The season for holiday spending may be in high gear, but you can get your finances in order for next year with these smart ideas―By Betsy Wiesendanger
It's not too late to revamp your finances for this year and beyond. Now is the perfect time to think about how much you spend and find ways to save money next year. Plus, with tax time just around the corner, you'll want to get your records in order to maximize your deductions. Use these seven strategies, and you may find yourself with just a little extra money in your savings account.
Look back at this year's statements (that's why you save them, right?) and write down what you spend on a regular basis. If you can, cut recurring expenses or services that you really don't use. Are all of those extra cable TV channels really worth the extra $15 a month? Do you really need a cell phone and a landline? Can you save money by getting phone, cable and Internet service from the same provider?
Contributing to a 401(k) is the best way to save for retirement and cut your taxes. The maximum you can contribute to your 401(k) (an employer-sponsored plan) is $16,500 this year, $22,000 if you're 50 or over. If you're below the maximum, increase your payroll deductions as much as you can afford to by going to your plan's web site or contacting your human-resources department. An individual retirement account (IRA) is another way to save using pretax dollars. You can contribute up to $5,000 each year, $6,000 if you're 50 or over. Opening an IRA can also help lower your tax payment, and you have until April 15 to do so.
Take a good look at everything cluttering up your house. If you haven't used an item in a year, donate it to charity. To find a group that will accept it, try JustGive's web site, www.justgive.org. Get a receipt for the fair market value of the goods―usually 25 percent of the original purchase price, depending on what condition the item is in. If you itemize your deductions on your taxes, you can deduct this amount from your taxable income.
Costs such as printing résumés, job counseling and travel to interviews are tax deductible if they exceed 2 percent of your adjusted gross income (your income minus tax deductions) and if you itemize.
After the holidays, stock up on half-price decorations and gift wrap, plus candles, turtleneck sweaters and other classic gifts.
Open enrollment at most companies runs November through December―if you've been thinking of making a switch, do it now. Even if you're happy with your current plan, look it over carefully. The benefits, co-payments and deductibles in many policies change annually. Ask your primary-care physician which other plans she participates in. You may be better off with another provider.
Ask your insurance agent for a free appraisal. If housing prices in your area have risen quickly or you've remodeled, you're
probably underinsured, so a claim will cost you more out of pocket, says Noel Edsall, director of product development for
MetLife Auto & Home.