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Reducing your spending is one sure fire way to accumulate assets for retirement, education or other major goals in life. It has been shown that these savings can add up over the years to a substantially increased ones’ nest egg.
There is that familiar saying that “A penny saved is a penny earned” but this expression overlooks the impact of taxes; a saved penny is, in fact, worth more, often much more, than an earned penny because you pay tax on an earned penny but not on the penny you save.
Thus, tax-free savings, with earnings compounding over the years, can really increase your nest egg, making it worthwhile to explore the following money-saving techniques.
This Financial Guide compiled by Metro Accounting And Tax Services, CPA, provides you with 10 tips for making sure that more of your money is slated for saving and investment. To get started you should:
A. Prepare a Financial Plan
While the importance of a financial plan is appreciated by most people appreciate, too many put it off to tomorrow and tomorrow never comes. It is important to identify your goals and determine how best to achieve them. A financial plan can help you do this.
B. Save Your Income
For every payroll period make sure that you save a percentage of your paycheck, this can be done through the use of an automatic savings plan. The percentage saved should be determined by your financial planning needs. Some people need to save 10 percent of their gross pay while others need to save more. If the amount saved goes to a 401(k) plan or another tax-deferred plan, so much the better.
But don’t stop with automatic savings. Put aside everything you can. If you invest $50 a month in a mutual fund, you could have as much as $25,000 in ten years, depending on the rate of return. A well-thought-out budget will help you determine how much you should and can save.
C. Cut Your Mortgage Costs
D. Cut Your Consumer Debt
It is imperative that you try to cut your consumer debt as much as you can. To save interest, you can consider replacing your consumer debt with a no-fee, no-points home equity loan. The interest on a home equity line is deductible, however, bear in mind that you are putting your home at risk.
Once you have paid off a car loan or other debt, keep sending that payment to a mutual fund or other investment.
E. Cut Your Credit Card Costs
There are many ways to cut your credit card costs, e.g., switching to a card that charges less interest.
Its best to try to pay for everything in cash. It’s a good way of disciplining yourself.
F. Cut Your Bank Fees
There are many ways to reduce your bank fees. Consider:
You should stop using your ATM card if you find you are withdrawing too much cash. Make yourself go to the bank and withdraw the money instead. This may help you to spend less cash.
G. Fine Tune Your Insurance Coverage
Here are some ways to save on insurance of all types:
H. Cut Your Utility Costs
Here are some thoughts to keep in mind in cutting utility costs:
I. Cut Your Phone Bills
Today’s cost-cutting competition among phone service providers offers many opportunities for savings on your phone bills, such as:
J. Forego One Big Expense per Year
Foregoing one big expense per year will really help. For instance, skip your yearly vacation this year or take a less expensive one. Another way to save one big yearly expense is to swap an expensive health club membership for a YMCA plan.
For help with all your accounting, taxes and financial planning needs give the accountants at Metro Accounting And Tax Services a call at 470-240-5143.
User | 15/11/2017