Money Instructor Blog

Before The End Of Year Tax Advantages

January 7th, 2010 by MoneyInstructor No comments »

The end of the year brings new opportunities for next year. However, keep in mind that there is more work to be done right now. Some of these opportunities may spill over into next year, too. Taxes are coming. However, if you take a few minutes right now to consider any deductions you may be entitled to, you may be able to reduce the amount of tax you owe to the IRS. This is an excellent way for individuals to save money. In some cases, you are getting more back, too.

What Dedications Can You Take?

You do want to work with a tax professional who is willing to spend a bit of extra time with you right now (and there are many that will) to help you to minimize your tax liability. The following are a few of the tax deductions many people can take. Whether you qualify for them or not is determined through your tax professional.

Tally up your medical expenses. However, you do have to reach a specific limit, if you have been putting off a procedure or a doctor’s visit that would qualify, do it now. If you have spent enough on medical costs, you can deduct them. This includes things like crutches, hearing aids, contact lenses, medications and even prescription glasses.
Job seeking expenses may be a deduction. Tax code allows for any costs associated with locating a job to be included as a tax deduction. This cannot be your first job out of college and there are a few other qualifications. However, those who have spent a lot on travel expenses or other needs may be able to take advantage of this.
The small business owner has plenty of tax discounts available to them. Did you keep track of your mileage for business use? Do you use your cell phone for business transactions? Are you factoring in half of the self-employment tax paid as a deduction? Do you need specialized clothing not suitable to wear outside of the work place? Did you invest equipment into your business? These are all deductions you may qualify for.
Deduct gambling losses up to the amount of your gambling wins. You do have to have some proof of these losses to qualify for them.
Have you donated significant value to charities? If not, now is the perfect time to do so. Donate that car you do not use. Donate old items around the home. Get a receipt. Do take into consideration monetary donations as well. These all help you at tax time and do help those in need at the same time.

In addition to these tax deductions, do check out your investments. Have you invested as much as you can for the year? For those under 50 years of age at the end of the year, you can contribute as much as $5000 or the amount of your taxable compensation in 2009. For those over the age of 50, you can contribute $6,000 or the amount of your taxable compensation. Both of these go into your traditional or Roth IRA. If you have not contributed enough, now is the time to do so.

Saving money just makes sense. There is no reason for you to put more money into your taxes than is necessary. In fact, now is a good time to access just how much money you are giving to the government out of each check. If you are getting a refund, remember that this is simply an interest free loan you are giving to the government. Adjust your withholdings to ensure this does not happen.

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Posted in Taxes

Be Ready For Change

January 6th, 2010 by MoneyInstructor No comments »

The definitions of the financial classes are changing. More companies are changing the definitions of their jobs as well. With outsourcing and freelancing becoming a more viable resource, the job market and the jobs available are shifting accordingly. This means even more upheaval for people who are unprepared for a quick change in their financial environment.

The days of long tenures with powerful companies are all but gone. The time of getting a single job and working it until you retired or died is nearly at an end. The market for jobs, an ever evolving and changing entity, has eliminated some jobs and created new ones. This is wonderful news to the people who can evolve with the change and are ever increasing their knowledge base and their skills. For those who are not so flexible, this could be a painful and depressing transition.

When the automobile became a household item, companies that manufactured traditional horse drawn carriages became obsolete. All the people who had made whips, carriages, harnesses and fittings for that industry had to find other work eventually. This is just an example of what happens continually in our marketplace.

One of the biggest changes in the last twenty years has been the increasing flow of outsourcing work. There is room for outsourcing in nearly every industry and for people who “get replaced” by cheaper contractors, it can mean devastating financial consequences. No matter the job you hold, you need to be prepared for the next advancement in the markets. Computers, networking, the internet and other technologies have caused the erasure of dozens of markets – but they have also created jobs in their wake. Just like the carriage builder who left the carriage house and went to work for Ford, people today have to move with the existing tide.

One way of preparing for this shift is to hone your skills. Freelance markets are all over the Internet for people who have been laid off or their jobs have been eliminated. If you have a marketable skill, considering a freelance career may be a good backup plan for you. Learning a new skill or trade while you are still working your current job is never a bad idea either. With a few exceptions such as the medical field, there is virtually no job that is one hundred percent guaranteed to never be outsourced. Even a great many jobs in the medical field are being outsourced to talented and cheaper sources overseas.

Protect your investments and your future by investing in your education and your skills. Learning a new trade or revising your current one may be a bit of a task, but in this market, you are virtually forced to continually upgrade yourself. If you have already felt the ax fall in your market, do not be discouraged. A great deal of companies that are taking advantage of the freelance market will search out American freelancers to do their work. Consulting is another field that will almost always be a viable option for those who wish to change venues.

Be ready for change, and you can soar into the next market shift!

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Posted in Careers

Personal Finance: Establishing the New Year’s Goals

January 5th, 2010 by MoneyInstructor No comments »

With the New Year upon us, there are many things individuals and families need to take into consideration outside of the resolutions you may make to lose weight or to spend more time together. Everyone can utilize this time of the year to look back at their financial goals and look forward with new ones. Each person is unique: some want to save more; others want to pay down debt. There may be an important big purchase coming up this year. On the other hand, you may want to think about retirement a bit closer. The New Year brings opportunity. What will you do with it?

Minimize The Crush Of Debt

Beyond anything else, individuals need to focus on their debt. Not only does it physically tax the body through stress, but it is holding you back from living a debt free lifestyle. Consider the following goals to help you reduce your debt:

Spend less overall. Find one way that you can spend 10 percent less of your budget.
Avoid credit cards. Try to use a cash only system when purchasing anything. It will teach you how to be a better saver, too. Make the drastic decision to cut up credit cards if you cannot control spending otherwise.
Pay an extra 25 percent on your monthly payments. Perhaps you are not sure you can do this. Use the funds you cut out of your budget to make it happen.
Contact each of your lenders and request a rate reduction. They may say no, but they may say yes and a yes can save you thousands of dollars over the life of your loan.
Commit to no new credit cards, loans, pay day loans or other debts in the coming year. This commitment to yourself could change your financial future.

Which of these (or all of them) can you tackle in the New Year?

Save More

The second most common goal people have when planning goals for the new year is save more money. Of course, this is a great idea. The problem is, many people do not actually put in place strategies to make it happen. Just saying you will save more money will not help you. Consider the following goals. Which can help you to get more money in the bank?

Take the time to invest in yourself first. If you do not have a 401K or an IRA, or other retirement savings account, find out if your employer offers one. This money comes directly out of your paycheck, has tax advantages and it is not something you need to think about. Did you know you could withdraw from most accounts, without penalty for big expenses such as medical care and down payments on homes?
Focus on the shopping cart. As you walk through the grocery store or department store, keep a calculator in hand. Each item that goes needs tallied as you go. Why bother with this? You are more conscious of how much you are spending. When you see the bill approaching your budget limit, take items out as you need to.
Save more at home. Read up on how to be environmentally friendly and energy use conscious. Find ways to cut costs at home. Is your water heater set too high? Are you using too much electricity during the day? Will a programmable thermostat cut your bill?

Although this is the time of year to be thinking about tomorrow, make sure you put your New Years plan in place today. Write it down. Give yourself specific goals to reach per week or month. As you go along, you will find yourself spending less, paying down debt, and putting more money away so you can achieve your long-term goals.