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Creative Ways to Save Money
Saving money doesn’t have to be a chore. In fact, with a little creativity, it can be both fun and rewarding. Here are some interesting ways to boost your savings without feeling like you're missing out.
• Embrace the 30-Day Rule. If you find yourself wanting to make an impulse purchase, give yourself 30 days to think it over. This rule allows time for the initial excitement to wear off, helping you decide if you truly need or want the item. If you still want it after 30 days, then go for it! If not, you’ve saved yourself from a purchase you may later regret.
• Try a No-Spend Challenge. Challenge yourself to a no-spend day, week, or even a month. This means avoiding unnecessary purchases and focusing only on essentials, such as groceries, rent, and utilities. Not only does it help you save, but it also makes you more aware of your spending patterns and helps reset your budget habits.
• Have a use-it-up month. Designate a month to use up everything you already have before buying more. This can apply to pantry items, food in the freezer, cleaning supplies, and even beauty products. You’ll be amazed at how much you can save by simply using what you already own instead of restocking.
• Create a Fun Jar. Use a clear jar as a visual savings tool. For example, set a goal to fill the jar with loose change or a specific dollar bill, like $5 or $10. This works especially well if you want to save for something fun, like a weekend getaway or a special purchase. Watching the jar fill up can be surprisingly motivating.
• Make gifts instead of buying them. Homemade gifts are often more thoughtful and can save you a lot of money compared to store-bought options. You could bake cookies, create a photo album, or craft something unique. DIY gifts don’t just save money, they also add a personal touch that recipients appreciate.
• Use a cash envelope system. Using cash instead of debit or credit cards can help control spending. Create envelopes for each budget category (groceries, entertainment, dining out) and place your allotted amount of cash in each. When the cash is gone, you know you’ve hit your limit for that category, which can curb overspending.
• NEVER carry a credit card balance. Speaking of credit cards, carrying a balance from one month to another means wasting money on interest expense. Pay yourself - and not your bank! - by paying your credit card off in full every month.
With a little creativity, you can make saving money both fun and rewarding.
#saving #money #rewarding
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The Art of Selfless Giving
Capture the spirit of the holidays
We are a generation past the hardships of the dust bowl and the Great Depression. And we are a generation well into an economy based upon consumption. And in this environment, Santa presents an interesting paradox.
From kids' perspectives, it is about magic and the joy of receiving the unexpected. From Santa’s perspective, it is all about selfless giving. In light of the vast increases in the cost for just about everything, this could be the year you decide to view the holidays from the perspective of Santa.
Here are some ideas to help capture the spirit of giving:
• Give the gift of time. Spend an afternoon with someone you never seem to have the time to see. It could be a neighbor, a parent, an adult child, a grandparent, or a friend. Challenge your kids to give you a non-monetary gift, like a coupon book of chores.
• Make something. Make something instead of buying it. Perhaps it's a meal, a drawing, or a useful object around the house. There are numerous ideas online and you DO NOT have to be a creative genius, just a willingness to be creative.
• Give the gift of fulfilling an unwanted chore. Offer babysitting for a night out to a young couple. Do the dishes, shovel the walk, or offer to mow the lawn. There are so many unwanted chores, that a creative gift here will be much appreciated.
• Commit to a gift that goes unnoticed. During the holiday season, quietly go about making things better for someone else without them knowing about it. Shoveling a neighbor’s sidewalk, rolling down a trash bin to the curb, gathering a morning paper and placing it by the front door, or picking up the garbage every day in front of a store are all examples that are easy to do.
• Pay it forward. Find opportunities to help someone else with a little surprise gift. Have your kids BRING a gift to help Santa while they visit him. Pay for your meal at a drive through restaurant, and then pay the meal of the car behind you. Do the same thing at a restaurant when you see someone out for a special occasion.
• Provide a smile to someone who needs it. Try to make a person smile every day during the holiday season. Then challenge yourself to do this with a person you do not know, or barely know.
Giving during the holiday season doesn't need to break the bank. It's up to all of us to reconnect the season to something that could be a lot more meaningful. Enjoy your holiday season!
#givingback #holidayseason #gifts
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The 2025 Tax Law Uncertainty
With the changes happening in Washington D.C., there is now some uncertainty about what tax policies we may see in 2025 and beyond. During this time of uncertainty, it is challenging to create a workable tax plan. But not to fear. There are several things that we DO know about tax changes to start 2025. Here are the key highlights as they are currently known.
