deductions for those with workplace coverage in 2009 start phasing out at income levels of $55,000 (singles) and $89,000 (joint filers).

Changes ahead:

Most Americans don’t contribute to an IRA, and many low-income workers miss out on the saver’s tax credit, worth up to $1,000 for singles and $2,000 for joint filers with modest income.

The White House’s 2010 budget aims to boost participation by offering a 50 percent, refundable saver’s credit on the first $1,000 in retirement contributions for families earning under $65,000.

IRAs and 401(k) plans are key places to invest saver’s-credit money.

Roth IRAs

Unlike traditional IRAs, Roths offer no deductions. Still, investment dollars grow tax-free, and taxes don’t normally apply on withdrawals.

If you think income-tax rates will rise in the future, it’s smart to have some retirement money in Roths. Plus, you don’t have to start withdrawing from Roths by age 70?, as with regular IRAs.

Higher-income people face Roth contribution limits. For 2009, eligibility starts to end at $105,000 in income for singles, $166,000 for joint filers.

Changes ahead:

You can convert or transfer money from a traditional IRA to a Roth (and pay ordinary income taxes) if your income doesn’t exceed $100,000. But starting in 2010, the government is waving that $100,000 limit, which means higher-income people can open Roth IRAs with a transfer.

With most investments down in value, a conversion makes more sense now because the tax bite would be less. Plus, you can delay taxes on a conversion done in 2010 to 2011 and 2012.

401(k) plans

In terms of taxation, 401(k) plans work like traditional IRAs, with a front-end tax deduction (through salary deferral), tax-deferred growth of investment dollars and taxes payable on withdrawals. (Roth 401(k)s also are available but are fairly minor so far.) One key incentive making 401(k)s popular is the matching funds paid by employers.

You can invest more each year in a 401(k) than in an IRA, with money pulled conveniently from each paycheck.

Changes ahead:

Workers can invest up to $16,500 in 401(k) plans in 2009, $1,000 more than in 2008.

Despite their benefits, 401(k) plans have proven less popular among younger and lower-paid workers. To address this, the White House budget aims to boost participation by prodding 401(k) sponsors to enroll all eligible workers automatically.

Employers lacking a retirement plan would enroll workers in a direct-deposit IRA instead.

Now that the Treasury Department has fleshed out more details on its mortgage-modification effort, it raises the question: Will homeowners who seek to change the terms of their loans get penalized on their credit scores?

They could, but it’s also possible a modification could improve matters.

Credit scores reflect the information compiled by credit bureaus in consumer-credit reports, as reported by lenders. Scores obviously affect your access to loans and the interest rates you pay, but also are factored in for other things, such as the availability and cost of insurance. Hence the wisdom of not hurting your score.

With a loan modification, the credit-scoring impact will depend on how lenders report activity to the bureaus, and that could vary, said Barry Paperno, a manager at Fair Isaac Corp., which developed FICO scores.

Anything hinting of a loan not being paid on time or as agreed could hurt. It’s also possible that a modified loan could be reported as a new loan, which could cause a slight score decrease, he said.

If you’re delinquent at the time of applying for a mortgage modification, your lender likely will report any late or missing payments as demerits. But it would do so even if you didn’t apply to change the terms of your mortgage.

“The modification itself shouldn’t do any damage,” said Ben Woolsey, director of marketing and consumer research at creditcards.com.

Another issue reflects loan modifications that specifically involve a principal reduction. Under the Obama plan, lenders first will be asked to cut interest rates to help lower monthly payments for borrowers. Then they might need to extend the length of the loan. After that, some might agree to reduce the principal.

“If you write down the principal, that could be a negative if considered a debt settlement,” said Mike Sullivan, director of education at debt-counseling firm Take Charge America in Phoenix.

Then again, a principal reduction could make a huge difference in helping you retain your home.

“If you avoid foreclosure, that’s very good (for credit scoring),” Woolsey said.

Actually, the Treasury doesn’t require modification applicants to be delinquent.

“My suspicion is that if you continue to make payments, a modification won’t affect your score and could help by allowing you to stay current on payments,” said Ethan Ewing, president of bills.com.

