What The Griswolds Can Teach Us About Our Finances

What The Griswolds Can Teach Us About Our Finances

The holidays can be an exciting and joyous occasion or stressful depending on how you prepare for them. But, using the Griswold’s situation in National Lampoon’s Christmas Vacation as a learning experience, you can take some steps to make the holidays more bright. So, grab some eggnog and your moose mug, and consider the following as you prepare for the year ahead: Don’t write a check you can’t cash – Or, as the saying goes, “don’t count your chickens before they hatch.” By relying on a source of income that you haven’t yet received, you put yourself at risk of financial catastrophe. For example, if you decide to put in a pool, make sure to wait until you receive your bonus check. Make sure you have an emergency reserve – Should the unexpected occur (for example, getting fired after your crazy cousin kidnaps your boss), it is important to have a liquid source of funds available to meet your monthly expenses until you can recover. This account is normally recommended to cover approximately 3 – 6 months’ worth of expenses. Save some of your year-end bonus – While bonuses can be a nice surprise and should be enjoyed, we recommend saving at least a small portion. This could mean padding your emergency reserve, depositing money into a brokerage account, or contributing to an IRA. Consider pet insurance – Should your feline companion chew on a cord and get electrocuted, chances are the vet bill will be fairly high. Much like human health insurance, pet insurance allows you to set deductibles and coinsurance based on an agreed-upon monthly premium. While...
2017 Year End Tax Planning

2017 Year End Tax Planning

As we approach the end of another tax year, it is beneficial to consider certain actions that can not only result in a lower tax bill this year, but also in the years to come. Below are a number of strategies you may wish to utilize prior to December 31: Increase retirement plan contributions – Even though it is the end of the year, there is still time to save! If you find yourself with extra income, make sure to contribute any excess to your retirement plan during the last few pay periods; if you receive a year-end bonus, you can also redirect a portion of that to your retirement plan. Not to mention, you may qualify for a higher employer match. Take advantage of preferential capital gains rates – For those individuals whose income falls in the 15% marginal bracket, long-term capital gains are taxed at 0%. With this in mind, you may wish to consider realizing enough gains to “fill up” the 15% bracket and therefore pay no capital gains taxes on that income. However, be careful as an increase in Adjusted Gross Income (AGI) can affect taxability of Social Security, itemized deductions subject to thresholds, charitable deductions, credits, etc. Review your withholding – To reduce the chances of owing money at tax time, make sure that your current tax withholding is as up-to-date and accurate as possible. You can use online tools to help calculate the correct amount; if you have been withholding too little, try to approximate the amount of additional withholding necessary to break even. To adjust the percentage for the final few pay...
This Thanksgiving, Don’t Just Stuff the Turkey

This Thanksgiving, Don’t Just Stuff the Turkey

Top of mind for many individuals is whether or not they have accumulated sufficient assets to retire and if they’re saving enough to meet their goals and objectives. While determining an approximate amount is a more in-depth exercise involving numerous variables, here are a few tips to help you build a better nest egg:   Update your budget – Creating and utilizing a budget can help establish spending patterns, reveal inefficiencies, and uncover excess cash flow and opportunities for savings. Usually, budgets should not exceed more than a year and should be calculated on a monthly basis. When putting together the budget, make sure to keep it simple; if there is too much detail, you risk making it too difficult to implement and monitor. Make sure you have a healthy emergency reserve – This account can serve as a buffer to your retirement accounts should something unexpected come up. A general rule of thumb is to keep at least 3-6 months’ worth of expenses in liquid assets to protect against unforeseen circumstances (i.e., job loss, disability, unexpected car or home expense, etc.). This fund may consist of checking/savings accounts, money market funds, or short-term CDs. Save your tax refund – If you do overestimate your taxes and wind up with receiving a refund, consider using it to fund your IRA, pad your emergency reserve, or pay down debt. Leverage your employer match – Employees fortunate enough to receive these contributions should increase savings to at least the minimum amount necessary to receive the full company contribution. Outside of that, individuals can contribute up to the maximum that the plan...