2013 Year-End Tax Planning Tips

So, as you put the final touches on your financial planning for the year, here are 9 links to year-end tax planning information you may want to review, that could impact your bottom line, from MSN Money, About.com, Morgan Stanley, Charles Schwab, CNBC, 360 Degree's of Financial Literacy, Wall Street Journal's Market Watch and Turbo Tax.    

1. MSN Money’s 8 Year- end tax moves to make now
2. About.com 's 2013 Year End Tax Planning by Income and Age
3. Morgan Stanley's 2013 Year End Tax Planning Checklist
4. Charles Schwab's Year-end Tax Tips
5. CNBC's Year End Tax Planning Info
6. 360 Degree's of Financial Literacy's 2013 Year End Planning Considerations
7. CNBC's Five Tips for Year-end Tax Planning
8. The Wall Street Journal's Market Watch - Year-end Tax Planning Ideas for U.S. Individual Taxpayers, Tax Planners, and Tax Preparer's
9. Turbo Tax’s  Start Tax Planning Early: 8 Great Year-End Tax Tips

Please review this information with your own tax advisor or financial advisor to determine how it applies to your own financial situation.

 

Financial Literacy and Financial Capability Summer Workshop

You may not always agree with Alan Greenspan, but you probably will agree with this quote of his "No matter who you are, making informed decisions about what you do with your money will help build a more stable financial future for you and your family." 

Financial skills last a lifetime, so giving your child the gift of financial intelligence and financial capability is something your child will forever be grateful for.

Join us this summer at the Greenhill School in Addison,Texas' Summer on the Hill program, we will be holding a week long Summer Workshop - "Money Management for Teens" starting on July 25th.  To register, call 972-628-5490.   Tell your friends.

Money Management for Teens - Summer Workshop - July 25th - 29th, 2011

This compelling and fun program gives students the financial tools to develop their personal philosophy about money and establish money management skills early, a skill particularly indispensable in today’s economy.

Using interactive group activities, we’ll explore the money cycle, how to set smart financial goals and achieve them, why spending plans are important, how career decisions affect your earning potential, the part philanthropy can play in your financial life, and the fundamentals of credit, debit, debt, taxes, banking tools, earning, and spending. These are fundamental principles students can rely on throughout their financial lives.

Join us this summer - Call 972-628-5490 - Course ID: MONEYM

The Economy: Marmalade or Jam?

Well, for everyone who has not been hiding behind a rock in the last 10 days, (and man that is a place that might feel a lot more comfortable than facing what we do now face) we all now know that we are going through a lot more than a rough patch in the economy. For most of us, the big resolution is out of our hands, as the Treasury Secretary – Henry (Hank) Paulson, Federal Reserve Chairman, Ben Bernanke, Securities and Exchange Comissioner, Christopher (Chris) Cox, and Federal Housing Finance Agency Director, James Lockhart, volley with the Congress to find a palatable solution for our economic hit in the jugular.

Of course, most of us are wondering how we got here. We hear that this started with the sub-prime mortgage market and the bad lending practices of financial institutions. Bank made “no-paper” or “liar” loans to people who showed absolutely no ability to repay this loan. Why? Greed, on the parts of both the borrowers and the lenders. Banks and financial institution took a gamble that with the way that loans are packaged and sold, there would be little or no trail back to the institution that made the risky loan. The risk would be exported. The chief motivator in this financial plan, was making as much money as possible, and pushing the risk as far away from you as possible.

But we all as a culture also have to absorb a piece of blame, First, folk who could not afford the homes that they insisted on buying, were doing this because they have come to believe that having as big a home as possible is what the “American Dream” is all about. Main streeters wanted to be in their own piece of the “American dream” and Wall Streeters wanted to make sure that they had the biggest estate among their peers – their “American dream.” Folks who allowed the institutions to document their loans with false information were obviously complicit in the deed. Second, folks who live on credit again want more than they can afford, and will charge or borrow ad infinitum to get it, and third, the culture of this country has for many years chosen to motivate people to be creditors or negative savers.