Credit scores thus are a factor to consider if you apply for a loan modification, but not the main one.

“If you’re in that bad of shape (to seek a modification), I’m not sure if your credit score should be your primary concern,” Sullivan said.

• Fair Isaac recently tweaked its FICO credit scores in ways that could help some people and hurt others. The changes were analyzed by bills.com.

The changes aim to “help lenders better gauge actual risk by better differentiating good customers who have made one mistake from people who have multiple delinquent accounts,” Ewing said.

One positive is that small debts below $100 for things like unpaid parking tickets or other minor bills won’t count as heavily as before. Even one serious issue, such as a vehicle repossession, won’t factor as much if other accounts are current, Ewing said.

Among negatives, Ewing said consumers now could be hurt a bit more if they close accounts that they opened fairly recently or use a high percentage of available credit.

The basic rules for good credit remain unchanged. They include paying bills on time, using a mix of credit and keeping balances low.

• Will more credit-card companies offer incentives in hopes of encouraging risky customers to pay off balances and close their accounts?

American Express might have started a trend last month with an appeal to certain customers with high balances and little activity. Those who agree to pay off their balances and close their accounts by April will get a $300 prepaid gift card.

“I can definitely see other credit-card issuers who are being bitten by a rotting portion of their portfolio pulling this one out of their bag o’ tricks,” wrote Bruce Cundiff at Javelin Strategy & Research.

I made an ugly discovery the other day: my husband and I will owe taxes this year.

It’s not a huge amount. Still, it took me by surprise. I thought I had planned our taxes well and had the appropriate amount taken out of our paychecks. My husband earned more last year than he had in years’ past. I wondered if that contributed to the higher tax bill.

This situation got me to thinking about another ugly reality: the Alternative Minimum Tax.

When it was created by Congress in 1969, the AMT, which has also been nicknamed “The Stealth Tax,” was designed to nab wealthy people that used extensive deductions to get out of paying their share of taxes. However, the AMT has never been adjusted for inflation and now affects the middle class, too.

The AMT severely limits deductions such as children, state and local taxes. That translates to a drastically higher tax bill.

There is some good news. Congress passed a patch for 2008 that raised the AMT exemption for married couples filing jointly to $69,950, for single filers or heads of households to $46,200, and for married couples filing separately to $34,975. Without the patch, the exemption for taxpayers would have reverted to pre-2001 rates: $45,000 for married couples filing jointly and $33,750 in 2009 for individual filers.

While this patch will certainly help a lot of families, there are still a fair number of middle class families that could feel the pinch. To find out if you’ll be one of them, go to the Internal Revenue Service’s Web site. Its features include an online worksheet to help you determine if you’re going to owe (http://www.irs.gov/businesses/small/article/0,,id=150703,00.html). You’ll need a copy of your draft Form 1040 (filled out at least through line 44). Then the “Assistant” asks you a series of questions, which takes about 5 to 10 minutes. The more accurate data you provide, the more accurate answer you’ll receive.

If you want to learn more about the AMT, check out the Web site for a great overview as well as links to other AMT resources:

http://www.smartmoney.com/personal-finance/taxes/the-alternative-minimum-tax-9540/

Romi Carrell Wittman is a writer and the communication services director for Trico Electric Cooperative. E-mail: romi.wittman@comcast.net.

With the economy sinking to new and chilling lows, creating – and sticking to – a budget is more critical than ever before.

You don’t need to spend a lot of money on budgeting software to get started. Several tools on the Web can help you get organized for little or no cost.

Mint.com offers a wealth of free online tools to help you first determine where you’re spending your money, and then determine areas where you can realistically cut back. It also consolidates all of your accounts in one convenient location, making banking that much easier. It will even analyze things like the interest rates you’re paying on your credit cards and suggest cards with lower rates or help you negotiate a lower rate with your current credit card company.

Best of all, since Mint.com is Web-based, you can access it from anywhere, even your Web-enabled phone.

BudgetTracker at budgettracker.com allows you to track your budget, bills and transactions, and ties all these together in a calendar that can send you reminders when bills are due. Basic membership is free. For unlimited use, you’ll pay about $3 a month.

