Those of us who have taken budgeting to the extreme are always looking for new ways to get even more insight into our expenses. Much like tracking cash is probably more detail than most budgeters require, so too is tracking sales tax. But for those who have taken all other aspects of their budgeting to the extreme, tracking sales tax may be a welcome addition.

I tend to be more aware of the sales tax I pay than most other people. I suppose this comes from the fact that I used to live in New Hampshire, which is one of the tax-free states. I got used to purchases being free from sales tax and so now paying it seems like an unnecessary expense. I often leave a store wondering how the items I selected could have possibly totaled to the amount I paid, only to discover that the sales tax was the hidden item I was forgetting.

The idea to track sales tax came to me after a recent visit to the grocery store. I typically split receipts into various categories like groceries, household items, cleaning supplies, etc. I use rough numbers and tend to bulk the tax into the category with the largest percentage of the total purchase. Since trips to the grocery store usually have groceries as that category, sales tax gets lumped in with that group. But groceries generally aren’t taxed, so putting the sales tax in this group increases their reported cost and decreases the true cost of items that are subject to the tax.

I could allocate sales tax to the individual items on which the taxes are levied, but I decided to track it as a separate expense. Doing so gives me the ability to work on reducing it in a more flexible way. If I want to cut out 5% of the amount I spend on sales tax each year, I can find that 5% among any of my taxable expenses.

Many readers will find tracking sales tax to be too fine a granularity for their budgeting needs, but some of you will surely find it useful. I found it most useful to allocate sales tax to a separate category, but how you track the expense is up to you. The important thing is to realize that sales tax is an expense that can be tracked and managed if you so desire.

Do you track sales tax in your budget?

Many companies try to capitalize on our fears to sell their products and services. Even unwarranted fears are fair game. A recent advertisement that I saw online provides an excellent example. The ad hoped to capitalize on the fear of your bank going out of business.

The ad promoted OptionsExpress, the online options, stock and futures broker. The copy read “Banks Going Under Are Scary. Options Aren’t.” A “Sorry, We’re CLOSED” sign was shown in the background.

Despite what you may hear on the news or imagine would happen if your bank went under, that prospect shouldn’t invoke fear. Any fear you do feel probably has less to do with the bank’s troubles and much more to do with losing the money you have on deposit there. As I described in my post FDIC Insurance Limits, money on deposit (within the limits described) is protected from bank failure. That means that very few of us have anything to fear from our bank going under.

Now that we know the first part of the ad is false, let’s consider the second half. Note: For those readers new to options, Investopedia describes Options Basics.

As someone who has used options regularly over the past few years, I can tell you that they are very scary. At times they’re the good kind of scary, inspiring the same type of nervous excitement that you might feel on a first date. Often they’re the normal kind of scary, where a feeling of despair quickly wells up inside of you. The same leverage that can bring quick profits can (and in my case often does) bring huge losses in a hurry. Options have their place in the investment world, but they aren’t for everyone and are certainly very scary investment vehicles.

In that sense, the advertisement is wrong in both points it is trying to make. Uninformed investors might conclude that options are a safer investment than depositing money in the bank. This is far from true. When you see an ad that invokes fear, be sure to consider whether that fear is warranted before being persuaded to act as the ad suggests.

Have you made purchases based on fear-inspiring advertisements?

We all know that buying in bulk usually yields the lowest unit cost. But there’s a lot more to packaging than just the quantity of product within the box. Here are just a few examples.

Convenience Features

Features added to packaging for the convenience of the user are quite common and often lead to higher prices. Consider the zip tops on bags for shredded cheese. That feature makes it easier to access the product and may help to keep it fresh longer. That may be valuable to you depending on your needs. If you’re using an entire bag of shredded cheese in a recipe, easy access and resealing are probably not as important as the quality of the product itself. Paying more for a product with such features would be a mistake in such a situation. If you sprinkle a little cheese on your salad each day, then the convenience may be well worth any added packaging cost.