So without delving into the details which abound on the web, we got to the point where the drag of these poorly made mortgages on the American economy started to take a toll on financial institutions, and their liquidity. Of course this simply made a bad situation worse, because the financial sector had already been playing darts with their holdings, by using a model that did not maintain adequate liquidity for the loans they made.

As we speak, home prices continue to deteriorate, and credit markets are at a stand still. If the credit markets are not working, more houses will be lost, and the economy will have a harder time in recovering, if it will be able to recover at all. It has been estimated that to get out of this mess, each and every man woman and child in these here Unites States will basically be in hock for approximately $2300. Most of us would gladly pony up our $2300, if that would really fix everything, but will it? Only time will tell.

But let’s see what we can do about stabilizing our own lives. It's really just going back to the basics.

For starters, we have to stop believing that the adults that are in charge, really know what they are talking about, and start taking a real interest in our own finances so we can do the safe and right things for our lives. Next, we all have to start living within our means. Yes, starting right now we will have to tighten our belts and stick to an austerity program. Much of the rest of the world goes through this on a regular basis. Although this is a foreign concept in America, we as individuals have to do just that, as does our government. It will be difficult times ahead, very difficult times indeed. To start the process, if you aren’t already living on a workable budget, you need to immediately create a working budget for your own life. We also have to start saving for a rainy day, if you haven’t noticed, its pouring down torrentially right now. Maybe that will be a start to a situation where if Ben Bernanke chooses to repeat the statement below, that he means it this time.

Comments made by Ben Bernanke on Milton Friedman’s 90th birthday (Novemebr 8th, 2002) – “Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again.” (1)

(1) See the entire speech here.

NOTE: Vast Bailout by U.S. Proposed in Bed to Stem Financial Crisis - NY Times.

Were You Better Off Than Your Parents? Will Your Kids Be Better Off Than You?

While you may feel that you are better off than your parents, and I hope you do, our kids will have a definitely more difficult time making this statement. Much has changed. Our national economy has been impacted by a number of things, a war, not yet concluded; much increased fuel prices with expectations they will continue to rise, lower job creation, and increased competition globally. While we as Americans have had a much lower savings rate than most of the rest of the world, we are now in the realm of having a negative savings rate. Retirement benefits have decreased, and health care costs have risen. Social Security in all probability will not be around in the way we know it today, for our children. With all these factors that impact wealth creation, what can we do to ensure that our kids have a fair chance at being better off?

While some things are outside of our individual control, there are some areas where we can direct and guide our kids of all ages.

Understand money. Help your kids really understand money. Online payments, debit cards, credit cards and check books, may give children the impression that there is an unending supply of money. Teach your children that these are payment tools, and that you have to earn the money and have it in the bank, before you can use them. Help them understand interest rates and the cost of money. Help them understand how much money you make, and how it is spent. This will give children a good idea of the cost of living and also make indelible the fact that they will need to start saving early.

Wean yourself off of credit cards. There is no better education than the one observed. If your children observe your saving habits and not using credit cards and payday loans for regular expense items, they will be more likely to prevent the credit monkey from climbing on their backs.

Start saving now. Mandate that 10-25% of all the money that comes through your children’s hands be saved. During a regular year, kids rack up money from allowances, jobs – part-time or full-time, gifts, contest winnings, etc. Saving a percentage on a consistent basis is a good life lesson. Help your child monitor the growth of their savings, and eventually move those savings into investments. Having a real savings goal helps this process, for younger kids it may be some toy or electronic purchase, for older kids, it may be spending money on a trip, or even a partial payment on a car, for young adults, among other things it will be saving for retirement. Savings also means looking for bargains on the items that must be purchased.

Learn to budget. Introduce your children to budgeting as early as possible, but it is never too late to implement this most important wealth building tool. Also referred to as a spending plan, a budget simply puts you in control of your money so that you spend your money on the most important things to you and avoid frittering it away on impulse items. Help them create written budgets and set up a regular monitoring process. A budget must be written down and followed to be useful. Budgets in your head are not reliable.

