ErinSims.com Budget and Taxes

Making a Budget

Learn how to budget by

following these 10 steps

on how to bring your spending under control

1. Budgets are a necessary evil.

They're the only practical way to get a grip on your spending - and to make sure your money is being used the way you want it to be used.

2. Creating a budget generally requires three steps.

- Identify how you're spending money now.

- Evaluate your current spending and set goals that take into account your long-term financial objectives.

- Track your spending to make sure it stays within those guidelines.

3. Use software to save grief.

If you use a personal-finance program such as Quicken or Microsoft Money, the built-in budget-making tools can create your budget for you.

4. Don't drive yourself nuts.

One drawback of monitoring your spending by computer is that it encourages overzealous attention to detail. Once you determine which categories of spending can and should be cut (or expanded), concentrate on those categories and worry less about other aspects of your spending.

5. Watch out for cash leakage.

If withdrawals from the ATM machine evaporate from your pocket without apparent explanation, it's time to keep better records. In general, if you find yourself returning to the ATM more than once a week or so, you need to examine where that cash is going.

6. Spending beyond your limits is dangerous.

But if you do, you've got plenty of company. Government figures show that many households with total income of $50,000 or less are spending more than they bring in. This doesn't make you an automatic candidate for bankruptcy - but it's definitely a sign you need to make some serious spending cuts.

7. Beware of luxuries dressed up as necessities.

If your income doesn't cover your costs, then some of your spending is probably for luxuries - even if you've been considering them to be filling a real need.

8. Tithe yourself.

Aim to spend no more than 90% of your income. That way, you'll have the other 10% left to save for your big-picture items.

9. Don't count on windfalls.

When projecting the amount of money you can live on, don't include dollars that you can't be sure you'll receive, such as year-end bonuses, tax refunds or investment gains.

10. Beware of spending creep.

As your annual income climbs from raises, promotions and smart investing, don't start spending for luxuries until you're sure that you're staying ahead of inflation. It's better to use those income increases as an excuse to save more.

Continue here...

Regarding Budgeting and tax preparation, planning is key. In a personal budget, all sources of income (inflows) are identified and expenses (outflows) are planned with the intent of matching outflows to inflowws (we help you make more than just ends meet).

Here are some pointers:

•Give it three to four months to start working. It won't be perfect the first time you do it.

•Spend every dime on paper before the month begins.

•Over-fund your groceries category. Most people underfund that category.

•Husbands (if applicable) need to loosen up and quit using the budget as a whipping tool on their wives.

•If married, spouses need to do the budget together. The preacher said "... and you are ONE."

The Truth About Budgeting, taken from from daveramsey.com on 03 Aug 2009

Ask about the THREE TAX BOXES. What we share WILL change your viewpoint from here on. Decide how you will pay your taxes. We’ll show you what you are currently doing to pay taxes and why that may or may not be the best option for you. We’ll show you how to select the best options for your goals. Tax planning is an important step in reducing taxes. Let's discuss various tax strategies that could potentially save you thousands of dollars. This will enable you to make any needed adjustments before the end of the year so that you have some control over how much you pay in taxes.

We align our strategies with the assistance of One Bookkeeper To Go for bookkeeping, budgeting, and taxes.

Contact Us TODAY To Get Started!

Social Security:

So Good, So Bad, So Long

By Erin Sims, Financial Advisor

In the depths of the Great Depression, when FDR signed the Social Security Act of 1935 into law, there were more than 40 taxpayers contributing to the trust fund for every person withdrawing benefits. Mortality tables foretold that a person living to age sixty-five was the exception to the rule. Back then if you could find a job, you worked, you retired, then you died. Many people just worked then died. By insurance industry standards, Social Security was an actuary’s dream-come-true – lots of premium with almost no claims – the new cash cow for the New Deal government.

The one thing our dispirited nation needed most back then was hope. If you were around in the 1930s, you probably conjure up images of rampant unemployment, bread lines, the poorhouse. The only thing worse than being poor was being old and poor. To combat the evils of the era, like the mythical opening of Pandora’s box, out jumped the gift of hope in the form of Social Security. How could this be anything but good? As the Greek myth counseled, the box was simply a metaphor for the unanticipated consequences of things politicians should leave well enough alone.

Asking politicians to keep their hands away from a trust fund bulging with cash is like asking a pack of wolves to keep their teeth away from a carcass of blood-red meat. Little by little our hard-earned cash was pilfered, replaced with IOUs in the form of treasury bills, moved into the general fund and spent on pork-barrel projects that buy votes in home states. Our Social Security trust fund was drained dry to reelect the very politicians who drained it.

But aren’t treasury bills just as good as cash? What’s the difference? you ask. The difference is that cash earns money, while IOUs cost money. If Social Security funds had not been squandered but left alone to fulfill their promised purpose, allowed to earn even a modest rate of interest slightly higher than the rate of inflation, by now we would have amassed enough reserves to eliminate FICA from present-day paychecks and permit endless generations to retire in style.

Instead, our Social Security system lives hand to mouth with nothing in the cupboards. Today there are only 3.3 contributing taxpayers for every Social Security recipient. We have 78 million baby boomers coming into retirement over the next twenty years. Millions of early boomers will begin to retire in 2008, when those born in 1946 reach Social Security’s early option retirement age of 62. Each year through 2025 more baby boomers will enter retirement.

Because baby boomers have not reproduced in numbers sufficient to grow replacement taxpayers, the ratio of 3.3 contributors to 1 recipient will diminish to roughly 2 to 1. Each double-income household will have to pay the Social Security benefits of one retiree (today an average of $1002 a month without counting Medicare) before buying their own groceries, paying the mortgage, utilities, clothing, school expenses, healthcare, etc.

What’s the bottom line? Three things: First, be thankful for what little Social Security benefits you get. Under the present system, the odds of your children getting it are slim, and of your grandchildren getting it, probably none. Second, be open minded to privatization of Social Security, and ignore party politics. They couldn’t mess it up any worse than it already is. And finally, teach your children (yes, I know it’s a line from an old Crosby, Stills, Nash & Young song - and I'm dating myself). Seniors are still revered for their wisdom. Teach your children, no matter how old, to move money into their own private retirement fund until it hurts. Encourage them to teach their children to do the same. Saving money is a good thing. Really! It's a way to tell the politicians, “So long.”

For a free information kit, consultation and analysis of your retirement plan, please contact us.

Deductible (Often Forgotten) Deductions :

Out-of-pocket charitable contributions. It’s hard to overlook the big charitable gifts you made during the year, by check or payroll deduction (check your December pay stub). But the little things add up, too, and you can write off out-of-pocket costs incurred while doing good works.

Student-loan interest paid by Mom and Dad.Generally, you can only deduct mortgage or student-loan interest if you are legally required to repay the debt. But if parents pay back a child’s student loans, the IRS treats the money as if it was given to the child, who then paid the debt. So, a child who’s not claimed as a dependent can qualify to deduct up to $2,500 of student-loan interest paid by Mom and Dad.

Job-hunting costs. If you’re looking for a position in the same line of work, you can deduct job-hunting costs as miscellaneous expenses if you itemize, but only to the extent that the total of your total miscellaneous itemized deductions exceed 2% of your adjusted gross income. Moving expenses to get to that position are also, and you get this write-off even if you don't itemize.

American Opportunity Credit. This tax credit, which has been extended through 2012, is available for up to $2,500 of college tuition and related expenses paid during the year.

See more at http://www.kiplinger.com