Need to get your debt under control? Go to debtsteps.com. This site will help you determine if you should borrow to consolidate your bills. It will also outline the pros and cons of bankruptcy, credit counseling and settlement. It also provides insight into how creditors operate and just what constitutes harassment.

Clearcheckbook.com is another free online tool to help you manage your money. It acts as an online checkbook register that also creates reports and helps you set budgets and payment reminders. Basic membership is free, but if you need added features – like access to your running balances, transaction histories, etc. – you can upgrade to a premium membership for about $4 per month.

If you prefer trusty old Excel spreadsheets over online tools, you can download free templates that will help you track expenses. Visit office.microsoft.com/en-us/templates/CT101172321033.aspx to find templates for everything from tracking event expenses to family budgeting. Go to Mactopia at www.microsoft.com/mac/templates.mspx to find similar templates for Excel on a Mac.

Romi Carrell Wittman is a writer and the communication services director for Trico Electric Cooperative. E-mail: romi.wittman@comcast.net.

The holidays are over and you’ve hopefully recovered from any excess cheer imbibed at your New Year’s Eve party. That said, it’s time to break out the New Year’s resolutions.

While I’m not normally big on New Year’s resolutions, there is one resolution that makes sense for everyone: getting your credit report in top shape.

With the economy in such a sorry state, it’s a good idea for everyone to cut back, stick to a budget and set some money aside in savings. But just as important is ensuring that your credit report is clean and solid.

Credit reports are reviewed by everyone from potential employers to auto and home insurance agencies as well as by lending institutions. A good credit report can help you get lower interest rates on loans and lower premiums on insurance policies.

First, you should pull your credit report by going to Annualcreditreport.com. You’re entitled to one free copy of your credit report each year from each of the three major credit bureaus (Equifax, Experian and TransUnion). You’ll have to pay a little extra to get your credit score.

Be sure to carefully look over all three reports. If you see something erroneous or if something looks fishy to you, immediately contact the credit bureaus to notify them of the problem. Your credit report will contain information on how to dispute such entries.

If your credit isn’t in the best of shape, you need to create a plan to repair it. However, beware of scams. Any company billing itself as a “credit doctor” with the ability to wipe negative information from your credit report is a scam.

If you need help finding a legitimate credit counselor, go to the National Foundation for Credit Counseling’s Web site at nfcc.org. Most debt counselors charge a fee for their services and this Web site will help you determine what fees are fair. This site also offers advice on managing consumer debt.

If you feel you’ve been had by a credit scammer, notify the Federal Trade Commission at ftc.gov or call (877) 382-4357.

Romi Carrell Wittman is a writer and the communication services director for Trico Electric Cooperative. E-mail: romi.wittman@ comcast.net.

If all the prognosticators are right, this economic downturn could last a very long time. That means planning for your financial future is more important than ever.

The end of the year always gets me to thinking about getting my financial house in order. It’s a good time to pull those receipts together, get your pay stubs out and start thinking about filing your taxes, too. And, while you’re at it, you’ll probably want to re-examine your tax withholding, your 401(k) and/or IRA contributions, as well as any charitable giving.

If you’re anticipating a big, fat refund from Uncle Sam, you’re paying too much in taxes. While some people count on this as a kind of forced savings program, I look at it more as an interest-free loan to the government. My goal is to come within a couple of hundred bucks, give or take, on both my federal and state taxes.

You can figure out where you stand by using the Internal Revenue Service’s handy online calculator at www.irs.gov/individuals/article/0,,id=96196,00.html. You’ll need to have your pay stubs (and your spouse’s) as well as the number of times you’re paid each year.

If, after completing the calculator, you find yourself in the “give” part of the equation – that is, you’re going to owe on your taxes, there are a few strategies you can take to minimize the hit next April.

First, get organized. You need an accurate assessment of your expenses to take advantage of all qualified deductions available to you. This includes documentation of stock losses as well as capital gains. Investors may want to consider selling holdings that have lost value since they can claim up to $3,000 in losses on their taxes.

Also, carefully review all out-of-pocket medical expenses as these can be deducted if qualified expenses reached 7.5 percent of one’s income.