Help your children understand that a budget is a dynamic document as income and expenses change. Help them understand the power of directing their money where they want it to go, to what is really important to them, and not frivolous impulse purchase that often generate buyer’s remorse.

Help them understand that the celebrity lifestyle that is conveyed unendingly on television and in magazines apply to a very small part of American society. Understanding that trying to rival the designer shoes or purses in a celebrity’s closet on a non-celebrity’s budget, will almost certainly lead to financial ruin, or at the very least the inability to obtain some things that may be higher on their personal goal list.

Keep good records. Along with budgeting, good record keeping is important. Learning to do this at an early age, will keep this habit throughout life. Good budget records show where you are overspending and allow you to make changes. Later on good record keeping will help you make sure you are able to claim all the tax-deductions legally allowed. Good records are also key when you have to make credit card or other purchase disputes.

Learn to give back. Being better off doesn’t begin and end with money, helping your kids learn to help ones less privileged than themselves at all levels, this is one way to fill their lives with meaning.

Get as much education as possible. Gone are the days of working a lifetime in one company. Investing in education throughout their life-time will keep your child ahead of the trends and be able to participate in the workforce as changes occur.

Get a career in an area that will support their desired lifestyle. Help your child examine the lifestyle that they may want to lead and guide them towards jobs and careers that can make that happen, based on the remuneration available for those jobs. Help them connect with people who are currently in similar jobs to determine whether salary or income expectations are valid.

As parents our job on guiding our children in financial matters really never ends, but if we start teaching them about money when they are young, the skills will be a lifelong asset. If your kids are teenagers or young adults and you fear that you may not have done a good job of guiding them, remember it is never too late to start.

The Money Taboo: Breaking the Taboo – Part 2

Missed Part 1 - Find it here.

How can we change?

Follow our Youth. Our young people seem to be a lot less concerned about privacy on many levels, as seen by the gravitation towards the You-Tube and social-networking phenomena. While I am less likely to adapt to some of the freedom on those networks, personal finance blogs provide a forum for financial education and some confessions, allowing folks to talk about their problems, issues and plans with anonymity. A few blogs have gone overboard, giving excruciating personal finance detail, but we won’t complain. This is a step in the right direction to breaking money’s taboo status.

Financial Literacy. We all more than ever have to take responsibility for our own financial future, become financially literate and financially mature. If we aren’t financially savvy, we should seek out people in our group who are. Folks, who may have made a money mistake or two in the past, might be happy to pass on that information to you to avoid repetition of the error. We often by pass receiving that good information because we are afraid to broach the subject, and possibly show our lack of knowledge. Until we make the move however, we are destined to remain financially illiterate.

Managing our money wisely really requires that we become educated about it. Start talking about your money to your friends. Start a “money-group.” Use it to foster discussions about all aspects of your money. Talk about the fact that , e.g. there is a universal clause on most credit cards, which can raise the rates on all of your cards, if you are late on one card, it allows your other cards, if they so choose, to raise their rates, even if you are current and early on those other card payments. Think about it, if you fell into that trap, why allow your friends to fall in too. In this particular example, it is possible that if you are unaware of the clause – and you are not the type to check your interest rate each month (a lot of folks simply look at the due date and the payment due) you may not realize for several months that your interest rate has been hiked sky high, sometimes to 30%, and you have been taken for a pretty expensive ride. After all, as far as you knew, you are current on those accounts.

Why talk about it? It can be financially beneficial. Almost 2 decades ago, in a general conversation with a friend of mine, we started talking about our properties (my first home purchase) and as we talked, I realized that I had not been taking advantage of the homestead deduction on my property taxes, for probably 5 years. Now I am quite the reader, so it is certainly probable that at some point I would have come across that information, but it could have taken another 5 years. It should be noted, however, that as a student of “continuous improvement,” I am happy to talk about anything, particularly if it will ultimately improve my process or yours. My friend also did not consider money talk as taboo, and both of us came out of that conversation a little better off financially.

