It’s true; the year is coming to a close. A new year is on the horizon. It’s actually exciting to know that a new year is starting, an opportunity for a fresh start, a new beginning, new goals. However, we are not finished with this year yet. There is still time left for us to take action on a few tasks that will make a difference in our financial life.
1. Max Out your Flex Spending Account
Most FSA accounts are use it or lost it. Meaning if you do not use it by the end of year, you lose your money. It really makes no sense to lose those pre tax dollars. Decide what items you can use the money on and use it before December 31st. When I worked for a company that had flex spending. I would spend my remaining money on new glasses or contact lenses they never expire and you can’t go wrong with an extra pair of glasses.
2. Max out your Investment Accounts
In addition to maxing out your FSA Account, this is also the time to get as close as you possibly can to maxing out your 401K. By increasing your contribution to your 401K before the end of the year, your money has an opportunity to grow for a longer period. Consider increasing your contribution amount with your final paycheck of the year. Especially if you receive a Bonus (LOL, You may).
Contribution Limits from IRS.gov
Employee – $16,500 in 2010 and 2011. If the employee is aged 50 and over, an additional “catch-up” contribution is allowed. The additional contribution amount is $5,500 in 2010 and 2011.
3. Clean out your Closet
If you itemize your deductions when you file your taxes cleaning out your closets just may give you a boast in saving. Cleaning out your closet will help with that but a better reason to clean your closet to help other. Someone may need what you do not have a use for anymore. Clean out your closet, and then donate it to charity. You will end the year helping someone else, with less clutter and possibly keeping more of your money.
4. Pay your Mortgage Early
Are you a homeowner? If so, pay your December mortgage before the end of the year. Unlike rent, when you own a home, you pay your mortgage in arrears. Which basically means that your interest is accrued the 30 days before you pay your mortgage for that month. So, when you make a mortgage payment, you are paying for the month before. By paying your mortgage for December which is actually due Jan 1st, you will be able to deduct the extra month of interest from your taxes when you file next year. (There are exemptions to this, so be sure to consult a tax professional for any questions)
5. Tame the Paper Monster
Get an early start on preparing for the tax season. It’s cold outside, so spend some of your time inside with a warm cup of Hot Chocolate and organizing your tax documents. Gather all the needed documents (receipts, investment statements, charitable donations, reimbursable medical expenses, etc). By taking the time to do this you will have a headache free Tax Season and hopefully be able to file your taxes as soon as you receive your W-2.
Taking these steps over the next few weeks will give you a jump start on the New Year. If you want some additional steps you can take to prepare for the New Year. Take a look at Don’t Mess With Taxes, every year Kay Bell does a series called Year End Money Moves. This is a great resource. I hope this will save you a little time and stress for the upcoming year.
There is still time to download the Complimentary Guide “Have a Debt Free, Stress Free Holiday Season” The guide contains quite a few tips you can still take advantage of before the Holiday Season is over.
Andrea is the Chief Chick of Smart Money Chicks. After filing BK twice (once because she panicked, second time because the pro messed the first time up), she realized that it all could have been avoided if she understood more about how her Finances worked and the options available. At that point, she wanted to help as many as she could never make the same mistakes again. Our Promise is that all the content you read on here is created or edited by Andrea