5 Financial Moves to Make Before 2014 Ends
The holiday season can be a frenetic one as you juggle your normally busy work schedule with the added stress of shopping, social engagements and travel. But it’s also an important time of year to think about your finances. Not only is this a chance to get your financial house in order for 2015, but it also allows you to take advantage of certain money-saving measures that must be implemented before Jan. 1.
Here are 5 financial moves to consider between now and ringing in the New Year:
1. Help others – and yourself
There’s a reason why Black Friday, Small Business Saturday and Cyber Monday are now followed by #GivingTuesday – a day dedicated to donating to charitable organizations. Not only is it a great opportunity to help out your favorite cause, but it’s also the time to finalize your charitable gift giving for 2014.
If you’re going to be itemizing deductions on your 2014 tax return, a gift to a charitable organization may make you eligible for a charitable contribution deduction against your income tax. Just remember to keep proof of your donation, and for gifts worth more than $250, be sure to obtain a written acknowledgement from the charity showing the date and value of the donation.
2. Take advantage of investment losses
There are very few times when there’s an upside to investment losses, and the end of the year is one of them. Using a practice known as tax loss harvesting, you can sell your poor-performing investments at a loss and use those losses to offset capital gains from other investments sold throughout the year – particularly poignant given this was a year of record highs in the stock market. Tax loss harvesting can help reduce your overall tax bill – but be sure not to run afoul of the wash-sale rule, which prohibits you from selling an investment at a loss and then buying a “substantially identical” security 30 days before or after the loss sale.
3. Maximize retirement savings
Even if you’re in the early stages of your career, setting yourself up for a successful retirement is something that should always be on your mind. If you haven’t already, consider making or increasing the contribution to your 401(k) or other tax-deferred retirement plan by Dec. 31st. In 2014, taxpayers under age 50 can contribute and deduct up to $17,500 in a 401(k) plan. Even if your finances are tight, see if you have any wiggle room to make a contribution — it can help reduce your taxable income for the current tax year and put you closer to meeting your future financial goals.
4. Set the (credit) record straight
Under the Fair Credit Reporting Act, you’re entitled to one free credit report from each of the three major credit bureaus — Equifax, Experian and TransUnion — every 12 months. If you haven’t done so recently, you can visit www.annualcreditreport.com to request a copy of your report. Look through it closely to ensure it doesn’t show signs of identity theft or contain errors, like listing an account that isn’t yours. Now is the time to be proactive about reporting any errors you might see because they can hurt your ability to get credit and affect the interest rate at which lenders will loan you money.
5. Minimize your interest payments
If you’re one of the 40 million Americans with student loans, now’s a good time to check in with them to see if there’s anything you can do to reduce your debt burden. If your finances have improved since you first took out your student loans — and your credit score along with them — you may be eligible to refinance your student loans at a lower interest rate. Refinancing can potentially lower your monthly payments and reduce the amount of interest you pay over the life of your loan – sometimes significantly.
Because who doesn’t want to start the new year with a more manageable student loan?
This article is intended to provide useful information about personal finance, but it is not intended to provide legal, investment or tax advice.
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