If you’re able to, consider prepaying things such as your mortgage, tuition fees or taxes. These all translate to deductions on your 2008 taxes if they are paid by Dec. 31.

Charitable giving is another step you can take. Any check written or item donated before Dec. 31 can be deducted. If you can’t think of a worthy school or charity to donate to, visit www.give.org or www.charitynavigator.org to find a reputable charity whose cause you support. Go to Forbes at www.forbes.com/feeds/a

2008/11/21/ap5728888.html for more end-of-year tax tips and advice.

Romi Carrell Wittman is a business writer and the communication services director for Trico Electric Cooperative. E-mail her at: romi.wittman@ comcast.net.

It’s time, once again, for my annual December tradition. No, I don’t mean eating fruitcake (which I never do) or sending out chocolates (which I do every year). I’m talking about cleaning off my desk and files.

Yes, yes, I know…If I were a better (or at least more organized) person, I’d clear off my desk more than just once a year. But let’s face it – I’m the kind of person who does better with “piles” than “files.” If I put something in a drawer, it’s likely to be forgotten forever. So I like to have piles of stuff on my desk.

There’s nothing inherently wrong with working this way. But I have a friend who never cleaned off his desk. After more than a decade, he couldn’t even be seen behind the piles.

So, during the last week or so of the year – when things are much quieter around the office, it’s a good time to make sure I can see my desktop – and finally get rid of the dust.

You may want to pick up on my tradition. You’ll feel better, and you’re likely to find the business card of that key prospect you wanted to follow up on.

So wear comfy clothes – jeans preferably. Go to the office. Play some lively music and start cleaning.

First, let’s get our equipment ready:

1. Two trashcans: One for trash; one for recyclable papers. As you pick up each piece of paper, if you’re not going to keep it, toss it now.

2. A shredder: Unfortunately, it’s not safe to throw some stuff in the trash. I get dozens of pre-approved credit card offers and documents containing confidential information. Shred, shred, shred.

3. Small Post-It notes and a pen: For those documents you’re going to keep, put a Post-It with the name of the file. Go through a whole stack this way and then make the files all at once.

4. Scissors and stapler or scanner: Sometimes you only want one article from a newspaper or magazine. Clip what you want and toss the rest. Scanning eliminates paper altogether.

5. An address database: Have a pile of business cards on your desk like I do? Decide which names are important and enter them into an address database. If you have an electronic business card reader, it makes the process faster. Toss the rest.

6. Computer backup system: Clean up your hard drive, too. Transfer old files to a portable hard drive. Then defragment your hard drive overnight.

7. File folders and file drawers: You need a place to put your files, don’t you? Ideally, have at least one file drawer in easy reach from your desk.

8. Label maker: Files look better with printed labels. Label makers cost less than $30, and we all love the one in our office.

Next, figure out what you absolutely must keep. Here are a few suggestions:

1. Financial documents: Tax returns or any tax filings, bank statements and bookkeeping records. My bookkeeper advised me to retain for a minimum of five years the receipts, bills, or other documentation for items I deduct from taxes.

2. Legal documents: Contracts, business licenses, county tax papers, critical correspondence with suppliers or customers, and anything that might involve a legal action on which the statute of limitation has not run out. Some legal papers, such as your company’s incorporation documents, you should hold on to for as long as you’re in business.

3. Personnel records: Payroll records, insurance documents, performance reviews, and anything else that might be necessary in an emergency, if an employee ever has their wages garnished, or if you later face a lawsuit. But be careful to protect privacy and insure against identity theft. Legally, you’re required to shred employee applications from those you did not hire.

4. Bids: You naturally hold on to supplier’s bids until the work is finished, but it’s also useful to retain even losing bids for the past year or two to keep track of pricing.

5. My columns: Hey, some things are obviously worth saving.

So clean off your desk – you’ll feel better and more energetic about facing the new year. Happy holidays!

—

Copyright, Rhonda Abrams, 2008

Rhonda Abrams is the president of The Planning Shop, publisher of books for entrepreneurs. Her newest is “Successful Marketing: Secrets & Strategies.” Register for her free business tips newsletter at www.PlanningShop.com.

