22 Money Maximizing Moves You Can Do Today

Now that the benefits enrollment for my company is over, I can start thinking about things that I could do before the end of the year to make my money work harder for me. Here are 22 ideas that I want to share with you.

Piggy bank 

Photo from morgueFile

  1. Boost 401k contribution – I think I will hit the maximum 401(k) contribution limit of $15,500; otherwise, I would consider bumping up my contribution before the year is over. The contributions and earnings are tax deferred — i.e., you don’t pay taxes until withdrawal. Remember if you are 50 years or older, you can contribute additional $5,000 in catch up contribution.
  2. Pay property taxes due next year – I pay my real estate tax quarterly. However, I can pay property taxes due in January 2008 before December 31st, and claim taxes paid as deduction against 2007 income tax.
  3. Pay January 2008 mortgage in December 2007 – Likewise, this allows me to deduct mortgage interest paid against my 2007 income tax instead of waiting for 2008.
  4. Sell the losers – Due to the recent weakness in the stock market, I have a few ETFs and stocks that are in the red. I can sell them, capture the losses, and buy something else that would allow me stay invested. I just have to watch out for the wash sale rule. Capital losses can be used to offset capital gains, and ordinary income up to $3,000.
  5. Donate to charities:
    • Appreciated assets — I have never donated appreciated assets before (e.g., stocks, bonds, etc.), but it could be a good option because you could deduct the full value of the stocks without paying the capital gains tax.
    • Old car — My car is not old enough yet. However, when I am ready to retire our 98 Ford Contour, I would consider donating it to a charitable organization. Typically, the organization would take it away for free, coordinate the title transfer, and provide a tax deductible donation receipt. The IRS allows us to deduct the fair market value of your vehicle.
    • Cash, Clothes, Furniture, etc. — Any cash donation and the fair market value of used clothes, furniture, electronics, appliances, etc. are tax deductible. However, make sure you read this MSN article, since the IRS tightened charitable-gift rules in 2007.
  6. Contribute to 529 Plan — 16 states offer state tax deduction on 529 contributions for their residents, and some states impose annual contribution limit. I will be contributing the planned $5,000 before the year is over to capture about $340 in tax savings this year. Check out 529 plan tax deduction estimator at CNNMoney.
  7. Contribute to IRA — This one can wait until April 15, 2008. I am planning to contribute the maximum of $4,000 for my and my wife’s account for 2007. People age 50 and above can contribute up to $5,000 for 2007. Traditional IRA contribution is tax deductible, but not Roth IRA contribution. See Traditional IRA and Roth IRA Contribution Limits at About.com for more detail.
  8. Contribute to Coverdell Education Savings Account — I am not planing to leverage CESA, but it could be a nice college savings vehicle for some parents. CESA allows parents to contribute up to $2,000 per account annually. The contribution is not tax deductible, but it grows, and can be withdrawn, tax free. This one can also wait until April 15, 2008.
  9. Use up Flexible Spending Account (FSA) — Unfortunately, I didn’t add enough money to our FSA, and we used it up very early in the year. If you still have money in there, you should try to use it up because the remaining balance will be lost forever. Before you rush out, check with your employer because you may have up through March 15, 2008 to spend that money. Kiplinger offers 25 Ways to Spend Your Flex Account.
  10. Visit your doctor for a final check up — If you already fulfill your deductible requirement this year, you should take advantage of your insurance coverage and visit your doctor for last minute check up and treatment. Moreover, your medical expenses exceeding 7.5% of your adjusted gross income (AGI), the excess amount is tax deductible.