What we DO know
• Tax brackets and rates. The seven tax rates remain unchanged while the income subject to each rate got a slight bump. After a 5.4 percent increase in 2024, there's an additional 2.8 percent increase in income subject to each tax rate in 2025. This means more of your income will be subject to a lower tax rate.
• Higher retirement plan limits. The amount you can contribute to a 401(k) in 2025 is $23,500, up from $23,000 in 2024. The 401(k) catch-up contribution limit in 2025 stays at $7,500 if you're age 50 to 59, and age 64+. New in 2025, if you are ages 60 to 63, the catch-up contribution limit increases to $11,250. The annual contribution threshold for IRAs remains at $7,000, as does the IRA catch-up contribution limit of $1,000.
• New cryptocurrency reporting rules. New reporting rules in effect as of January 1, 2025 means you’ll need to be more vigilant with tracking your cryptocurrency transactions and complying with the IRS’s digital asset rules. Brokers of digital assets, including cryptocurrency exchanges, custodial services, and certain payment processors, must report sales and exchanges of digital assets to the IRS starting in 2025. Your digital asset transactions will be summarized annually on a new Form 1099-DA. This new reporting of digital asset transactions will be similar to existing reporting for traditional securities such as stocks and bonds.
Changes on the horizon
• The 1099-K reporting threshold. If you use third party payment processors like Venmo or sell tickets on apps like SeatGeek, you're more likely to receive a tax form of your activity that will also be sent to the IRS. The limit requiring your activity to be reported was $5,000 in 2024. In 2025, this threshold is scheduled to be lowered to $2,500, and further lowered in 2026 to $600.
• Uncertainty over TCJA provisions. There has been discussion about extending and/or making permanent many of the provisions contained in the Tax Cuts and Jobs Act (TCJA) of 2017. Most of the provisions are scheduled to expire at the end of 2025, so we will pay attention to any legislation forthcoming that could change any of this tax landscape.
• Proposed decrease in corporate tax rates. There is also discussion about lowering the corporate tax rate from its current level of 21%, in addition to lowering the effective corporate tax rate from 21% to 15% for domestic manufacturers.
Stay tuned for continuing updates of any tax changes as events unfold in 2025.
#taxlaw #taxbrackets #changes
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Year-End Tax Savings Checklist
Great tax moves you can still make
Conducting a year-end tax review of your financial situation can uncover opportunities to cut your tax bill or save you from an unpleasant tax surprise. But hurry, the clock is ticking! Here are several areas to consider reviewing in the next few weeks to trim your tax bill.
Review #1: Retirement Savings Accounts. The deadline to contribute to a 401(k) plan to help reduce your 2024 taxable income is December 31st. So if your employer's plan allows it, consider making a last-minute lump sum contribution. For 2024, you can contribute up to $23,000 to a 401(k), plus another $7,500 if you're age 50 or older. Even better, you have until April 15, 2025, to contribute up to $7,000 into a traditional IRA, plus another $1,000 if you're age 50 or older. And as long as your income does not exceed phaseout limits, your traditional IRA contribution can reduce your taxable income on your 2024 tax return.
Review #2: Investments. If you own stock outside a tax-deferred retirement plan, you can sell your under-performing stocks by December 31st and use these losses to reduce any taxable capital gains. If your net capital losses exceed your gains, you can net up to $3,000 against other income such as wages. Losses over $3,000 can be used in future years.
Review #3: Appreciated Assets. Consider selling appreciated assets in the tax year that helps you the most. While this strategy may be hard to accomplish this late in the year, it's still worthy of consideration. To do this, estimate your current year's taxable income and compare it to next year's projected taxable income. Then sell the appreciated asset in the year that will yield the lowest tax. Remember, if appropriate, to account for the 3.8% net investment income tax in your estimates.
Review #4: Tax-Efficient Contributions. As you're reviewing your appreciated assets, consider donating one or more of these assets if it helps you pass the itemized deduction threshold. If it does, consider donating next year's contributions as well to maximize the tax savings. Remember when you donate a long-term asset (held for more than one year) you avoid paying capital gains taxes while getting a market value charitable deduction. And don't forget, if you are over age 70 1/2 you can make up to $100,000 in direct contributions from a qualified IRA account and not pay tax on the withdrawal.
Review #5: Health Spending Accounts. If you participate in a Health Savings Account (HSA), try to maximize your annual contribution to reduce your taxable income. Remember, these funds allow you to pay for qualified health expenses with pre-tax dollars. The deadline for contributing to your HSA and still getting a deduction for the 2024 tax year is April 15, 2025. The maximum contribution for 2024 is $4,150 if single and $8,300 for married couples. If you're age 55 or older, you can add $1,000 to your HSA contribution. If you have a Flexible Savings Account, you can carry forward a maximum balance of $640 from 2024 into 2025 if your plan allows this.