You’re getting all kinds of advice on how to survive this recession. Some is sound. Some is silly.

It’s been my good fortune to have lived through 15 recessions and one depression in my 84 years. Based on those experiences, I suggest you not only will survive but ultimately thrive if you practice the proper mix of these two recession “musts”:

• Realism.

• Optimism.

Reality is that we’ve been in a recession since last December, even though it took the National Bureau of Economic Research a year to figure it out. That reality means that if you haven’t already done so, you should tighten your belt as much as necessary.

Optimism means you must understand that if you handle this problem properly, you can ride high on the wave of recovery and prosperity that follows every recession.

Tightening your belt does not mean putting money under the mattress. It means spending only what is necessary on necessities and funneling what you can into the future. The sooner the better.

That means investing now in everything worthwhile you can afford. New ideas of your own. New products. The best time to market anything new is during a recession.

We planned and launched USA TODAY during the 16-month recession of 1981-82. Because it was a popular new product, it rode the recovery in the late ’80s to become the nation’s No. 1 newspaper.

During the current recession, we opened the new NEWSEUM on Pennsylvania Avenue in Washington, D.C. because it is a popular new product, it will ride the recovery to become the No. 1 must-see attraction in the nation’s capital.

If you invest in the future in time of recession, the best of times are ahead of you.

Al Neuharth founded USA TODAY.

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FEEDBACK

“Right on, Al. People who keep their cool and invest in a reasonable mix of stocks and bonds will be the ones reaping rewards when the economy rebounds.” – Walter Updegrave, “Ask the Expert” columnist, CNNMoney.com

“Also, invest your time, to help the people overwhelmed by the recession, and stay positive about the leaders trying to get us out of this mess.” – Jane Bryant Quinn, columnist, Bloomberg.com

Tucsonans hit Toys 'R' Us at East Broadway on Black Friday last month.

My late father used to tell a story about frugality that would have my sister and me rolling our eyes.

As a cash-strapped college student who had made his way from Calcutta to London, he walked seven miles every morning instead of riding the bus, to save money to buy a tie.

The story always ended with how that tie was more precious because of the effort and sacrifice invested in getting it. My father’s stories, with their tidy morals, had a way of coming up when my sister or I were clamoring for something.

Maybe it’s age, or the loss of him, or the changing shape of the economy, but I seem to be coming back to his morals lately. And feeling sorry I didn’t impart more of them to my kids.

This might be a bad time to talk about how excessively consumer-driven we’ve all become – what with Christmas coming, the economy in recession and retail businesses aching for sales.

Or maybe, with money tight as jobs, homes and life savings are evaporating, this is the best time to think about how and why we spend money, and the effect not just on our wallets but on our souls.

“We have all become children,” says Tahira Hira, Iowa State University personal finance and consumer economics professor. “We just point the finger and say we want that, and we just get that.”

For a lot of people, disposable income will be in short supply this holiday.

Judging by debt level, the size of our homes and cars, and even how we spend our spare time, our priorities have gotten out of whack.

We’ve moved steadily away from the lessons of thrift and saving our Depression-era parents learned. We caved in to the lure of easy credit (abetted by relentless credit-card solicitations) and the “buy now, pay later” philosophy. That, in turn, helped drive up everything from government deficits to personal debt.

“Businesses, individuals, households do it,” said Hira. “We all do it. Now its (cost) has been proven.”

About 60 percent of credit-card holders carry a balance, which is on average $9,000 to $10,000 per household, according to Tom Coates of Consumer Credit of Des Moines, Iowa.

Total credit-card debt has shot up from $100 billion to nearly $1 trillion in about 20 years. According to one estimate, a $1,000 charge will take almost 22 years to pay off, and cost more than $2,300 in interest if only minimum payments are made.

We shop for recreation, to make ourselves feel better, to plug in the holes in our lives, to demonstrate our love for each other. Many who didn’t grow up with a lot of money, and now have some, shower things on the next generation because they can.

The ads, the game shows, the Internet, all entice us to buy.

So did the Chicago Tribune in a recent editorial. It urged people to avoid the “doomsayer” scenarios, and go shopping, as a patriotic duty. I think it missed the point.