Special Labeling

As a migraine sufferer I was excited when Excedrin pain reliever came out with the new Excedrin Migraine product. Listening carefully to the commercial I learned that the product was exactly the same as Extra Strength Excedrin, but the label had additional information about migraines. I suppose that some users got more relief from the placebo effect of not knowing they were taking the same medicine, but paying more for the same product wasn’t going to help me at all.

Pre-Portioned Servings

Rather than label their product “High Unit Cost” the marketers at many snack companies ingeniously came up with “100 Calorie Packs” and similar names instead. By appealing to dieters who still want an occasional treat, these companies are able to sell their products at a much higher price than larger quantity packages. Again, some people may find this package size useful and worth the added cost, but anyone eating multiple packs would be better served financially to buy in larger quantities. Another example of portioned packaging is how small packages of M&Ms are labeled “Fun Size.” I always laugh when I see that since I know that eating an extra large bag of M&Ms would be a lot more fun!

It shouldn’t come as a surprise that manufacturers offer products in many different packages. Different people will benefit from each of the types of packaging. It’s important to realize that when you make a purchase, you are paying for more than just the product inside. Depending on the type of package you choose, you may also be paying for a convenience feature, special label, pre-portioned serving or one of many other packaging costs. Understanding the premiums paid for the different types of packaging will help you to decide if it’s worth the price.

What other ways have you seen packaging influence price?

Soon after New Year’s resolutions are being forgotten or abandoned, many of us turn our attention to income taxes. Until we file our returns, the process is likely in the back of our minds. Those of us who pay estimated taxes might even think about income taxes on a more regular basis. The IRS has long sought to soften its perception as an adversary of taxpayers and will be going even further than normal in that effort this year.

Policy changes were chronicled in Stephen Ohlemacher’s article for the Associated Press, IRS agents soften heart for delinquent taxpayers. Citing the struggling economy, the article details how the IRS is more willing than ever to help delinquent taxpayers who make an effort to comply with the law but whose financial hardship prevents them from doing so. IRS Commissioner Doug Shulman implores struggling taxpayers to open a discussion with the IRS, over the phone or at one of their branch offices. Ignoring the problem will not only make matters worse, it may also preclude the IRS from using its new policies to help. By going to the IRS and demonstrating your inability to pay, it is in a much stronger position to be able to help.

Those who are able to pay their taxes should not expect the same type of leniency. Ideal candidates are those who have previously been in good standing, but whose finances have deteriorated this year, leaving them less able to pay. Along with waiving late fees, the IRS may be able to delay property seizures or make it easier for people with IRS liens to refinance their properties.

On its website, the IRS recommends that taxpayers file returns by the deadline and pay as much as possible even if they are not able to pay the full amount due. To take advantage of the various payment options and leniency programs available, it’s best to contact the IRS as early as possible.

Will paying your taxes be more difficult this year?

Expect the unexpected when it comes to business in this economy. Case in point, Amazon and EBay.

Two of the web's premier online stores are going in opposite directions, both in the sense that their revenue and income are increasingly dissimilar and that they are producing opposite results from what conventional wisdom might expect.

Let's begin with the former. In fourth quarter earnings reports released at the end of January, Amazon and EBay were headed different ways - Amazon decidedly going up and EBay going south. Amazon's fourth quarter revenue was up 18 percent and its income rose nine percent. On top of that, industry experts predict a rise in first quarter revenue and a relatively rosy outlook for the Seattle-based e-store.

Its online counterpart didn't fare nearly as well. EBay took a drop of seven percent in revenue and a plunge of 31 percent in income. It lost customers at a rate of three percent from totals last year, and it may struggle to keep revenue losses from falling even further in the first quarter of the new fiscal year.

With these figures for Amazon and EBay in mind, it is interesting to note the expectations for each business in the current state of the economy. In Amazon's case, retail businesses nationwide are struggling immensely, and it would have been understandable if some of the consumer hibernation had an impact on Amazon's figures. With the population getting thrifty when it comes to retail purchases, Amazon was expected to feel a hit.

