| Begin 2009 On A Financially Sound Note |
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The year 2008 witnessed a major bloodbath across different markets in the world. Personal wealth of major investors and financial institutions was severely eroded. The impact was felt at the level of the individual too. Pay-cuts, higher taxes, higher mortgages, and other similar things made life difficult for an average American. However, this is not the end of the road. Things can be reversed in 2009. Here is how you can do it.
Tax Planning For 2009- Start Early Just because the financial year ends in the month of April does not mean that you put off tax planning four months down the line. Start right now and begin with adjusting your tax holdings. Do not pay too much in advance taxes, only to get a refund back in April. Adjust it so that the refund is close to negligible. It is important to calculate your withholdings right at the beginning so that you have more money in 'your' pocket rather than with the IRS. Planning would also avoid the chances of writing a check to the IRS towards the end of the financial year. If you are not sure of how to calculate tax withholding, then don't feel worried. The IRS provides you with a withholding calculator. Should You Save on Home Down-Payments The financial market has tightened its belts over providing loans to home-buyers. Hence, for those planning to buy a home, increasing the size of down-payments at the time of purchase of the house is imperative. Though increasing the down-payment may take some time, it would not only mean a smaller mortgage on the property but also instant liquidity as well. Mortgage- To Refinance or Not to Refinance As you might have seen, mortgage rates came down in the year 2008. The same is the case with mortgage refinance as well. A lower rate of interest on your existing mortgage may sound enticing but do not avail it right away. The reason why you should not go for refinance right away is because of the costs involved (pre-payment penalties, for example). It will cost you money to get a refinance. Hence, you need to compare how much you will spend to get a refinance and how much you will save in the end. If the latter figure is higher then it is best to go for refinance. Otherwise, refinance is a strict no. Planning to buy a Car- Think of the Following: A car or any other vehicle has become a necessity in today's world. If we don't have it then we definitely would like to buy it. However, we do not think of such an investment in the following terms. a) Addition of down-payment and future EMIs to your current earning figures. b) Knowing what type of vehicle we need. c) Whether to buy a used one or an old one. d) Hidden costs of acquiring and owning a vehicle. e) fully financing a purchase when it is guaranteed that the value of the car would come down immediately after the purchase. If you think of these five things before buying a car in 2009, you will make a financially sound decision. Related Articles
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