12 Financial Wellness Lifestyle Tips

12 Financial Wellness Lifestyle Tips

January is Financial Wellness month. It is a new year and many of us have resolved to be better this year – physically or financially. We all know from experience, that change does not happen all at once. It takes time. It takes dedication. It takes work. And the results can be so worth it.  With this in mind, I offer you some of my favorite financial wellness lifestyle tips:

  • Freedom of choice, financially, is wonderful & liberating. Plan for it
  • Buy Carefully: The value of most “assets” depreciates as soon as you buy them. Spend as little as possible on these items
  • Invest: Put your money in assets that can appreciate. Diversify
  • Value people first. Looks fade. Money can go away. Heart remains. Choose heart
  • Life is more about relationships and experiences. Build & grow your relationships. Live life fully. Volunteer. Be Uncomfortable. Give
  • “Pay “your self first” and then live well within your means. This will not always work, but do it as much as possible
  • Live debt free – this provides you freedom. Don’t get stuck living in a “paycheck to paycheck” world or in a job you might not like, simply because you have to pay the bills
  • Stay out of debt (other than a mortgage and if necessary for a car and student loans)
  • Plan financially – know your tax bracket and try to defer some of your income by investing in a 401K, IRA, etc. Build for tomorrow. Get the maximum company match. Don’t leave money on the table
  • Learn to “stretch your dollars”. Be creative. Living simple can be as much fun as living expensive. Find bargains. Use restaurant.com, Living Social. Trade services. Be a part of the “Sharing Economy”. Have fun. Value Simplicity
  • Be grateful for what you have. Share with those that have less. Celebrate your “XX” birthday with friends by packing an equal amount of “XX” lunches & deliver them to the homeless as a group – on the streets, downtown, near the bridges. Take toiletries, extra jackets, or new socks as additional gifts. Think about giving and not getting. You’ll receive more than you give
  • Learn to delay short-term wants to meet long -term goals. Less instant gratification today pays big dividends. In addition to financial rewards, we dream, wish, and work to get what we want. We prioritize by importance. Do I want this today or do I need/want something different for tomorrow? We build self- esteem. We become more who we were created to be.  We grow. We become a good role model for our kids & our community.

Life is meant to be good. Not easy but good.  Remember:

Good Better Best
Never Let it Rest
Until Your Good Gets Better and
Your Better Gets Best
– author unknown

2013 Year End Federal Tax Planning – Individual


If you want to want to make sure your money is more in “your pocket” than Theirs (The IRS), now is the time to act. Estimating your 2013 tax bill keeps you from being surprised next year. More importantly, it provides the opportunity to perhaps decrease your actual tax amount by planning and acting strategically before the end of this year.

To start:

  • Determine how much you have earned this year
  • Determine what you have paid toward your 2013 Federal tax bill
  • Then increase each of these amounts to estimate the year-end amounts

Keep these amounts in mind as you consider the following simplified tax form

– Above the Line Deductions
= Adjusted Gross Income
– Standard Deduction or Itemized Deductions
– Exemptions
= Taxable Income
– Tax Credits
– Tax Paid
= Tax Owed or Refunded

With the visual in mind, you might find it easier to review each major section to see if there is action that you can take now to reduce your tax bill:

1. Income:

If you think your income will decrease next year and your tax rate would be lower, can you:

  • Defer a year-end bonus to January 2014?
  • Postpone a sale that will trigger a gain to next year?
  • Delay exercising stock options?

Alternatively, it may make sense to move income to this year:

  • Covert a traditional IRA or a SEP IRA into a Roth IRA and recognize the conversion income this year?
  • Take IRA distributions this year?

2. Above The Line Deductions:

  • Above the Line Deductions include:

1.   Health Savings Accounts
2.   IRA Deduction

  • Establish an IRA for yourself
  • Establish a Spousal IRA

3.   Qualified Student Loan Interest
4.   Self-employed health insurance or qualified pension plans

  • Establish a Defined Benefit Plan

3. Estimate what is going to save you the most money:

The Standard Deduction or the Itemized Deduction?

The 2013 Standard Deductions are:

$ 12,200 Married, Filing Joint
$ 8,950 Head of Household
$ 6,100 Single or Married, Filing Separate

There is an additional Standard Deduction amount of $1200 for those over the age of 65, blind, or both.

It is important to note that there is a reduction for Personal Exemptions and Itemized Deductions for taxpayers with Adjusted Gross Income over:

$250,000 Single
$300,000 Married, Filing Joint
$275,000 Head of Household
$150,000 Married, Filing Separate

  • This will have the effect of increasing taxes on affected taxpayers

If you itemize, would you benefit if you changed the timing of some of your payments?

If you expect your income to decrease next year, then you might want to move some payments/deductions to the current year to offset your higher income this year:

  • Prepay property taxes
  • Make your January mortgage payment
  • If you owe state income taxes, consider making up any shortfall rather than waiting until your return is due
  • Medical Expenses are deductible only to the extent they exceed 10 percent (7.5 percent if you or your spouse are 65 before the end of the year) of your adjusted gross income (AGI).
  • Sell some or all of your loss stocks
  • If you qualify for a health savings account, consider setting one up and making the maximum contribution allowable.

