Category Archives: Tip of the Month

4 Financial Resolutions You Can Actually Keep

Believe it or not, it’s 2020. You’re not just starting a new year, you’re entering a new decade. With this in mind, you might want to make some resolutions that focus on your finances. According to  Psychology Today, 80 percent of resolutions fail by February. If you’re thinking about dieting or eating better, this isn’t very encouraging. However, when it comes to your money, there are some changes you can implement now that will have staying power and won’t be forgotten by spring.

Review Your Credit Report

This is important for your financial future in many ways, particularly if you want to buy a house or a car (and that’s just for starters). If you need to make some repairs to your score, the new year is the best time to do this. Better still, you’re entitled to three free reports each year. Check it out. See how you’re doing. You’ve got nothing to lose and everything to gain.

Get Out of Debt

This might be easier said than done, but it’s absolutely possible. One very helpful tool is Unbury.Me. It’s free and easy to use. Just create an account and map out a payment plan that works for you. If you want to wipe away your debt quickly, there’s the avalanche method, which attacks the highest interest rate debts first, then moves to the second highest and so on. But this isn’t the only solution. There’s another tool that actually uses your purchases to help you pay down debt: Qoins. Here’s how it works. You round your purchases to the nearest dollar, then apply the cash to your debt, i.e. student loans or credit cards. So, in essence, you can go on living your life while shrinking your debt.

Evaluate Your Insurance and Disability Insurance Needs

As you age, your insurance needs change. Think about how much protection you really need. For example, would you be better served by term or permanent life insurance? What about disability insurance? For the latter, make sure you have enough coverage. Life happens. It’s always best to be prepared.

Refresh Your Retirement Savings

If you work for a company that offers 401(k), 403(k) or 457 plans, consider asking your employer to withhold enough through salary deferrals to make sure you reach the maximum limit each year. If you’re over 50, you can raise the amount to make catch-up contributions. If you’re self-employed, you can contribute to a SEP IRA, profit-sharing plan or independent 401(k) plan. Making retirement deductions from your paychecks, especially when they’re maxed out, might take a bit of getting used to. But once you’ve retired, you’ll be very glad you had the foresight to act now.

Truth is that the above resolutions are just the tip of the moneyberg. You can go deeper into each area. If you want further assistance, consult a financial planner or your accountant. But the biggest takeaway from all these suggestions is simple: begin now, or as soon as you can. When you’re making the most of your money today, you’re working toward a more secure tomorrow.

Sources

https://www.investopedia.com/articles/pf/06/newyear.asp

https://www.psychologytoday.com/us/blog/modern-mentality/201812/why-new-years-resolutions-fail

https://www.investopedia.com/terms/c/catchupcontribution.asp

https://www.nbcnews.com/better/business/4-tech-tools-help-you-get-out-debt-faster-ncna828351

https://www.transunion.com/article/3-free-credit-reports

https://www.investopedia.com/terms/t/termlife.asp

https://www.investopedia.com/terms/p/permanentlife.asp

https://www.investopedia.com/terms/d/disability-insurance.asp

https://www.investopedia.com/terms/s/sep.asp

https://www.investopedia.com/terms/p/profitsharingplan.asp

https://www.investopedia.com/terms/i/independent_401k.asp

Practicing Gratitude: A Look Back at 2019

It may be hard to believe, but the end of the year is upon us. During this time, many of us might reflect on the year and tally up the good and the bad, the pros and the cons of the past 12 months. In a society that focuses on success and getting ahead, probably the most common thing to do is zero in on what you didn’t accomplish, or what went wrong. But science tells us that if you’re smart, you’ll look back with gratitude. And the best news is: it’s good for our health.

Gratitude Changes Your Brain – For the Better

When you give thanks for positive things in your life and show appreciation, it literally changes the structure of your brain, according to UCLA’s Mindfulness Awareness Research Center. It keeps the gray matter functioning and causes synchronized activation in multiple brain regions, lighting up parts of the brain’s reward pathways and the hypothalamus. It’s kind of like an anti-depressant: it boosts neurotransmitter serotonin and causes the brain stem to produce dopamine, a chemical that mediates pleasure in the brain. In short, thinking about what you’re grateful for is kind of like free therapy.