EBay, it stood to reason, should have found renewed life as gun-shy citizens turned to cheaper means of acquiring the toys they used to splurge on. Ebay's auction-style market seemed perfect. People could unload the items they found excessive and pocket some much-needed money. Those in search of a good deal would have a bevy of options on Ebay's pages to scrimp and save.

Only none of this happened the way anyone expected. Amazon rose; EBay fell. And experts scrambled for an explanation.

The best they could come up with was that Ebay's user experience did not meet the needs of a consumer base that preferred traditional, dependable e-commerce like that found at Amazon. EBay excels in offering a wide variety of products (thanks to third party sellers), but they lack the polished, direct selling style of their competition. Buying a product on EBay has risk associated. Granted the risk may be negligible depending on the quality of the third party seller, but even an ounce of negligible risk - for instance, in the condition of the product, the speed of the shipping process, or the possibility of a scam - is more risk than one would find buying items off Amazon. Plus, when you throw in Amazon's customer service, competitive pricing, discounts, and convenient shipping, the Amazon experience would appear to come out the clear winner.

To test this phenomenon, I went shopping on EBay and Amazon, curious at what I might find. I consider myself a relatively unbiased participant: I don't have a preference for either site, and I shop online with fair infrequency. My object of desire: a Dark Knight Blu-Ray DVD.

Searching Amazon's site was a breeze. Other than a distracting Kindle letter on the front page, I was able to type in my search parameters (Dark Knight blu ray), and my movie was the first result on the next page.

Ebay's experience was a little more stressful. The searching was easy. I typed in the same "Dark Knight blu ray" text (both sites had a helpful auto-complete feature), but the results I was given came across as horribly confusing. The first result was a 500GB PS3 for $400.00. I did not want this. There were multiple listings of this PS3 throughout the page, but I found myself overwhelmed by the amount of Dark Knight DVDs that were for sale, too. Telling them apart was a chore. I finally decided on one that had a "Buy it Now" option because I did not have time to wait a day and a half for an auction to end.

I wouldn't be surprised if a lot of consumers just give up on EBay at this point. I nearly did. Pressing forward to the product pages only further served to test my patience.

Both Amazon's and Ebay's pages were busy with ads and links and information I was pretty sure I didn't need to know. This was the first thing I noticed. The second thing I noticed was the price. Amazon's Dark Knight cost $23.99, marked down from $35.99 for a savings of $12.00, Amazon made sure to tell me (I appreciated Amazon's doing the math for me). Ebay's price was a plain-and-simple $15.26. Point, EBay.

At face value, EBay won the price battle, but below the surface there was doubt brewing in my wary consumer thinking. Why was Ebay's price so much cheaper? Is there a problem with the item? Am I sure I'm even buying the right thing? And why $15.26? Who sells stuff at such a specific price? The whole EBay page just seemed fishy with seller rankings and graphics and logos that I didn't understand. Amazon explained why its price was so cheap. EBay just left me to wonder.

I continued through on both websites, clicking the "Buy it now" link on EBay and the "Add to shopping cart" button on Amazon. Ebay's page redirected me to a sign-in screen. Amazon's added my item to a cart and suggested other movies I might want to try. Point, Amazon.

The checkout process for each was similar enough that there was no clear-cut favorite. But the overall story was different.

Amazon won, and the only thing keeping it a game for EBay was the price. Had Amazon's Dark Knight been five dollars cheaper, my decision would have been a no-brainer.

After seeing both online stores firsthand, I can see how Amazon's style might succeed in a down economy while Ebay's might suffer. Amazon seems more organized, more reputable, and it appeals to a consumer experience in more ways than EBay does. If I had been looking for a rare collectible or a secondhand item, I may have had more success on EBay. But when the buying comes down to a group of similar products at similar prices, Amazon takes the cake.

And it's no surprise anymore why they're taking the market share, too.