  11. Buy business equipment and supplies — If you own a business, you can make your purchases before December 31st and claim these expenses against your business income. For bloggers and other small business owners, take a look at “46 Tax Deductions that Bloggers Often Overlook” at ProBlogger for additional ideas.
  12. Pay your vendors early — Likewise, pay for any services rendered by your vendors before the end of the year to claim these expenses against your business income.
  13. Cancel under utilized subscriptions – Do you have any unread, or under utilized, magazine and newspaper subscriptions? These should be canceled. Every bit helps.
  14. Cancel under utilized memberships — Likewise, any under utilized gym, club, or association memberships should be eliminated.
  15. Review your insurances
    • Life, health, dental, and vision — These were part of my employer’s benefit package and my open enrollment is over; however, you may still have time to review and adjust these to maximize their value.
    • Car, house, and umbrella — I recently cut my insurance expenses by $1,145 per year. Since you are already on a money optimization streak, this is the perfect time to shop around and see if you can get a better deal on your insurances.
  16. Review your home services — Cable television, satellite television, internet, telephone, cell phone, and home security service are typical candidates for this category. Shop around and see if you can get a better deal. I recently wrote about how I saved $50 per month by switching my television, internet, and telephone services from Time Warner to Verizon.
  17. Set holiday shopping budget – Holiday season is approaching quickly, this is also a great time to figure out your budget for the rest of the year.
  18. Transfer your balance to 0% APR credit card — I advocate paying your credit cards in full each month. But in case you owe money on your credit cards, take the time to find someone who will give you “no fee 0% APR balance transfer” to consolidate your debt and save money on interest.
  19. Cash in your rewards – If you have been using cash back reward cards to your advantage; this is the perfect time to apply the cash reward toward your balance, or shop at their partner sites for the holiday gifts.
  20. Prepare your home for winter – Winter is here and it will only get colder. Heating your home will be more expensive this winter. Some money saving ideas include: insulate your home, adjust the thermostat, add a thermostat with timer, check the heating system, etc.The list is so huge that I will just leave you with a link to Google search: prepare home for winter.
  21. Prepare your car for winter — It can be very expensive, or even fatal, if your car is not ready for winter. Check and replace as needed: brakes, tires, fluids, wipers, and battery. It’s also a good idea to put together a winter emergency kit for each of your car. Here is another link to Google search: prepare car for winter.
  22. Rebalance your portfolio — If you haven’t look at your investment asset allocation for a while, this is a good time to make adjustment to bring it back in line with your original allocation. Timing is easier with tax-sheltered accounts. For non-tax sheltered account, it’s a little trickier and I won’t go into it here.
  23. Kev said, “Giving birth to a child on or before December 31st is a great money-maximizing move. The tax break is wonderful!”
  24. Madison said, “When planning a substantial conversion of a traditional IRA to Roth IRA often it is beneficial to spread it over multiple years to minimize taxes. By projecting how much room you have left in your current tax bracket, you can convert only that much and save the rest for conversion in another year. This way you avoid paying a higher tax rate.”
  25. Speedy said, “Plan to increase your savings and investments by “banking” your raise this coming year. Once you see the amount of your raise, adjust any automatic withdrawals for savings and investment (keeping an eye on contribution limits for retirement plans). I did this in 2007, plus I decided ahead of time that any overtime earnings would be dedicated to debt payments and insurance premiums. This has worked so well that by the end of 2008 I will have no debts and so can increase my retirement savings even more!”

