Yea! I got my income taxes done. Any day now I should be expecting both my Federal and State return to direct deposit into my bank account. I’m not getting back as much this year as I had hoped, but it will still be quite a handsome amount.
Just like back-to-school signs and Christmas decorations, you can almost pin-point the time from December on when a swarm of tax-filing hysteria starts to show up in our lives. But among the tax software and lists of documents we’re told to dig out of our file cabinets, financial advisors also like to argue one age-old debate:
• Should you wait to get your big tax refund check or take it throughout the year?
We all know that we should be saving more money for retirement, but how do you make that happen? How do you go from nothing to maxing out all our tax-advantaged savings options like your employer sponsored retirement plan or individual retirement account (IRA)?
As I’ve mentioned in previous posts, my wife and I have been on this path for sometime. I’m proud to say that we currently have reached the maximum amount allowed for my 401k and for our Roth IRA’s. It wasn’t easy, but looking back I’m sure glad we did it!
So what steps did we take along the way to get to this point? Here is the strategy we used:
/ Tags: 401K
, employer retirement plan
, Individual Retirement Account
, mutual funds
, Roth IRA
, tax advantaged savings account
, tax deferment
, Traditional IRA
Saving money can be a real challenge. You know you should, but some months it feels like you’re barely making ends meet. And no matter how much you actually make, it never feels like enough.
Fortunately, there are some painless steps you can take to get your savings back on track. Below are a few of my favorite tips for ways you can save more money:
Category: Savings & Budgeting
/ Tags: budget
, Cash-Back Program
, Craigs List
, garage sale
, Individual Retirement Account
, tax refund
If you’re doing a good job of saving up for retirement and looking at the possibility of meeting your goals sooner than later, one of the next biggest hurdles you’ll have to overcome is how to physically get your money out of your retirement accounts.
For most personal accounts such as a 401(k), 403(b), or IRA, you have to wait until age 59-1/2 or get slapped with a hefty 10% penalty fee. There are special exceptions to the 401(k) and 403(b) that may allow you to access your money without penalty by age 55. But even still, what if you are able to retire even sooner than that?
Fortunately, this is where a 72(t) comes in.
A 72(t) is a little-known tax code within the IRS laws that allows an individual under the age of 59-1/2 to take their retirement income out of their retirement account through a series of Substantially Equal Periodic Payments (also called SEPP).
The end is near! The end of the year that is … And with that, December is a good time to get you finances in order and get ready to settle with the tax man. Here are some tips to get yourself ready for another year:
Set Your Budget for Next Year: Remember, a budget is simple:
• Money In – Money Out > 0 = Success.
The best way to do this is to create a table with 12 columns; one for each month. Start by listing your income towards the top. Then list all your bills and expenses. This strategy is usually a little more effective than just doing one generic monthly budget because it captures expenses that don’t occur every month or are seasonal (like Christmas expenses). This also lets you see how you’re doing throughout the entire year and if you will run into any problem areas.
Contribute: Before you file your income taxes, you’ll want to make sure you’ve maxed out your tax-deferred investments. This would include:
• 529 College Savings Plans
Category: Insurance & Planning
/ Tags: 401K
, capital gains
, long-term capital gains
, short-term capital gains
It’s one of the oldest clichés in investing: “Time” is an investor’s best friend.
Unfortunately, few people ever fully take advantage of this concept or grasp just how it works. So why is “time” an investor’s best friend? In two words:
• Compound interest.
There’s an urban legend that Albert Einstein once said that “compound interest is the most powerful force in the universe”. If he did, he was right. Consider two scenarios:
Which one would you rather have? How can it be that one is worth way more than the other?
This is the power of compound interest:
• Eventually you will make MORE money off the build-up of returns from your earnings than off the original money that you put in.
I will show you an example of why this is.