Take A Closer Look At Your Personal Finances

Thursday, August 30, 2012, 2:00 AM | Leave Comment

As we all know, we have an uncertain national economy. The stock market is quite volatile, employment is not rising constantly as expected, and cost of living is at a rise as well. Still, in a situation like this, it may be the right time to take a closer look at your financial situation and see what may need fixing.

Some things are not in your control like stock market. You must let them go. Instead, you must focus on what economic difference makers are within your reach.

The nation’s economy is still changing almost on a monthly basis and it definitely impacts us all. It has created uncertainty in many folks’ financial lives.

As the saying goes, individuals tend to experience the pain of loss more deeply than the pleasure of gains, and the pain of loss these days is highly significant.

The important thing is to not panic and stay cool. There are definite steps you can take to help put yourself back on the right track.

With these four steps, you can shore up your personal finances…

I have already talked about the top two steps in my previous posts. Here, I will talk about lowering your taxes, and spending wisely.

Lower your taxes
It’s just common sense and simple math. The less you pay in taxes, the more money you have in your pocket. For that to happen, most financial advisers point out the following steps:

    Review your withholding

  • Review your withholding and estimated taxes to make sure you are not overpaying. If you have been getting big tax refunds, you are probably paying more than you need to during the year.

  • With portfolio income down, your tax liability should be lower. In other words, you should get a bigger paycheck. When you file for taxes, you might not get a larger refund next year, but for the current year, it might improve your cash flow.

  • As long as you are able to save the extra money consistently, improving your cash flow is fine. But if your are a free spender, then lending money to Uncle Sam tax free, and getting a bigger refund next year will not be such a bad idea.

  • Capital gains and losses

  • By taking advantage of investment losses – from taxable accounts, you may save on taxes.

  • Many financial advisers suggest that investors could lower their tax bills by simply selling stock, bond, or mutual fund positions that are currently losing money, compared to original purchase price.

  • You can use these losses to offset capital gains you may have in other positions.

  • If your losses are greater than your gains, you may be able to deduct a net loss of $3,000 a year from your Adjusted Gross Income.

  • In addition, any net loss you have that is great than $3,000 can be carried over to help in next year’s taxes.


Spend wisely and save
There are ways you can save by spending wisely.

    Swap party

  • Many more people are caught up in getting the latest and greatest. There are many opportunities to get good, used merchandise that functions just as well as new but costs a lot less than new.

  • That may be the reason swap parties are getting so popular these days. At a swap party, you get a group of people together to trade a particular type of item, such as CDs, home furnishings, clothing, sports equipment, books, etc.

  • Swap parties can be done with family, friends, clubs, or school groups. For tips on holding a swap party, visit National Recycling Week – Planet Ark.

  • Keep car longer

  • Consider driving your old car a few more years rather than footing the bill for a new one.

  • By delaying purchase for a new car – even for a year or two, you can free up the cash to help save for other needs, such as

    • Emergency fund
    • Paying off high interest credit card debt
    • Saving for retirement.

    Pay less in energy cost

    Doing a few things around the house can save you some money in the long run.

      Heating and Air-Conditioning

    • To save around 10% a year on heating and cooling bills, set your thermostat as low as is comfortable when you are at home during the day. At night, when you are asleep, turn it down by at least 10 degrees.

    • Water heater

    • To save on water heater costs, which can account for 14% to 25% of energy consumed in your home, turn your water heater temperature down to a warm setting (120 degrees F).

    • Conduct an audit

    • Conduct an energy audit to find air leaks, including cracks around windows and doors, gaps along baseboards, cracks in brick siding, etc. etc.

    • Then plug the air leaks with caulking, sealing, or weather stripping to save 10% or more on your energy bills.

    • For more tips and details, visit Department of Energy website.


In a Nutshell
This economy has taught us that we really need to go back to basics and learn to spend less than we earn and be debt free.

For those of us who have been spending too much, it’s a learning process that will take time to change our mindset.

No doubt, the trouble in our nation’s economy is very personal. The pain it causes at the individual level may be a great motivator for change.

We need to adopt one of the most important strategies for building wealth: living within our means.

Throw us a like at Facebook.com/doable.finance

Post a Comment on Content of the Article


This is not a billboard for your advertisement. Make comments on the content else your comments would be deleted promptly.

CommentLuv badge