Make a List of Your Successes

So now that you know how gratitude works, make a list of what you’ve accomplished this year. It doesn’t have to be big and dramatic; for instance: you ate at home more often. You decided to recycle. You drank more water. However, if you got a promotion and raise, by all means write it down and feel good about it. Besides, there’s more that happens: when you’re feeling grateful, you generate higher levels of activity in your hypothalamus, the area which controls a large array of essential body functions, like eating, drinking and sleeping. According to the National Institute of Health (NIH), this activity prompts you to exercise more, get better sleep and, best of all, decreases depression and bodily aches and pains. How’s that for some motivation to put pen to paper?

Keep a Journal for Next Year

As you can see, being grateful is beneficial, both mentally and physically. So why not keep a journal for the upcoming year? It doesn’t have to be fancy. Granted, a journal helps organize your thoughts and can be your go-to source should you start feeling down. But practicing gratitude can be as simple as jotting down your thoughts on a sticky note and posting it on your mirror. Another way to do this is to pick a gratitude buddy. When you think of something you’re thankful for, text or email a friend. Don’t worry about it sounding right, just do it! Chances are, it’ll not only make you feel better, it might brighten your friend’s day, too.

Just Look for Positive Things

According to Dr. Alex Korb in his book “Upward Spiral,” the simple act of seeking things to be grateful for has as much if not more benefit than the things you are actually grateful for. Korb says that the search “forces you to focus on the positive aspects of your life. This simple act increases serotonin production in the anterior cingulate cortex.” This area of the brain not only regulates blood pressure and heart rate, it’s also responsible for decision making and evaluation processes. Serotonin is good stuff: it’s known as the happy chemical. See how good this gratitude thing is?

So, in the coming year, if you start feeling blue and negative, here are some quick remedies:

  1. Look in the mirror and name five things you like about yourself.
  2. Write someone a thank you note.
  3. When something bad happens, think of something good that’s happened.
  4. Give someone a compliment. The act of giving is soul-nourishing: to give is to receive.

Here’s to looking back and feeling good, then moving forward with positive vibes!

Sources

https://thriveglobal.com/stories/how-gratitude-actually-changes-your-brain-and-is-good-for-business/

https://www.news-medical.net/health/Dopamine-Functions.aspx

http://ebooksdownloadfreeed.blogspot.com/2016/04/the-upward-spiral-pdf-free-download.html

https://www.alleydog.com/glossary/definition.php?term=Anterior+Cingulate+Cortex

https://www.medicalnewstoday.com/kc/serotonin-facts-232248

Note From The Partners

 

Dear WZ Clients and Friends,

As the end of the year is fast approaching, we should consider any last minute strategies that might help reduce your individual or business 2019 tax bill. Last year was the first year to be impacted by the Tax Cuts and Jobs Act of 2017 (TCJA). While there was no significant new legislation in 2019 affecting individual taxes, situations do change from year to year, thus requiring a fresh look at how to approach year-end tax planning. There are some strategies we can implement to benefit you and we should discuss before December 31.

For individuals:

  1. Bunching deductions into 2019
  2. Deduct Medical Expenses and Health Savings Accounts
  3. Mortgage interest deductions
  4. Home office expenses
  5. Revised kiddie tax rules
  6. Education-related deductions and credits
  7. Charitable contribution deductions
  8. Rental real estate
  9. Retirement planning
  10. Reevaluating your stock portfolio
  11. Substantial increases in deductions or non-taxable income could result in AMT exposure
  12. Planning for 3.8% net investment income tax
  13. Additional Medicare tax
  14. Timing income and deductions
  15. Foreign bank account reporting

For Businesses:

  1. Section 179 Expensing and Bonus Depreciation Deductions
  2. Qualified Improvement Property Glitch Remains Unfixed
  3. Qualified Business Income Deduction
  4. Rental Real Estate
  5. Vehicle-Related Deductions and Substantiation Requirements
  6. Fringe Benefit/Retirement Programs
  7. Increasing Basis in Pass-thru Entities
  8. Electing the De Minimis Safe Harbor
  9. S Corporation Shareholder Salaries

Please contact us with any questions or concerns so we can discuss ways to reduce your taxable income and tax liability for 2019.

From all three partners at Wagner & Zwerman, thank you for your patronage. Your continued support and suggestions throughout the years are a vital part of our growth. And for that, we are most grateful.

We look forward to serving you for many years to come.

