Remember, you should be seeing more money in your net salary check because of less Social Security withholding (although because there is no more Making Work Pay Credit, it should not be a full 2% of your gross salary.) Whatever additional money you get, try and shift it over to a savings or investment account instead of spending it (or spend some and save some). If you set up an automatic withdrawal from your checking to your savings, you won’t even miss the money, and the compounding will start to build some money for you (although if you keep it in a !% savings account, it may take some time – but eventually interest rates will go up again so it will still amount to something – especially if you do this over 10 or 20 years).You could take some of this money (or unspent Christmas Bonuses – even though that is an oximoron, isn’t it) and put it into a traditional IRA before April 15 and get a tax deduction as well as deferred taxes on the earnings until retirement. That is always something to think about.
Brian’s General Musings
Hi Everyone:This will probably be my last blog of the year. We are spending New Years with friends and I probably won’t have time Friday. This has been an interesting year, with me leaving my old firm of 20 years and setting up my own practice plus many other personal ups and downs. It has been good to have friends at this time. Thanks to all of you.To people who also have their own business, remember you have today and tomorrow to buy last minute expenses to write off in 2010. So if you are going to buy something in the beginning of next year anyway go ahead and get it in the next two days and take the writeoff now instead of a year from now.Here is a picture of my office (where I probably will see a lot of you in the next few months).Anyway, have a Happy New Year and I will continue to say what is on my mind in 2011 (I bet you can’t wait!)
Brian’s Tax Musings
Here is something you might consider next year:You will be getting 2% payroll tax savings in 2011. Say you make $60,000 per year ($5000 per month). You will have $100 a month more money – congratulations! Before you go out and spend it all, think about taking some(or all) of it and putting into a regular or Roth IRA. This is a good way to save for retirement without even thinking about it. Set up an IRA account at Vanguard or another mutual fund family (or even your bank) or if you have a financial planner, get him to set up one for you, then have the money automatically taken out every month from your checking account. You will never miss the money and you will automatically save for retirement! A regular IRA will give you a tax deduction each year (in fact, if you designate the Jan – April contribution for 2010, you will get it on your 2010 tax return) while a Roth will allow you to take out the money tax free when you retire.Well H & R Block just lost their bank for their refund anticipation loans! It has been looming for awhile, but now it is [...]