Step 1: Spend less than you earn.
Spending less than you earn is the starting point for doing well financially. Anytime you find yourself trying to keep up with the Joneses, remember what Dave Ramsey says, “If you will live like no one else now, later you can live like no one else.”
Step 2: Don’t be cash poor.
A cash reserve can protect you (i.e. keep you from casing in investments or accumulating debt) when you face an unexpected expense like car repairs, home maintenance, etc. Having cash on hand is also a good way to make sure you can take advantage of any unexpected opportunities or investments that come your way.
Step 3: Accumulate the right types of assets.
When building your net worth, focus on accumulating assets that (1) are likely to appreciate and (2) can be converted into income later in life. It might feel great to have an expensive house that’s paid off, but if you don’t accumulate sufficient investment assets, you might have to sell your home later in life to fund your retirement. If you live in it, drive it, or wear it, then it’s not the right type of asset.
Step 4: Don’t forget the little things.
Many Americans have unsecured debt like balances on credit cards. Debt like this is often accumulated gradually – rather than all at once – until one day it seems too large to handle. Think twice before using your card to charge for spontaneous purchases. Make sure you actually have money to pay for it.
Step 5: Keep it simple.
When it comes to finances, “complicated” doesn’t always mean “better”. Be leery of any investment requires you to sign complicated contracts, disclosure documents, or suitability statements. There are plenty of straightforward, easy to understand savings and investment vehicles available to investors.
To learn more about our company - and find out how we are different from other financial advisors - call (210) 587-6433 or visit www.VannoyAdvisoryGroup.com
Monday, March 28, 2011
Wednesday, March 2, 2011
Don't Fall For These Tax Myths
Myth 1: It’s good to get a large tax refund.
Although it’s exciting to find out you’re getting a tax refund, it’s important to keep in mind where that money came from. Most refunds come from money that has been taken from your paychecks throughout the year. So getting a refund means you gave Uncle Sam an interest-free loan throughout the year. Instead of planning on a refund at tax time, consider adjusting your withholding so you get to keep more of your paycheck throughout the year.
Myth 2: Business owners can deduct all of their expenses.
As a business owner, I always like it when my friends say, “You pay for it. You can deduct it”. First of all, something has to be a legitimate business expense before you can deduct it. Second, many business costs like meals and entertainment are only partially deductible. And you can never deduct personal use of business assets like a car or cell phone.
Myth 3: You don’t have to pay your taxes by April 15th if you file an extension.
Filing an extension will give you additional time to “file” your taxes, but not to “pay” them. Any money you owe has to be paid by April 15th or you could owe substantial penalties and interest. You might want to send in an estimated tax payment if you’re filing an extension just to make sure you don't end up paying more than you need to.
Myth 4: Social Security benefits aren’t taxed.
Up to 85% of your Social Security benefit could be taxable under current law. The Social Security Administration’s website states that benefits usually aren’t taxed unless you have “substantial income in addition to your benefits”. They must have a different definition of “substantial” than I do because individual and joint filers could start paying taxes on their benefits at $25,000 and $32,000 in “combined income” respectively.
To learn more about our company - and find out how we are different from other financial advisors - call (210) 587-6433 or visit www.VannoyAdvisoryGroup.com.
Although it’s exciting to find out you’re getting a tax refund, it’s important to keep in mind where that money came from. Most refunds come from money that has been taken from your paychecks throughout the year. So getting a refund means you gave Uncle Sam an interest-free loan throughout the year. Instead of planning on a refund at tax time, consider adjusting your withholding so you get to keep more of your paycheck throughout the year.
Myth 2: Business owners can deduct all of their expenses.
As a business owner, I always like it when my friends say, “You pay for it. You can deduct it”. First of all, something has to be a legitimate business expense before you can deduct it. Second, many business costs like meals and entertainment are only partially deductible. And you can never deduct personal use of business assets like a car or cell phone.
Myth 3: You don’t have to pay your taxes by April 15th if you file an extension.
Filing an extension will give you additional time to “file” your taxes, but not to “pay” them. Any money you owe has to be paid by April 15th or you could owe substantial penalties and interest. You might want to send in an estimated tax payment if you’re filing an extension just to make sure you don't end up paying more than you need to.
Myth 4: Social Security benefits aren’t taxed.
Up to 85% of your Social Security benefit could be taxable under current law. The Social Security Administration’s website states that benefits usually aren’t taxed unless you have “substantial income in addition to your benefits”. They must have a different definition of “substantial” than I do because individual and joint filers could start paying taxes on their benefits at $25,000 and $32,000 in “combined income” respectively.
To learn more about our company - and find out how we are different from other financial advisors - call (210) 587-6433 or visit www.VannoyAdvisoryGroup.com.
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