#tax #planning #Checklist
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Remove the Stress from Paying Student Loans
Paying off student loans can be a daunting task. However with a planful approach, making your loans disappear can be a lot more manageable. Here are some tips to help make paying off your student loans less stressful and hopefully quicker!
• Refinance your loans. You may be able to lower your monthly payment by refinancing your current student loans over a longer period of time. And a lower monthly payment could give you more breathing room in your monthly budget. Refinancing may also provide the opportunity to secure a lower interest rate, which could add up to more savings for you. Refinancing federal student loans with a private lender, though, means losing certain federal protections, such as income-driven repayment plans and loan forgiveness options. Before refinancing, consider your financial situation and evaluate if this is the best option for your circumstances.
Tip: Shop around to compare rates and terms from different lenders. Even a small reduction in your interest rate can save you potentially thousands over the life of your loan.
• Make extra payments when possible. One of the best ways to pay off your student loans faster is by making extra payments. By paying more than the minimum required each month, you’ll reduce your principal balance quicker, leading to an overall lower interest expense over the life of the loan. Even small additional payments can make a big difference over time. For example, if you receive a bonus at work, a tax refund, or other cash gift, consider putting part or all of it towards your loan.
Tip: Consider splitting your monthly payment in half and paying that amount every two weeks. Since there are 52 weeks in a year, this approach will result in 26 half-payments, or 13 full payments instead of 12, effectively making one extra payment each year.
• Look into loan forgiveness programs. Depending on your profession and where you work, you may qualify for loan forgiveness programs. The Public Service Loan Forgiveness program, for example, forgives the remaining balance on federal loans for eligible public service workers after 120 qualifying payments. Other programs, like Teacher Loan Forgiveness and Perkins Loan Cancellation, offer similar benefits for teachers and certain professionals.
Tip: Research eligibility requirements for these forgiveness programs and stay up-to-date with any changes, as some programs require specific steps to remain eligible.
• Take advantage of employer assistance programs. Many employers now offer student loan repayment assistance as part of their benefits package. This benefit can help you make faster progress on your loans without tapping into your personal budget. Check if your employer offers this benefit, and if they do, take advantage of it to reduce your principal balance faster.
Tip: If your employer doesn't offer this benefit, ask if it's something they would consider implementing in the future.
#student #loans #refinance
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Taxes: Understanding the Essentials
Navigating the tax system can be challenging for everyone, whether you're an adult who hasn't paid much attention to paycheck deductions or a young person starting your first job. A crucial first step in managing taxes is knowing when to seek help, which begins with understanding what can be taxed.
Here are some key points to help you or someone you know better understand the basics of our tax system.
Different types of taxes
When you think about taxes, income tax is often the first to come to mind. Income tax is what you pay on the earnings from your job or from selling products and services. However, many other types of taxes exist. Here are some of the most common:
• Payroll Taxes. Unlike income taxes, which can fund various government programs, payroll taxes specifically support Social Security and Medicare. This tax amounts to 15.3% of most employees’ paychecks, but half is typically covered by the employer.
• Property Taxes. These taxes are applied to property ownership, such as your home or vacation property.
• Sales Tax. This tax is levied on goods and services you purchase. While state and local governments primarily collect sales taxes, certain items like gasoline are also subject to federal sales taxes.
• Capital Gains Taxes. If you sell an investment or property for a profit, you may owe capital gains taxes. Selling stocks, homes, or rental properties at a profit could trigger these taxes.
• Estate Taxes. These are taxes applied to the assets within your estate after you pass away.
• Inheritance Taxes. As opposed to estate taxes, inheritance taxes are applied when you inherit money or assets after someone else passes away.
Not all income is taxable
While most of your income is taxable, some forms of income are exempt from taxation:
• Interest from municipal bonds is generally tax-free.
• Life insurance benefits often aren't taxed.
• Capital gains on the sale of your primary residence may be excluded up to a certain limit.
• Estate tax exclusions mean only estates exceeding a set dollar amount are subject to tax.
• Many employee benefits, such as health insurance, Health Savings Account (HSA) contributions, commuter benefits, and small employer-provided gifts, are also tax-free.
The tax rules governing these various types of income can be complex. That's why it's often helpful to have a professional guide you through your particular situation. Having a basic understanding of how taxes work, though, will help you to ask the right questions.
#taxprofessional #tax #rules
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