The year end is fast approaching. The older I get the faster the days seem to fly. Well, it’s that time of the year when we need to step back and take a look at where we are headed and where we might want to change direction. I thought I would raise some questions, some food for thought, as we close the first decade of the 21st century and open the second decade.
Taxes are always a good place to start. Tax planning may be tricky this year since the politicians are still arguing over which tax breaks will continue and which will expire. But here are a few things to ponder:
1. Where do your taxable investments stand as you approach year end? The Dow is up to 11,410 as of Dec 10, 2010 from 10,428 at the end of 2009 – a 9.4% increase. Do you have some long term gains that you might want to cash in at a 15% tax rate before the rate (most likely) increases to 20% next year?
2. The tax laws generally require individuals with retirement accounts to take withdrawals based on the size of their account and their age every year after they reach age 70½. Failure to take a required withdrawal can result in a penalty of 50% of the amount not withdrawn. A temporary tax law change waived the minimum distribution requirement for 2009 only. This waiver does not apply for 2010. So, if you are age 70½ or older, did you take your required distribution to avoid the penalty?
3. For those still working who have flexible spending plans, did you spend it all yet? You can’t use unspent amounts after year end.
After you get through your tax planning checklist, you can start thinking about New Year’s resolutions – those areas where we might want to change direction. I am asking myself this year where I may have become too comfortable with the way things are – a mortgage rate that may be higher than current market rates? property insurance premiums that may have crept too high? expenses that could be trimmed? There is always room for improvement.
I hope your 2010 was frugally fabulous and I wish you a frugally fantastic 2011. See you next year!
Keep those letters coming folks. Send in your ideas to: The Frugal Forum, P.O. Box 693, Huntley, IL 60142 or by email to: thefrugalforum@gmail.com.