Talking about money could help you determine that what you thought was an excellent compensation package is not so wonderful after all. Of course, because no-one will talk, nobody really knows what the measurement gauge is. Be careful on this front, as some companies still have policies that prohibit salary disclosure among employees.

By not talking we often make money comparisons based on presumptions or specific misinformation, and cause ourselves more stress and financial problems than we really need to. If we try to keep up with the Joneses we often use debt to mirror a lifestyle that is financially out of our reach, but which we hanker for, because if it appears that our peers can afford it, we question, why can’t we? The ability to talk to someone about our finances, whether family, friend, clergy, or financial adviser about the instruments that we are thinking of using, can at the very least educate us, give us another idea, option, or can sound the alarm. Of course, there is no guarantee that anyone in your circle is anymore financially literate than you are, but two heads in my opinion is often better than one.

At some point, I am confident that we will come around to the realization that we carry around an unnecessarily huge burden when we isolate our money issues. The more we hide our money issues, the more problems or damage we are liable to cause ourselves. Actually as Shira Boss states in her book, most people are eager to hear the money details of others, they are just not that ready to share their own, and therein lies the rub, maybe we start by reverting to the childhood – "I’ll show you mine if you show me yours."

Share your opinion. How do you see it? Should money remain under our kimonos, or is it time to shake off the taboo?

The Money Taboo: 8 Reasons why Money is still taboo. – Part 1

When was the last time you had an open discussion about your salary, your mortgage payment, or your tax returns with anyone besides your partner or spouse? Many of us still aren’t even able to have those frank discussions with our partners and spouses. Discussing money openly may be the last taboo.

So exactly why won’t people talk? Money discussions are taboo for many reasons:

Belief that money is personal. Often there is a generational belief that money is not to be discussed, as noted in Jamie Johnson’s (heir of Johnson & Johnson pharmaceutical fortune) documentary "Born Rich." Watch the video excerpt on this page. His family was more than a little peeved that he chose to speak out about their money. Warren Buffet’s granddaughter (in-law) got a little harsher treatment, she was apparently disowned. Watch.

In speaking to an associate recently, she indicated that she would be most uncomfortable commenting to a family member about a particular financial transaction the family member had made. When I asked, what if your financial experience could provide a benefit? The response was, “that’s something that you just don’t do.”

Corporations have also long used a privacy policy on discussing one’s salary with others, to maintain their bargaining advantage, which also probably plays into an individual’s belief that money discussions should be personal.

Guilt. If you are financially set, you may feel a tad guilty that you have done much better than the other guy.

Superiority. You revel in your financial success and certainly don’t feel obligated to talk about it with folks who have been less successful, in fact you have a certain disdain for those who you feel can’t “get it together.”

Shame. If you are in a bad money space, you may have feelings of shame that you haven’t done better, whether it’s due to poor money habits, or because you feel that your opportunities are limited. This often causes some folks to “beg off” from attending those high-school reunions.

Inferiority. You may want to do a lot better financially, but just can’t figure out which of your habits are preventing you from progressing. Your income is competitive with your peers; they just seem to be doing better. You really just aren’t sure that what you earn, or what you have amassed is as acknowledgeable as you might feel it is.

Financial illiteracy. You feel that others around you are more financially savvy, and so you keep silent about your own financial situation. You won’t talk about the huge financial mistake you just made, for fear of ridicule, or for fear of showing your lack of knowledge of how money works. Lack of math skills could also have a part to play here.

Jealousy/Envy. You maintain an image, commensurate or ahead of your peers even though it has to be supported by massive debt, which you dare not disclose, as it would reduce or destroy your perceived status in your community. The interesting thing here is that it becomes a never ending tale of the dog chasing its own tail. Herd thinking fuels each person’s effort to out-spiral each other, when no-one can afford to. Obviously not much thought is given to the damage and debt that this causes.

