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Ten Tax Time Tips

that have nothing to do with taxes

1. Review Income and expenses

Tax time is a great time to review your overall financial picture because you have all of your sources of income in front of you in one document--IRS form 1040. Review not just how much you made, but from where… interest, rental property, etc. Then, it's time to review expenses. What is your signal largest expense after taxes? Your mortgage payment? Health insurance? Something else? Knowing your largest expenses is the first step in reducing them.

2. Plan

This is a great time of the year for planning--formulate 1, 3 and 5 year plans, even if they are just notes on a single sheet of paper. Remember, these are achievable plans and not dreams. The difference between plans and dreams is having a course of action

3. Boost Savings

Make it a goal to boost your savings rate by 1% every year. Have a long term goal to put back 7%-15% of your after-tax net income. One simple, automatic way to boost your personal savings is to save ½ of raises you receive.

4. Rebalance investment accounts

Rebalancing is the single most important thing you can do to make sure your money is working hard for you, so you can reach your retirement or other savings goals. First, you have to know what you own and why; if you can't answer that, stop what you are doing and call us today! For example, if you had an account that was 50% stock funds and 50% bond funds that was started 5 years ago, today it is 36% stock funds and 64% bond funds. You need to rebalance by selling the bond funds and buying the stock funds. Why? It's just like the old investment adage, buy low and sell high. By rebalancing, you are selling what has done well and buying some of what has lagged. Our research indicates that disciplined rebalancing within a diversified portfolio can add up to 1% annually to the returns over time.

5. Check your credit report

Request a copy from at least one of the agencies (addresses provided below), but if you find a problem, request copies from all three . Look it over in detail, and study the accompanying legend if you have never seen one before. Does anything look unusual? ("Hey, we were never late on that car payment!") Make sure dormant accounts show "closed" since unused credit can lower your credit score; closed accounts should be identified as "Account Closed by Consumer".

The 3 credit bureaus with phone numbers and addresses:

Equifax Credit Bureau 800-525-6285
P.O. Box 740256 Atlanta, GA 30374

Experian Credit Bureau 1 888 Experian
PO Box 9595 Allen TX 75013-9595

Transunion Credit Bureau 800-680-7289
P.O. Box 2000 Chester, PA 19022

6. Check your Credit Score

Credit score, what is a credit score? Sometimes called a "Beacon" or a "FICO," your credit score is a grade you receive on credit worthiness based on the level of your debts and your payment history. Most credit scores range from 500 to 800, with above 700 being a "prime rating" and above 720 "super prime." Why is a credit score important and why should you care? A good score saves you money on all of your loans, but only if you know your score and use it to your advantage. You can purchase your credit score online at www.myfico.com for $12.95. If you don't know your credit score, we suggest you consider purchasing your FICO today!

7. Refinance

Everyone knows that rates have fallen, and most people have refinanced their home. But, what about your automobiles or your credit cards?

Home -- everyone knows rates are low; make sure you check into your options and get three competing bids for your business

Auto - were you aware you could refinance your car? You can for as low as 4.75%; visit Capital One Auto Finance for more details.

Credit Cards -- check out Bank Rate for the best deal on the kind of card you need. The average credit card rate is nearly 14% but some cards have rates as low a 4.75%. Wow!

8. Explore opportunities for higher yields

Interest rates are low, and inflation is slowly creeping up. Your bank may be only paying you between .20% and .80% on your cash and money market funds while inflation is nearly 2.00%...not a very good deal! Check around for low risk ways to boost your yields. A great resource for bank money market, savings and CD rates is Bankrate.com where you can check out rates from both local and online banks.

One option we recommend is ING Direct's Orange Savings account. ING Direct offers an FDIC insured savings account that yields 2.00%, has no minimums and is available at INGdirect.com.

9. Organize

Are you missing some information we mentioned, or are your files a mess? Do you have twenty different statements coming each month? Consider getting your financial life in order with software like Quicken www.quicken.com or MS Money www.microsoft.com/money. If you invest the time upfront to get all of your information plugged into either of these powerful tools, you will be well on your way to a secure financial future. And, you will save countless hours dealing with your personal finances!

10. Smile, you did it!

Being financially secure is about getting your money working harder for you than you work for your money . If you thoughtfully go through these steps you are well on your way. Congratulations!

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