Uncle Sam wears the pants in this household.

ARGH. I finally got my 2010 W-2, and I went to TurboTax and did my tax filing first thing, and I owe the IRS $844.

This smarts even worse because I'd used a TurboTax calculator through Mint.com, and it had estimated that I'd have a small refund. So the big bill was a surprise indeed!

The problem, I found, was that I had said, "Yes, file as Head of Household" on the tax calculator, and that had skewed the results. (A Head of Household gets more deductions, and therefore is taxed on a smaller amount and has to pay less.) I figured that in 2010 I lived alone (or with a housemate who paid her own bills) and paid my rent; I make the financial decisions in my household because I'm not responsible to someone else (a parent, for example). But to be eligible for that role, you have to have dependents of your own, and they have to be related to you. I didn't find that out until I had filled out the 1040 tax form. *sigh*

This morning I e-filed my federal return (free through TurboTax) and set up a direct debit payment to come from my checking account in early March; because of legislation passed in December 2010, returns like mine won't be processed until mid-February even if they are filed now. That gives me enough time to cut back further on expenses and just take that chunk out of one paycheck. It's painful, but it will work. And I'll still fulfill my resolution of paying my taxes on time.

Slightly better news: I have to file a simple state tax return and mail it in (TurboTax charges to e-file a state return, so I'll do it myself), and I'm owed a refund of $26. That will go toward paying my federal taxes, of course.

I'm feeling really poor right now. But all my bills are paid. I guess that's the difference between being broke and just having very few assets and no ready cash flow.

Christmas Club

Oof. I think I understand for the first time the "traditional" haze of bills that follows the holidays.

I got a little out of control with Xmas gifts, I'll admit -- and everything went on the little blue card! That got me extra JetBlue points, which is great... but even I, with my aversion to credit-based economy, can feel the attraction of "buy now, pay later". Glad I got it out of my system without too much damage. I can pay my January AMEX bill. Barely. It means that I'm going to have to watch myself for the next couple months, though.

For next year, I've set up an account for holiday expenses. It's an ING "Electric Orange" checking account (again, opened online in just a few minutes). I've arranged a small weekly transfer -- just $10 -- to run until the week before Thanksgiving. That gives me about $450 (a little more than I spent on family/friends/loved ones' gifts this year) to work with, and I can start early to avoid the holiday rush. It won't cover everything, but it's an amount I won't miss, and it more than gets me started. The account has a debit card I may be able to use to pay for items online, and then anything above that amount -- special food or decorations and the children's gifts I always donate through my church -- can be handled out of what I have available at the time.

Starting 2011 off right

I realized that all of my major financial triumphs in 2010 were made in the last three months. Admittedly, Quarter 4 had a lot of foundational planning behind it -- but that only points out that I can do much more in 2011 if I start early!

To that end, I opened a Roth IRA this morning at Charles Schwab.

I got an email nudge from Mint.com with a list of potential investment companies, including Schwab. I was attracted to it because of the zero-minimum starting balance (as long as you set up a recurring deposit, which I'd intended to do anyway) and that I could apply online! I don't want to go into a bank and talk to a human about my inexperience in financial matters. So I filled out a form online and elected to transfer funds in later (after my paycheck tomorrow is the plan). Easy!

I still don't know how much I'll be socking away each month. I think my educational fund will be taking the focus in 2011 and 2012. Although I know the sooner I get started with the IRA, the more I'll end up with, I think adding small amounts for the first couple of years is okay. Assuming the advanced degree gives me more earning power, I can maximize my contributions when I'm employed at a higher salary.