The holiday season brought snow on Christmas Day to the state of Georgia along with some relief around tax breaks that helped both the wealthy and the unemployed. It seemed like everyone’s stocking got a gift or two, but the reality of all these tax breaks will sneak up on us a few years from now. As the New Year gets kicked off, there are some key things you want to be taking action on in respect to your overall financial plan.
- Rates will not stay low forever – If you have the situation where you can afford to buy a piece of real estate or potentially refinance your home, this would be the time to take advantage of doing that if you haven’t jumped on the wagon already. If you have an adjustable rate mortgage, you should consider getting that locked into some type of fixed rate program. If you cannot refinance and are stuck with a higher interest rate (especially if you are on an interest only note) than you should consider taking your extra cash and paying down debt. If you treat your family finances like a business, a no debt business or a business that has low interest rate loans is more likely to prosper than those that are ladened with debt.
- Use the tax ‘patch’ for the next two years – If you think that these tax breaks will last beyond 2012, than you should wake up from your dream before it turns into a nightmare. You should strongly consider accelerating tax income into 2011 and 2012 when you review items such as stock option exercising, Roth IRA conversions, capital gain income, or other income shifting strategies. Remember, that we still have to pay down this debt and the money needs to come from somewhere.
- Look more globally with your investment strategy – It is quite possible that the United States will not be the dominant economic force over the next 10 to 20 years. Remember to look closely at United States based companies that have a large share of their revenue coming from outside the United States. In addition, you should consider increasing the allocation of your overall portfolio to have more of an international exposure than before. This may be a mix of countries, companies, or a just broad based strategy. Part of these overall strategies is to consider which countries and currencies are getting strong from a world perspective.
- Shop All Of Your Bills – Start the New Year off right and keep a copy of every single bill you get in the first quarter. When you get the bill simply call and ask for the area that handles cancellations or discontinuation of service. The customer service representatives in this area are trained to be able to make a deal and save your business. If you like your current vendor but want a cheaper price than this will be the easiest way to go about doing this. Whatever you save monthly be sure to save it in your cash reserve account, investment account, your retirement account depending on your situation.
- Learn A Second Skill – My first suggestion here is to learn how to run some type of home based or small business. With unemployment at double digits (on the books), you never know when your company is going to downsize or right size. It is critical in this economy that you learn some other craft, trade, or skill to help make you more marketable if you become unemployed. For some of you it may mean getting additional education while for others it could be starting that small business part time in order to create another potential stream of revenue.
Money is usually at the top of the list for New Year’s resolutions. This year, I would look closely at what is going on in the economy beyond just the regular financial goals you set for yourself. Use these 5 tips to uncork your potential in 2011!
Ted Jenkin, CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS®
Co-CEO and Founder oXYGen Financial, Inc.
Phone 1.800.355.9318 or 770.777.0427
oXYGen Financial, Inc. co-CEO Ted Jenkin is one of the foremost knowledgeable professionals in giving financial advice to the X and Y Generation.
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