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If you have a high deductible health plan (HDHP), you may be eligible to create a Health Savings Account. Also known as an HSA, this is basically a special savings account that is used to pay for medical related expenses. The primary benefit of this account is that you can make contributions (or deposits) into your account using pre-tax income. The drawback is that you can only use money in this account for medical-related expenses. The definition of medical related expenses is pretty broad; I have even heard that you can buy diapers with your health savings account.

The tax savings works like this: Say you make $50,000 in one year, and you want to contribute $2,000 to your health savings account (There are yearly contribution limits, make sure you aren’t contributing more than your limit). Y

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Personal loan customers may increasingly shun traditional banks. Read more…

U.S. foreclosure filings have soared in recent years. In 2009, RealtyTrac estimates, 3.9 million foreclosure notices were sent to American homeowners unable to make their payments, up nearly 22% from 2008.

It’s a terrible problem, emotionally wrenching for many families. And, as if losing your home isn’t bad enough, you may also get slammed by the U.S. tax code. Here’s where the hit could hurt and how to minimize the pain.

Debt relief and a tax break

The basic tax rule on debt discharge is simple: If a lender cancels your debt, that’s taxable income to you, and you and the Internal Revenue Service will get a 1099-C form, and you will have to pay tax on that forgiveness.

But Congress gave homeowners a big gift with the Mortgage Forgiveness Debt Relief Act of 2007.

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The US Treasury Department’s Christmas Eve announcement confirming massive new support for the Agencies had the following as the last sentence:

Recent announcements on the tightening of underwriting standards by Fannie Mae, Freddie Mac, and the Federal Housing Administration, demonstrate a commitment to prudent housing finance policy that enables a transition to an environment where the private market is able to provide a larger source of mortgage finance.

I believe that this is a very mistaken assumption by Treasury. Take them at their word on this regarding the tightening of standards. I

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He and his wife had an offer accepted on a home, only to later find that foreclosure proceedings were about to begin on it. That’s after they considered another home that was aesthetically pleasing but had major issues that came to light upon closer inspection. In the meantime, they’re trying to estimate the money they will need for closing costs and any future expenses, hoping that they won’t eat too much into their financial cushion.

“There are always going to be things that come up,” Leibfried said.

That statement could describe homeownership in general.

Allan Glass, a Los Angeles-based real-estate agent who works with the couple, says “the biggest mistake buyers make is underestimating the costs” of buying a house and maintaining it over time.

Homeowners should have 1% of the purchase price of their home in savings for improvements and surprise expenses, he said.

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