In Texas, this is referred to as folks with a “big hat and no cattle,” being showy without any substance financially. One young student, stated in a local newspaper article, that she had no idea why her parents moved into a huge house in a great neighborhood, yet she was never able to participate in extracurricular activities, because there was never any money to support those activities.

Shira Boss in her book ‘Green with Envy: Why Keeping up with the Joneses Is Keeping Us in Debt', talks about how she miscalculated the financial status of their next door neighbor – by presumption, innuendo, and gossip. Their neighbor’s apparently “financially carefree” lifestyle basically made them feel somewhat inferior, until through a series of events and meetings they realized that the lifestyle they almost envied was supported by huge credit card debt, home equity loans, and mortgages.

Dishonesty. There are probably enough cases where folks would rather not talk about their finances, because of the existence of “under-the-table” components, which could include illegal sources of income, under-estimation of taxable income, or erroneous tax deductions. Here keeping silent avoids them tripping themselves up. If you have watched any of the episodes of CNBC’s “American Greed” the con men featured were rarely an open book.

So, should we change? We all have our own belief systems about money, mostly indoctrinated in our early years. But our inability to openly discuss the one item that we need almost as badly as we need air to survive, can be damaging. Like anything else open discussion brings more items to the table. We are charged more so now than at any other time in our history to be in control of our finances for a lifetime. Improving our financial literacy will only come with our ability to have frank and open discussions about our money.

Can we change? Yes we can. Change occurs even in the most unwilling situation when accompanied by crisis. Like every long-standing habit, change will be gradual, but the mortgage and credit card mess with its ability to potentially decimate the finances of a large percentage of the population, may cause us to remove more layers of the onion in a speedier fashion. In the effort to take control of our finances, we will be challenged to remove , or at a minimum lessen the taboo. Maybe we are on the brink of that change.

The Money Taboo: Breaking the Taboo – Part 2

More Family. Less Money [VIDEO]

Expert conversation on how to make financial plans before a baby comes along. Watch the Video.

Make a Date with your Money.

Have you noticed how shocked and surprised folks appear to be when someone takes the time (generally on a financial planning show, or financial segment on a talk show) to total up their income, expenses and debts. It’s like they are meeting their money, or lack of money for the first time. I am sure you are very familiar with your money, but if you are not, its time for you get re-acquainted. Your money is one of those things that will completely turn on you if you ignore it.

Why another Money Blog?

Hello everyone. As you read in “About Me” this blog is meant to simply share information on money. Why did I decide to blog about money? On a daily basis I come in contact with people who have questions about their money and want to make sure that they will have enough. Enough money on which to retire, or to do the things that they want to do. In short, people who want to protect their money and make it grow. I also come in contact with folks with ostrich qualities (head in the sand), who figure that it will all work out somehow, and then just about everyone in between. So, if you are truly independently wealthy this blog is probably not for you. This blog is aimed at folks who want to figure out how to create a plan to get on the road to financial independence, or tweak their plan, to improve their chances of staying on that road.

Money is completely intertwined in just about every thing we do in life. It’s the air we breathe financially.

Watch "Money As Debt"

Ever wondered about what money represents and exactly how it is created? Take a look at the piece - Money as Debt by Paul Grignon, from video.google.com. An animated presentation on what money is and how it is created.

Money As Debt

47 min 7 sec - Feb 12, 2007
Average rating: (3912 ratings)
Description: Paul Grignon's 47-minute animated presentation of "Money as Debt" tells in very simple and effective graphic terms what money is and how it is being created. It is an entertaining way to get the message out. The Cowichan Citizens Coalition and its "Duncan Initiative" received high praise from those who previewed it. I recommend it as a painless but hard-hitting educational tool and encourage the widest distribution and use by all groups concerned with the present unsustainable monetary system in Canada and the United States.

If you're having trouble watching the video, try copying the following URL into your browser:
http://video.google.com/videoplay?docid=-9050474362583451279&pr=goog-sl