|Focusing your vision, achieving results|
-- Lester R. Bittel
by Dianne Webster
You probably don't want to think about your financial plan until next January. But you might consider doing a midyear mini-review just to make certain you're still on track and to tweak a few things. Here are some places to start.
Taxes. Did you either receive a sizable refund or owe a chunk of money in April? If either one happened, now's a good time to correct that for 2005 by projecting your taxes for the year and changing how much you are having withheld from your paycheck or you're paying in estimated taxes.
A substantial refund suggests you're overpaying taxes during the year. That's money you could have invested or saved. To reduce the size of the refund, increase the number of allowances you claim on your W-4 form at work (or pay a little less when estimated payments are due this June, September, and January). Do the reverse if you owed money.
Budget. Review your household spending plan. Are you on track? Do you have a good handle on where you are spending your money? Do some categories need adjustment? Are you saving 10 to 15 percent from each paycheck?
Fringe benefits. Many companies hold open enrollment in the fall for benefits, so this summer is a good time to start thinking about them, especially health care. Your employer may have changed health care plans, for example, or the existing plans may have new wrinkles, prompting you to switch plans. Perhaps your family circumstances have changed, such as the addition of a child, so a new plan may be preferable.
Retirement accounts. Have you received a raise this year that might allow you to put more into your retirement plan at work, or if a plan's not available at work, to contribute more to your individual retirement account? For example, you can put in up to $14,000 this year in a 401(k) or 403(b) plan, plus another $4,000 if you're age 50 or older.
Flexible spending accounts for health care. These employer-sponsored accounts allow you to divert wages into an FSA account tax free and take money out of them tax free to pay for qualified out-of-pocket medical expenses. They can be a very good deal for employees. The catch is that you forfeit any balance not spent by the end of the year, a deadline the U.S. Treasury has now extended from December 31 to the following March 15th.
So now's a good time to see what's left in the account to be sure you use it up by the deadline and to help you estimate how much to have withheld for next year. Remember that you can use FSA money for such things as eyeglasses and many over-the- counter drugs.
Investments. One tweak to consider is taxes. The decision to buy or sell an investment should generally be based on your needs and the economics of the investments themselves, not taxes. But say you've sold off some winners this year. Consider offsetting some of those taxable gains by selling some losers. Or if you've sold off some losers, consider selling winners, which would offset their gains by establishing a new investment basis. You can then turn right around and rebuy the winners without worrying about wash-sale rules.
Assuming that your portfolio had the right mix of assets at the start of the year, you may not need to make adjustments until next year. But if a portion of your portfolio has done extremely well or extremely poorly, you may want to rebalance the portfolio to bring the proper mix back in line.
Charitable donations. Yes, you can wait to the end of the year to make planned donations. But consider avoiding the rush, which can lead to mistakes, and get a head start now. Perhaps appreciated securities will make the perfect donation.
Dianne Webster is a CERTIFIED FINANCIAL PLANNER (TM) and President of Integrated Financial Strategies of Amesbury, MA. She offers securities through Commonwealth Financial Network, Member NASD, SIPC. For more information please visit http://www.www.ifslegacy.com.
See the July 2005 issue of Women's Business Boston where Andrea Novakowski is voted one of the Top 10 Executive Coaches.
July 20, 2005
A.G. Edwards, one of Fortune magazine's "100 Best Companies to Work for in America" (2005), believes in supporting their brokers to be successful. Andrea Novakowski will deliver her program, "Being Resourceful: Using What You Have to Get to Where You Want to Be!" to their Boston brokers on July 20th.
July 21, 2005
Last month the focus of our call was cleaning up the piles on our desk. We started the day with the quote, "Organizing is what you do before you do something, so that when you do it, it is not all mixed up." -- A. A. Milne. So if you want to organize with some fun and companionship, join us in Pounce on a Project on Thursday, July 21st, from 8:30 a.m. to 12:15 p.m. Eastern. We will join as a group by phone and declare what you want to accomplish: putting together a new marketing piece, finishing that client project, backing up your computer before you buy a new one, making those cold calls, organizing your office, simplifying your filing system, or cleaning under your bed.
During the morning, the group will gather by phone a few times to check progress and get any support needed to finish with a bang. At noon, the group will celebrate their accomplishments. Who says projects have to be boring and tedious? Bring your lightness and fun and join us for the energization.
To sign up or learn more, call or e- mail Andrea by noon on July 20th. Feel free to share this with friends and co-workers, the more the merrier. (Cost of the program is only the cost of long distance phone calls.)
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