Defer Deductions into 2014

If you expect tax rates to increase next year, or if you anticipate a substantial increase in taxable income, you may want to explore waiting to take deductions until 2014:

  • Postpone year-end charitable contributions, property tax payments, and medical and dental expense payments, to the extent you might get a deduction for such payments
  • Postpone the sale of any loss-generating property

State and Local Sales Tax Deduction

The option to deduct state and local sales taxes in lieu of state and local income taxes is scheduled to expire at the end of this year. If you are thinking of purchasing an expensive item that will generate a larger deduction than the state and local income tax deduction, buying the item this year may be beneficial.

Deduction for Eligible Teacher Expenses

This is the last year that eligible educators (teachers) can deduct $250 of qualified expenses paid during the year.

  • If you itemize and you have not reached the limit, take advantage of it by buying next years supplies now

4. Exemption Amount is $3900 (phase-outs apply)

5. Use your numbers to estimate your 2013 Taxable Income

– Above the Line Deductions
= Adjusted Gross Income
– Standard Deduction or Itemized Deductions
– Exemptions
= Taxable Income
– Tax Credits
– Tax Paid
= Tax Owed or Refunded

6. Use this Chart to estimate the amount of tax owed

Tax rate Single filers Married filing jointly or qualifying widow/widower Married filing separately Head of household
10% Up to $8,925 Up to $17,850 Up to $8,925 Up to $12,750
15% $8,926 – $36,250 $17,851 – $72,500 $8,926- $36,250 $12,751 – $48,600
25% $36,251 – $87,850 $72,501 – $146,400 $36,251 – $73,200 $48,601 – $125,450
28% $87,851 – $183,250 $146,401 – $223,050 $73,201 – $111,525 $125,451 – $203,150
33% $183,251 – $398,350 $223,051 – $398,350 $111,526 – $199,175 $203,151 – $398,350
35% $398,351 – $400,000 $398,351 – $450,000 $199,176 – $225,000 $398,351 – $425,000
39.6% $400,001 or more $450,001 or more $225,001 or more $425,001 or more

Rev. Procedure 2013-15 can provide additional information

7. Apply Tax credits, including these that will expire this year

Expiring Energy-Related Tax Credits

  • Residential Energy Credit: If you are considering energy improvements to your home, you may want to make the improvements this year. The credit is 10 percent of the amount paid or incurred for qualified energy efficiency improvements installed during the tax year and the amount of residential energy property expenditures paid or incurred during the tax year, up to a maximum credit of $500.
  • Qualified two- or three-wheeled plug-in electric vehicles: The credit is equal to the lesser of 10 percent of the cost of such a vehicle or $2,500.

In summary, yes, this involves some work and at a time of year where most of us are busier as we approach year-end and the holidays. If it saves you some money, isn’t it worth it?

Deb Fox can be reached via twitter @ debfoxfinancial or via e-mail @ debfoxfinancial@gmail.com.

Financial Literacy – No App for That, but…

Over the past few years, we have heard or said “there is an App for that” and indeed, from a financial literacy perspective, there are applications for:

  • Mobile Banking
  • Budgeting
  • Cash Flow Management
  • Investing Loan Calculators

These are helpful but currently can only help us so much.  There are resources to help fill in the gaps such as:

  • The American Institute of Certified Public Accountants (AICPA) has a free community service program titled 360 Degrees of Financial Literacy.  http://www.360financialliteracy.org . The goal is to help people make smart financial decisions at every stage of life.  Information is included for both personal finance and for small business owners.
  • Feed the Pig: www.feedthepig.org was designed to encourage 25-34 year olds to take control of their personal finances.

Poverty-Action.org has a paper titled Keeping it Simple: Financial Literacy and Rules of Thumb http://personal.lse.ac.uk/fischerg/Assets/KIS-DFS-March2013.pdf .  The research suggests that reducing complexity can improve effectiveness. Rather than teach double-entry accounting, working capital management, and investment decisions to some business owners, Rules of Thumb could be used. Most of us use some of these in our personal life, but as a country we do not do a very good job in practice.

The Council for Economic Education: Survey of the States 2011: The State of Economic and Personal Finance Education in our Nation’s Schools http://www.councilforeconed.org/news-information/survey-of-the-states/ includes a lot of information that is important for our kids, ourselves, and our economic future.

We are all busy and we usually only seek information when we need it; i.e. “just in time education”.  Some people like to learn on their own and for you, I have provided some on- line resources. Others like to learn with someone and for you, perhaps, I can be your partner. As Benjamin Franklin said, “an investment in knowledge pays the best interest”. Please let me know if I can help.

Email: debfoxfinancial@gmail.com

I hope this information helps to empower you to navigate life’s uncertain financial seas. Life is meant to be good; enjoy.