In part one of this article, we looked at some key “to do” items to get your financial house in order in time for the new year. In addition to monitoring your credit, debts and savings, there are also some smart moves you can make to save on 2010 taxes and improve your long-term cash flow by re-thinking your home loan.
Make contributions to a 401(k) or IRA for year-end tax savings.
If you have a 401(k) retirement savings plan at work and if your employer matches your savings, make sure you’re contributing enough to get the full employer match. An employer 401(k) match is free money – your employer is offering to help fund your retirement; don’t miss the opportunity to get the full amount that your employer is willing to provide. For example, your employer might match 50 percent of the first 5 percent of your salary that you put into your 401(k). If you make $40,000 a year, this means you’d put $2,000 into your 401(k), and your employer would add $1,000 – every year, tax free, automatically out of each paycheck.
If you don’t have an employer 401(k), you can set up an IRA (Individual Retirement Account) that lets you save money on a pre-tax basis – you will have to pay taxes someday in the future when you retire, but for now, every dollar you save for retirement reduces your 2010 tax bill. If you’re not ready or not sure how much more you want to save in these retirement accounts, don’t worry – there’s no rush to decide by the end of December; you can still make tax-free contributions to these qualifying retirement accounts right up until you file your taxes in April 2011.
Check your mortgage interest rate.
Think of how much mortgage interest you’ve paid during 2010 – would you like to pay less in 2011? Maybe it’s time to refinance. American taxpayers saved over $100 billion on their taxes in 2010 by deducting their mortgage interest – and there are approximately 50 million U.S. households that have mortgages. This is a rough estimate, but assuming an average marginal tax rate of 15 percent, that means that the average household paid over $13,000 worth of mortgage interest during the twelve months of 2010. That’s a big chunk of money – wouldn’t you like to reduce the amount of interest you’re paying to the bank and boost the amount of money you have available to save or spend on other needs?
Can help you find the right home mortgage options for you – whether you want a lower monthly payment or whether you want to pay off your mortgage faster and own your home “free and clear” in fewer years than you’d expected.
The time is right to make some positive changes in your financial life. Don’t let 2010 come to a close without sitting down for a clear-headed look at your financial picture – whatever your financial goals, whether you want to buy a house, pay off your house, get out of debt, save more money, or get your credit score in tip-top shape, the steps you take today can help you have a happier and financially healthier New Year.
Similar Posts:
- Financial Advice for 20-Somethings: Retirement Savings
- Financial Advice for 20-Somethings: Retirement Savings
- Individual Retirement Accounts: Which Flavor Works for You?
- Roth Ira Comes To The Rescue
- The New House And New Goals For 2010
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