“If you don’t have the money to buy gifts,” urges Hira, “please don’t do it.”

The Tribune Co., by the way, declared bankruptcy later in the week.

The idea that by deferring payments, we could live beyond our means, helped lead to the foreclosure crisis. We’ve passed on to our children the sense that money has no value.

Not only does that encourage them to spend frivolously, but when lean times come, they haven’t learned resilience.

I don’t carry a credit-card balance, but I love shopping. It doesn’t matter whether it’s the department store, the drug store or a yard sale, whether I need the thing or not. I love a good deal. My closets are crammed embarrassingly full of clothes I never wear.

Whatever happened to window-shopping? asks Hira. The term has been wiped from our vocabulary.

“We sit overnight in the parking lot to buy something which the next day we will wait in line to return,” she says.

When it comes to holiday gift giving, people like me say we spend because we don’t have time to make, bake or provide a service. Yet we always seem to make time to shop.

The corrosive effect of all this on values became shockingly apparent on Black Friday, when a stampede of shoppers waiting to get into a sale at a Long Island, N.Y., Wal-Mart trampled a store clerk to death. Then customers got mad that the store was closing because of it.

Money is the No. 1 issue couples fight over, studies show. Yet studies also show our happiness level has little to do with how much we own.

This isn’t to suggest we cut out holiday spending, just that we be more purposeful about it. Think about books instead of the latest electronic gizmo for kids. (And when you’re shopping or eating out, support local stores and restaurants that are struggling to stay afloat.)

If you’re giving to someone who has plenty, think about making a donation in his or her honor, as a friend did on my birthday to a food pantry.

Being purposeful is what Michelle Obama is also doing by making plans to shield her kids from the sense of entitlement that being raised in the White House could bring. She will insist they continue to make their own beds and clean their own rooms.

Many religious and spiritual leaders make the point that Pastor Rick Warren of the Saddleback Church in Lake Forest, Calif., does. The author of “The Purpose Driven Life” and “The Meaning of Christmas,” says the best thing to do for one’s own soul is something for people who have it worse.

There are wonderful, meaningful ways to approach the holidays that demonstrate our interconnectedness without spending a fortune. Parties are just as much fun when they’re potlucks. For clothes, consider a “clothing exchange” with friends.

This year, my friends and I drew names so we would each give a gift to one other person rather than to everyone at our Christmas dinner.

And I’m resurrecting an old tradition of my mother’s: making rum balls to share with friends. They don’t even require cooking (see accompanying recipe).

As tough as these economic times are, Hira says there may actually be a silver lining. They may force us to be honest about our means and the need to live within them. And they could help us shift our priorities, to value what’s really important, like relationships.

Sounds like something my father would have said.

Rekha Basu is an editorial columnist for the Des Moines Register. E-mail: rbasu@dmreg.com.

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REKHA’S RUM BALLS

1 and one-half cups finely chopped toasted pecans, hazelnuts, walnuts or almonds

1 and one-quarter cups finely crushed vanilla wafers

one-half cup confectioners’ sugar

2 tablespoons unsweetened cocoa powder

2 tablespoons light corn syrup

one-quarter cup rum

Finely chop the nuts in a food processor and transfer to a large bowl.

Finely grind the vanilla wafers and mix with the nuts. Add the confectioners’ sugar and cocoa powder and stir until combined. Add the corn syrup and rum and mix well. Roll into 1-inch balls.

Garnish by rolling the balls in half a cup of cocoa or confectioners’ sugar, sifted.

If possible, store for several days in an airtight container before serving.

Makes about 3 dozen.

Everyone is feeling the pinch this year, and not just the usual budget strains we feel at holiday time.

This inevitably means people will scale back – and one of the first areas to go is charitable giving.

At a time when local and national charities are reporting record need, people are cutting back in their giving. So, as you’re planning your holiday spending this year, if you can, consider setting a donation aside for a charitable group.

Or, donate your time and skill. Here are some Web sites to help.

If you don’t know which charity you’d like to donate to, or if you just need more information on a particular non-profit, go to charitynavigator.org. Here you can research thousands of charities nationwide, including background information and financial data.

