News You Can Use: A Taxing Decision
This time of year, most of us turn our thoughts to taxes. We’ve gotten most of the information we’re supposed to receive (most of it is due to us by law by January 31). Whether we like to file right away to get a refund as soon as possible, or whether we procrastinate to the last minute (or even beyond by getting an extension!), one question we all face is whether to handle our taxes on our own or whether to consult a tax professional. The fact that an entire industry exists to fill out these forms is an indication of the complexity of our tax code.
If you’re wondering which way to go this year, here are a couple of tips from Dave Ramsey. Doing it yourself using tax software or an online site makes sense if you are single, have one source of income (not a small business), and don’t own property. Indications that you may be better off with a tax preparer include: you’re married, have kids, own a small business, own a home, plan to itemize deductions, give to charities, or have sources of income other than a job.
Whichever way you decide to go, be sure to pay attention to “who you are when no one’s looking!”
Fulfilling your New Year’s Resolutions
According to an article on Time.com, the percentage of people making financial New Year’s resolutions for 2015 is down from last year. A survey of people who did and didn’t make a financial resolution last year suggests that there are benefits to a New Year’s commitment to improve one’s financial situation.
If you’re thinking about improving your financial situation in 2015, here are a few thoughts about how you might get started.
Know where you are.
- What did you spend in 2014?
- What are your account balances – savings, checking, credit cards, investments?
- What are you currently saving for retirement (eg, 401(k), IRA, etc.)?
- What insurance coverage do you currently have?
- What does your credit report look like?
Determine where you need to be.
- How much do you need for retirement, and will your current plan get you there?
- Do you have the right amount of insurance?
- Are your savings sufficient? Consider emergency, replacement, and long-term savings (college, etc.)
- Do you have any major events coming this year that will have a financial impact? Are you ready for them?
Make a plan to get where you need to be from where you are.
- If you don’t have a budget, create one based on your 2014 expenses. If you don’t know those expenses, you may need a few iterations to get to a budget that works.
- If you have credit card debt, put together a plan to pay off that debt.
- If you aren’t where you need to be with savings, incorporate in your budget a savings plan that will move you in the right direction.
Two keys to success
- Keep good records. No one plans to get into bad financial situations. These situations generally occur either because of unexpected emergencies that we have not prepared for or because of incomplete planning and tracking.
- Get some help. If you need to make some significant changes financially, like getting out of debt, don’t go it alone. Check out some of Good $ense’s Freed-Up Resources or, better yet, be a part of a financial class at your church for support, encouragement, and accountability.
For further thoughts on getting organized and getting a plan together, see investopedia.com.