Best,

Andrew Zwerman, Vincent Preto, John Antinore and the Wagner & Zwerman Team

5 Ways to Save on Holiday Gifting

Save on Holiday Gifting, Save GiftBelieve it or not, the holidays are right around the corner. And try as you might, overspending is real – whether you plan ahead or wait until the last minute. With this in mind, here are a few ways to get a handle on spending and save money on gifting.

Set Limits. Decide how much you’re going to spend overall on holiday gifts and how many people you’re buying for. Then do the math. For instance, you might want to spend $250 for 10 people. That’s $25 per person. However, there might be those you want to spend more on, which is perfectly understandable. But you can get into trouble when you buy your sister an expensive sweater and then feel like you need spend just as much your brother, mother or aunt. Spending sprawl sets in and it’s a runaway train. One way to avoid this situation is deciding before you shop how you’ll divvy up the amount you’ve set aside. While the holidays are special, remember that your family and friends also have birthdays, which means you don’t have to throw down a big chunk of change in one fell swoop during this time of year.

Shop Thanksgiving Weekend. Believe it or not, Thanksgiving Day has historically been the best time to find bargains. And you don’t have to leave your turkey dinner and run to the mall, unless you want to (read: uncomfortable family dynamic). The good news is that, on this day of carb overload, you can also find great deals online. If you miss the sales on Thanksgiving, you can always hit Black Friday and Cyber Monday. Black Friday, if you can stand the crowds, yields serious savings. And the beauty of Cyber Monday is you can shop from your favorite chair in your PJs, if you want.

Buy Gifts for Kids at Cheaper Stores. While adults might appreciate a brand name gift from, say, Neiman Marcus, kids really don’t care. Look online at Hollar.com for some great deals, as well as at discount stores like Walmart and Kmart, where you’ll find some big markdowns on popular gifts. The truth is, you don’t have to pay full retail prices from fancy stores for gifts that will surprise and delight the little ones.

Make Your Own Gifts. If you’re a craftsperson, handmade gifts always touch the heart: quilts, paintings, photographs, jewelry, bath and body products and so on. If you’re not so crafty, then going to holiday fairs are a good way to select handmade gifts. Etsy is another great place to find handcrafted items. Food is also a heartfelt gift to make and give, especially for the person who has everything. No matter what you choose to make, chances are you’ll save big time.

Give Secondhand Gifts. The key to giving this sort of gift is knowing where to shop. Good places to check are thrift stores and used bookstores, where you can find gently used clothing, board games, jewelry, books and even CDs and DVDs. Just make sure to check for rips or tears that might be unsightly. If you don’t want to make the trek, eBay is great for people who are collectors. Amazon even has items that are used. Just check to see if there’s a link that says “used and new offers” on the page of the product you’re looking for. All of the aforementioned resources can be treasure troves for terrific, affordable finds.

While it’s the spirit of giving that the holidays are all about, saving when you’re gifting might be one of the best gifts of all.

Sources

https://www.simple.com/blog/how-to-save-money-on-holiday-presents

https://www.moneycrashers.com/ways-save-money-holiday-gifts-friends-family/

https://www.dealnews.com/features/Thanksgiving-Day-Will-Top-Black-Friday-for-the-Best-Deals/857586.html

How Parents Can Save Money for College-Bound Kids

How Parents Can Save Money for College-Bound Kids, College SavingsNo matter how old your children are, it’s always a good idea to start saving for college as soon as possible. (Yes, even when they’re still in diapers.) This might sound overwhelming, especially if you haven’t started, but take heart, it’s never too late. Here are a few things to do before you start saving, as well as smart ways to gather the resources you’ll need.

Figure Out How Much College Will Cost

Is your child interested in a state school? A small private university? Or a trade school? Create a list of schools, do the math and figure out a ballpark number of how much you’ll need. When you do this, you can calculate how much per month or year you need to set aside. The truth is that state schools are generally a lot less expensive. However, because private universities rely heavily on private donations, they also have a healthy number of scholarships available. If your child is more interested in a trade school, these can be even more affordable, depending on what they want to study.

Create a Long-Term Spreadsheet for All Your Expenses

You may want your children to go to college, but that’s not the only goal for a family. There’s saving for your own retirement, paying your mortgage and credit card bills. You’ll also want to save for emergencies. A good rule of thumb is to save up for three to six months of expenses. All of this might sound tough, but if you create a priority list, it’s absolutely possible.

