The year is quickly coming to an end, and there are things that you could do to improve your finances. Here are 9 money moves that could help you for years to come.
Photo by Edwin Dalorzo via Flickr
Having SMART financial goals is one of the most important things you can do to improve your finances. There are three basic steps you should follow when setting financial goals:
I have a good article that explains all of this in detail, please check out How to Set SMART Financial Goals.
Each year, you are allowed to apply your investment losses against your gains, and deduct any excess loss up to $3,000 against your income (i.e., tax loss harvesting). I am sure you have some losing stocks this year, and you should take advantage of this tax provision. You could always make other investments to stay in the market, as long as you are careful about the wash sale rule.
Also, I think it’s a good idea to get rid of some mutual funds from your taxable accounts this year. I have a feeling that some funds will be distributing significant amount of capital gains due to the volatile market we have been experiencing. This could cause you to both losing money on your investment and having to pay capital gains tax.
Question everything that you spend money on and ask yourself if you really need it. Better yet, imagine that you just lose your job and think about how you’ll survive. What would you cut? To help you think through the process, check out Lower Your Cost Of Living The Geeky Way, and for some money saving ideas check out How To Save Your Home From Foreclosure.
Charitable donations are tax deductible as long as you can produce proof when requested. Non-cash donations are also tax deductible, but it’s a little more involved; especially if you donated more than $500 worth.
If you have outstanding credit card balances, or a secured loan like home equity loan, you should consider paying them down. My 7 Steps Debt Reduction Illustrated article could help you effectively pay down your debt. If you can’t afford to pay them off, consider taking advantage of 0% APR balance transfer credit card offers to lower the overall interest rate. Just make sure you don’t pay too much balance transfer fee along the way, and try not to use your credit card until everything is paid off.
If you don’t carry any debt, this is a great time to save more money for your retirement. There are several benefits to contributing more to your 401k and IRA right now:
There are certain bills that if you pay before December 31st will allow you to increase your tax deductions. Two prime candidates are your property tax bill and mortgage payment. If you are a business owner, paying your bills now or spending money on your business will allow you to claim these expenses for tax purpose.
If you haven’t review your insurances in a while, take a look. Do you still need everything that you have? Do you need more? At the minimum, you should review these (if applicable):
You should also consider getting an umbrella policy if your net worth exceeds the liabilities coverage amount on your car and home insurances. I recommend using services like NetQuote or InsureMe to quickly find an agent or a broker in your area – sometimes switching to a different company can save you a significant amount of money.
Lastly, just remember that money is not the most important thing in life. Take care of your finances, but more importantly take care of your health and family — and simply enjoy life!
Have your own ideas for year-end money moves? Make sure you let everyone know in the comments!
And here are the rest of the 12 Days of Christmas – Personal Finance Style from the M-Network