Five Reasons You Never Want To Borrow On Your 401(k)

Many millennials are stretching financially to buy homes, and the numbers are getting scary.  People in the younger generation are modeling behavior that is far riskier and more dangerous than they even realize for their future.  According to a new survey by the Bank of the West, approximately 1 in 3 millennials say they raided either their 401(k) or even worse liquidated part of their IRA to put a down payment on a home.  Even more millennials are tapping these retirement accounts to pay down their growing student and personal debt.  There is a reason these are called “retirement accounts”, and specifically there are five enormous reasons you never want to borrow on your 401(k). The Magic Of Compounding – In a recent story I did on CNN Headline News, I discussed the power of compounding. A 25-year-old who puts away $300 a month and hypothetically earns 8%, will have roughly 1 million dollars at the age of 65.  A ...

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Should You Ever Borrow On A 401(k)?

For some of you a dreaded financial question may stare you in the mirror at some point in your life. Should you borrow against your 401(k)? While all initial responders in your body say no, there could be a few instances where borrowing against a 401(k) may actually make sense. Here is my smart money moves take on when to make yourself a loan. In general, it is not a smart financial move to borrow against your 401(k) plan. There are many individuals who are quitting their job and considering starting up a new business. In order to start their new entrepreneurial venture, they will likely exit from their current employer. The additional problem is where will the new entrepreneur find the capital to open up their new business? Instead of cashing in your old 401(k), one tremendously creative option to potentially fund a new business is to set up your new corporation and create a Solo 401(k) plan. Solo ...

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Don’t Forget the $150 Drivers Education Tax Credit

Who knew? The Driver School License Training Act actually exists.   This is why Your Smart Money Moves is a top ranked blog.  We stay on top of these things so you can improve your bottom line.   You’ll be filing taxes soon, and if you live in the State of Georgia and have a child who took drivers education you can be eligible for this nice little tax credit.   As long as you took courses from a private school, you’ll be eligible for this 2013 state tax deduction. O.C.G.A. 48-7-29.5 (2010) 48-7-29.5. Tax credit for private driver education courses of minors; required documentation; rules and regulations (a) A taxpayer shall be allowed a credit against the tax imposed by Code Section 48-7-20 with respect to the amount expended by such taxpayer for a completed course of driver education for a dependent minor child of such taxpayer at a private driver training school licensed by the Department of Driver Services under Chapter ...

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Time For Your Health Insurance To Be Taxed

As all of your tax documents begin to pour into your mailbox and you get ready for tax season, it is a good time to take stock of the changes that recently happened with the fiscal cliff in 2013.     It’s also really important to pay attention to other changes that may impact your financial future.     I am not a believer that the Government will show you a card that they don’t plan to actually use at some point in the future.    When you get your w-2’s from your employer in 2012, pay close attention this year to a brand new number that will appear on the w-2 which is the cost of the employer paid component for your family health insurance. The w-2 your employer sends you is typically pretty straightforward. It shows your gross wages, taxable income, federal income taxes paid, state income taxes paid, and your social security/Medicare tax paid during the course of the year.   This year’s ...

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How To Lower Your 2011 Income Taxes

The color of the trees  are changing during the beautiful fall season, and that also means it’s time to begin thinking about strategies for minimizing your 2011 income taxes before the year has come to a completion.    Remember, that when it comes to lowering income taxes, you generally have to large rock strategies.   Above the line deductions are tax deductions that reduce the amount that will end up on the taxable income line to determine how much tax you should have paid for 2011.   Below the line deductions, which mainly have to deal with tax credits that will offset the tax you owe dollar for dollar in most cases.     It is important to note that there are many strategies to keep your income taxes down, but here are four you should consider before the clock strikes midnight in 2011.  Max out your contributions to your employer sponsored retirement plan –   For most of you this will be your 401(k), 403(b), ...

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Consequences of Unfiled Taxes and What to Do Now

Despite common belief, filing unfiled tax returns regardless of how many years have passed is not as scary as it may sound. Do not be deterred from doing so even if you do not currently have the funds to pay for the taxes. In fact, not filing your taxes at all can often have greater penalties and be more detrimental to your financial situation than being unable to pay. Ultimately, the faster you file your taxes the better. In this case the phrase, ‘better now than never,’ could not reign more true. Penalties for Unfiled Tax Returns While many people avoid filing their tax returns because they are unable to fulfill the payments, the penalties and added fees are far worse for not filing at all versus being unable to pay. In best case scenarios, you may even be due a refund without realizing. Keep in mind, the IRS will no longer honor this after a certain period of time. ...

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Do you need disability insurance?

There are many types of insurance programs to manage these days. Yet, one of the programs most misunderstood by employees of companies and small business owners is the need for disability insurance. Since there are so many nuances of disability insurance, here are some key questions to ask yourself regarding your personal situation. What percentage of my income will you replace if I become disabled? At most employer programs it will be between 50% and 66%.  Will you cover commissions or bonuses on top of a base salary? In most cases, your employer will only cover your base salary. If you have a large bonus program or work commissions, you need to really review the fine print of your group policy.  What about 401(k) or other retirement contributions? Generally, this is not covered. The big question then is how will you continue to fund your retirement goals? Can the payout go up as my income goes up in the future? ...

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