On a local level, consider donating nonperishable food items to the Community Food Bank. For a complete list of needs and drop-off locations, visit communityfoodbank.org.

If you’d like to donate a new, unwrapped toy to a needy child, go to toysfortotstucson.org.

If you’d rather donate your time and skills, go to volunteermatch.org. This site acts as a job board for volunteer opportunities. It’s searchable by city location and job type.

And volunteering needn’t be a one-man show. You can get the whole family in on the act. Go to www.thevolunteerfamily.org to find volunteer activities the whole family can participate in.

If you have neither time nor money to give this holiday season, you might consider this option: recycling your old cell phone. Collective Good at collectivegood.com takes cell phones and donates them to charities. Many are used to provide affordable wireless access throughout the Caribbean, Latin America, Eastern Europe and India.

Romi Carrell Wittman is a business writer and the communication services director for Trico Electric Cooperative. E-mail her at: romi.wittman@comcast.net.

Talk about adding insult to injury.

Many investors are likely to receive a capital-gains tax bill on their mutual fund holdings later this year – despite widespread stock market losses in 2008 and even if they don’t sell anything.

“Clients don’t expect it this year,” said B.G. Malamut, a certified financial planner at Ameriprise Financial in Phoenix. “They’ll be surprised and very upset.”

Actually, not all fund investors will be impacted. If you invest in mutual funds within an IRA, 401(k) plan or other tax-sheltered retirement vehicle, there’s nothing to worry about. Similarly, most bond funds aren’t likely to pass along much if anything in the way of taxable capital gains.

But many stock funds will, so investors holding shares in taxable accounts should beware.

“We are seeing a trend that could be quite alarming to many people,” said Tom Roseen, a senior research analyst for Lipper Inc. in Denver. The combination of personal losses with taxable distributions is “the double whammy we all fear,” he said.

All this begs a fundamental question: How can investors be billed for a tax gain during a year when they see their holdings plummet? The answer relates to the quirky nature of mutual-fund taxation.

Simply put, fund companies are required under the nation’s tax code to make payments to shareholders that reflect profits realized on stocks or bonds sold by a portfolio manager.

Losses don’t get the same treatment but, instead, are used to offset gains. Excess losses are carried forward to offset gains in future years, but excess gains must be passed along to shareholders as taxable distributions in the current year.

Gains and losses aren’t taxable until they’re actually locked in when a manager sells. Many fund managers try to avoid realizing taxable gains for just this reason, but some have been forced to sell holdings lately to meet redemption requests from panicky shareholders.

Roseen predicts funds owning foreign stocks or commodity/natural-resources shares are more likely to pay taxable distributions in coming weeks, since those had been sources of hot money, having attracted buyers with a short-term focus.

Equity-oriented funds in general have suffered billions of dollars in net cash outflows this year, forcing many to sell stocks.

Already, some firms are warning shareholders of taxable distributions ahead. For example, the American Funds estimates it might make taxable distributions on more than a dozen funds. These could include payments of up to 9 percent of the share price of the New Perspective Fund, 6 percent for New World and 5 percent for EuroPacific Growth.

At the Vanguard Group, only a handful of actively managed funds and no index funds had realized gains through September, and most of the few distributions were small, said John Woerth, a Vanguard spokesman.

“However, given the market activity in October, these figures could change,” he cautioned.

And that’s the point of this exercise – to encourage you to call your fund company or check its Web site to find out what taxable-gain distributions might be in store.

You can prepare for, cushion and even avoid an upcoming distribution in several ways. For example, you could sell some other money-losing investment and use that to offset some or all of an upcoming capital-gain distribution.

Also, you could sell the fund in question before the “record date” and avoid receiving the distribution. Shareholder record dates typically fall in November or December.

Conversely, if you’re thinking of making an investment, you should avoid doing so until after the record date to avoid getting a taxable payout.

If you do get saddled with a taxable-gain distribution this year, above all you should keep good records. The reason: When you ultimately sell your fund shares, you can reduce your future gain (or maximize any taxable loss) to reflect taxes paid along the way on distributions that you reinvested into additional shares.

Contact Russ Wiles at russ.wiles@arizonarepublic.com