I already did some of these things, and will be using this post as a checklist. If you have other ideas, please share with us and I will add it to the post (you’ll get the full credit, of course).

About the Author

By , on Nov 20, 2007
Pinyo
Pinyo is the owner of Moolanomy Personal Finance. He is a licensed Realtor specializing in residential homes in the Northern Virginia area. Over the past 20 years, Pinyo has enjoyed a diverse career as an investor, entrepreneur, business executive, educator, and financial literacy author.

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Leave Your Comment (22 Comments)

  1. Nico says:

    These are great point brought together! You should plan and think ahead in order to get the best out financial possibilities of enhancing your budget!

  2. Nerdizen says:

    These are great tips. I exercise most of these and one in addition and that is, I live abroad in several countries where you can live on less than $5 a day, for many months through out the year and this enables me to put funds away. I know that this isn’t an option for most people, but if you are retired or disabled, then this may be an option.

  3. Eric says:

    Good tips – especially #24. I recently rolled over a 401k into a Roth IRA and managing when those taxes come do is very important or you could be in for a big surprise come April 15th…

  4. charlie says:

    how can you help a disabled parttime worker in ca.Married no kids renting.
    both my wife and I are disabled we both work p/t.

  5. Diane says:

    I made a similar site – ‘all in one place’. I’m 66 years old; grew up poor, so no recession has ever affected me.

    It’s amazing how people waste; I don’t need the stimulus check – in fact, I gave mine to my mother for some repairs on her house.

    The good thing about a recession is people learn they can ‘do without’……

  6. Pinyo says:

    @Chris — Of course, I didn’t suggest having a child for tax purpose. That would be a poor financial decision. :-)

    @Fiona — Thank you. I’ll make the correction. I should say “tax deferred” — i.e., you don’t pay taxes until you withdraw the money.

  7. Fiona says:

    Good list — minor note; 401k contributions are tax-free, not tax deductible — you can’t deduct them from your taxes because you haven’t paid taxes on that $ in the first place.

  8. Funny, After reading your post I just checked my credit card account and found out that my rewards points just reached the level where I wanted to redeem them. I just ordered for the redemption. Thanks for the reminder.

  9. Chris says:

    Having a child is an exceedingly poor tax write-off for a number of reasons, specifically because the immediate costs dwarf the write-off savings.

  10. Jonathan says:

    Excellent advice here Pinyo, especially about the importance of business expenses and how these can be off set against tax concerns, so few people do this in a disciplined manner and yet it can save $1,000’s if done properly

  11. Minimum Wage says:

    Rents in the area where I live went up an average of 6 percent last year and are projected to increase 8.5 percent this year and an additional 6 percent next year, according to the June, 2007 issue of Apartment Manager, a publication of the METRO Multi Housing Association.

    $75 rent increases in this area have not been rare in the last 18 months, especially in cases where rent was not raised in 2006 and they are playing catchup.

  12. Great list! Somethings we all need to consider. I plan to link to it on my Friday recap of the carnival.

    Best Wishes,
    D4L

  13. Pinyo says:

    @Minimum Wage – how much rent do you pay? Rent usually go up 4% per year or 7% (for 2 years contract). If your rent goes up by $75 per month, that means you are paying nearly $1,875 per month?

  14. Minimum Wage says:

    #25 hits my hot button.

    If you get a $50/mo raise, and your rent goes up $75/mo, how much of your raise should you start saving?

  15. speedy says:

    Plan to increase your savings and investments by “banking” your raise this coming year. Once you see the amount of your raise, adjust any automatic withdrawals for savings and investment (keeping an eye on contribution limits for retirement plans).

    I did this in 2007, plus I decided ahead of time that any overtime earnings would be dedicated to debt payments and insurance premiums. This has worked so well that by the end of 2008 I will have no debts and so can increase my retirement savings even more!

  16. Pinyo says:

    That’s great Madison!

  17. Pinyo says:

    @Steve – Thank you. I have the advantage of living together with my parents and my in-laws are also coming. The baby will be taken care of, but he will be spoiled by 4 grand parents.

    @Madison – I think I understand you tips, but would you mind elaborate a little? I think they would be good add to the list.

  18. Madison says:

    Sure… sometimes I think faster than I type!

    When planning a substantial conversion of a traditional IRA to Roth IRA often it is beneficial to spread it over multiple years to minimize taxes. By projecting how much room you have left in your current tax bracket, you can convert only that much and save the rest for conversion in another year. This way you avoid paying a higher tax rate.

  19. Madison says:

    Also, maximize any remaining room left in your tax bracket for the year and convert IRAs to Roth IRAs.

  20. Steve says:

    That’s a great list. I think I do all of them – but seeing them put together in one place is a great idea.

    Getting close! December 15th is just around the corner. Start storing up microwave dinners and frozen dinners now, you won’t be sorry you did! :)

  21. Pinyo says:

    You’re not kidding. My baby is due Dec 15th. I am just praying to the financial god right now. ;-)

    Although, I don’t know if it’s a money maximizing move that you can do today. That’s some serious timing.

  22. kev says:

    23) Giving birth to a child on or before December 31st is a great money-maximizing move. The tax break is wonderful!

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