Start an Education Savings Account (ESA)

Also known as an Education IRA, this fund allows you to save $2,000 (after taxes) per child, per year. And here’s the best part: it grows tax-free! You’ll also most likely earn a higher rate of return than you would with a regular savings account. But know this: you must be within the income limit to qualify; contributions are limited to $2,000 a year; and the money must be used by the time your child is 30.

Consider a 529 Plan

If the ESA sounds too limiting or you don’t meet the income limits, then a 529 Plan is a great option. You can contribute up to $300,000, but this varies by state. What’s more, most of the time there aren’t any income limits or restrictions based on age. And again, the cherry on top: it grows tax-free. But something to be mindful of when you’re shopping for a plan is whether you want to choose the funds you invest in through the account. Some 529s offer preselected funds or automatically change your investments based on the age of your child. Also, restrictions may apply if you choose to transfer your 529 Plan to another child.

Look into a UTMA or UGMA

Otherwise known as Uniform Transfer/Gift to Minors Act, this option is different because it is not created just for college savings. The account will be set up in your child’s name, but it will be controlled by a custodian, which is usually a parent or grandparent. When your child turns 21, the control of the account transfers to the child. While there are tax advantages for you, a significant downside is that your child can use the funds any way she wants. (College or trip to Vegas?)

Saving for college, especially these days, might seem daunting. But it’s not impossible. In fact, if you chart a course and stick to it, you’ll be in good shape when those little ones of yours become all grown up.

SOURCES

https://www.daveramsey.com/blog/saving-for-college-is-easier-than-you-think

https://www.daveramsey.com/dave-ramsey-7-baby-steps?int_cmpgn=no_campaign&int_dept=dr_blog_bu&int_lctn=Blog-Text_Link&int_fmt=text&int_dscpn=saving_for_college_blog-inline_link_baby_step_5#baby_step_5

5 Money-Saving Ideas for Back-to-School Shopping

Just when you’ve finished spending a bunch on swimsuits and stuff for grilling out, summer’s over and it’s time for the kids the head back to school. How did this happen? Here are some ways to cut expenses while shopping for all those inevitable, seemingly never-ending things that the season demands.

Create a Budget

This might seem like a no-brainer, but it’s worth mentioning and well worth it before you enter headlong and breathless into the frenzy of a superstore. Make a list of the things you need before you leave the house, then let your fingers do the walking and check prices online. If all this seems daunting, never fear, there’s an app to help: EveryDollar. It will walk you through all the steps you need to make a budget and stick to it.

Use Money-Saving Apps and Websites

In addition to store-specific apps, here are some others to check out before you race out the door. Hollar, known as the online Dollar Store, even has a Back-to-School section. ShopSavvy is an app with a barcode reader that lets you scan and compare prices, both online and locally. Flipp allows users to check ads and coupons from their favorite stores. And there’s also Groupon and Amazon, both of which are always great options.

Sign up for Store Emails

As much as you might not like sharing your email, this is one of the smartest things you can do –  especially when the seasons change. In fact, many stores send out weekly emails. If this gets too burdensome, set up a separate folder for them. But remember this: sometimes stores dangle carrots to get you in. They often offer free things with a purchase that you just can’t say no to, such as fresh-baked cookies or free next day delivery when you pass a threshold of spending. So keep your eyes on the back-to-school prize and you’ll be golden.

Consider Used or Refurbished Items

Those necessary gizmos like computers and calculators can be pretty pricey when new. That’s why seeing what you can buy pre-owned or refurbished is such a good idea. Check eBay or Craigslist for deals, as well as major retailers like Apple or Dell for reconfigured electronic items. You might be surprised what you find.

Leave the Kids at Home

Whether it’s those little hands that put things in the cart or sweet, pleading smiles you can’t resist, it’s a fact: bringing your progeny along when shopping will drive up the cost. Set out on your own so that when you come back, they’ll be thrilled that you bought them a bag full of goodies. You’ll be happy and so will they.

These are just a few of the ways to keep your sanity and stay on budget while back-to-school shopping. If you choose one or all, when it comes to spending, you’ll be way ahead of the crowd and might even earn yourself an A+.

Sources:

https://www.daveramsey.com/blog/back-to-school-budgeting