How Much Does A Formula 1 Driver Get Paid 5 Stupid Ways to Lose Money to Those You Dislike and Simple Solutions to Stop it From Happening

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5 Stupid Ways to Lose Money to Those You Dislike and Simple Solutions to Stop it From Happening

1. NOT TAKING ADVANTAGE OF TAX DEDUCTIONS – Taxes are the biggest expense any of us have, and the problem is likely to get worse. Tax laws are complex things that change every year. While most people who are employed and have a few bank statements and / or commercial accounts can prepare their taxes with one of the many tax software packages on the market, those who have a complex return that must fill out the “Letter”. Schedules” (Schedules A, B, C, D, E etc.) in depth, or depreciation/amortization items should always be used by a tax pro.

SOLUTION: Have a tax professional do your return after so many years, even if you don’t want to. If you missed something, it could amount to a one-time cost in savings over the years. For those who receive regular property tax assessments, do you file appeals when appropriate? Here in Allegheny County, where Pittsburgh is located, their assessment method involves taking a front view of the property and walking the area that has already been recorded. Recently the mother of a new customer had a river that runs through her property tested. When his son (my client) brought this to the appeals board, the tax was lowered without question.

2. NOT OWNING OR CHANGING YOUR LIFE INSURANCE INFORMATION WHEN IT IS APPLICABLE.

John and Mary divorced three years ago. John and Mary can’t stand each other, the mere mention of the other’s name causes bile to flow from the other’s throat. Last year John remarried Linda. John and Linda are very much in love. Today, John died in a car accident on the highway. Today Mary is now a multi-millionaire thanks to John, and Linda is stuck paying the last big bill on joint bank and investment accounts? Why did this happen? John didn’t bother to notify his insurance agent and his HR person at work of the big change in his life, and fill out the paperwork changing the beneficiary from Mary to Linda.

I know first hand this happens, not only because I am an insurance worker, but also because I served as the Vice President of my volunteer fire company for 3 years, and the “veep” job included keeping the information of the insurance beneficiaries. During my time as VP, a member died of a fire-related death, one of the many things the PA Government did when they came down to lead us through the Death Task Force was to order a drawer and file of the members. are sealed until further notice. No new information can be added or removed from ANY file in the drawer until I am told otherwise. After access is allowed again, many members quickly remember the changes that need to be made. Thank God nothing else happened at that time

SOLUTION: Check the beneficiary information on your life insurance policies regularly but not less than every two years or when there are major life changes including marriage, divorce, birth of children etc. A special note: if you leave money to the children, someone will have to be the custodian of the money as the court system does not usually release hundreds or thousands of dollars for the children to use as they see fit. If you do not name a person of your choice, the court will appoint a guardian who may or may not be the person you would have chosen. This may or may not be the person you have chosen for your child’s day-to-day care.

3. NOT OBTAINING OR CHANGING BENEFICIARY INFORMATION ON YOUR IRAS

Insurance policies and IRAs have a very important point in common, they are affected by laws outside of estate law and probate processes in many cases. I mean most cases because if you have cash value life insurance (permanent versus term insurance) its value can make you eligible to pay federal estate taxes if your estate is large enough. It is NOT a good thing to happen to you. IRA funds may be subject to estate law if you name your estate as a beneficiary instead of an individual. Although it won’t pay you anything if you die for not naming a beneficiary, it could cost your loved ones millions. The reason is that IRAs inherited by someone can benefit from something called an “IRA stretch.”

Here’s the Cliff’s Notes version of Stretch. Let’s say that when you die you are at the age where you must take Reduced Required Distributions (RMDs), which means you are over age 70 1/2. Let’s also say you leave your IRA to your 35-year-old son or daughter. In inheriting an IRA for your son or daughter, if they are wise, go to Halas Consulting to learn the best way to protect their new wealth. The good folks at Halas Consulting can advise your son or daughter to set up a Beneficiary IRA. Basically what happens when ownership is effectively transferred, your son or daughter must continue to take RMDs, but they do so based on their younger age and not your older age. This means that less is allocated to be taxed, if the IRA is a traditional IRA and not a Roth IRA that may never be taxed. If they also ask Halas Consulting to manage the money and based on the right asset allocation model, that money can grow to be very large (we’re talking millions here) with a tax-advantaged basis and a small cash flow. Every year, until your child hits about half a century, to satisfy the RMD. This is a good thing.

HOWEVER (as long as you knew it was coming), if the IRA is terminated or improperly transferred the rollover is FOREVER lost. What if the reason this happened was because of bad counsel? In many cases the IRS says “tough beans,” there are many Private Letter Rulings (PLRs) by people who have claimed this and lost the PLR. You can sue the person who gave you bad advice but you may lose and you will be subject to legal fees on top of losing your case. For more information on this, I recommend reading the books written by IRA expert Ed Slott. These can be found at bookstores or your local library (yes, that place has all the books they haven’t gotten to since they had to write their college thesis or worse, their senior year of high school)

SOLUTION: Always have a named beneficiary in your IRAs and 401ks. Also, if you want to take the big advantage of the Divide and charge less. Please appoint an adult whom you trust financially to act as a guardian until the child reaches an age where you feel responsible.

4. TRANSFERRING HIGH-VALUE COMPANY MONEY FROM YOUR RETIREMENT PLAN TO AN IRA.

While on the surface this may seem like a good idea, it is not. The reason is a little known rule called “Net Unrealized Appreciation” or NUA. Here is a brief overview of how NUA works. Let’s say you have 500 shares of company stock that you have accumulated during your career. For simplicity let’s say you had an option to buy this stock for $3 per share when the stock was valued at 10 in the late 1990s. At retirement these shares are worth $20. If you transfer these shares to a self-directed IRA when you retire, you will owe income tax on these shares each time they are distributed to your IRA. Your income tax could be much higher if you have a lot of retirement income.

SOLUTION: If you effectively take the NUA, you will sell the stock and withdraw the money to a non-qualified brokerage account (non-IRA). After doing this you will pay income tax at $7 per share, the amount of the difference between what you paid for the stock ($3) and the value of the stock at the time you exercised your purchase option ($10). The difference between the stock’s purchase price ($10), and what it’s worth now ($20), or $10 per share, will be taxed at the current capital gains rate of 15% max (higher income tax rate doubles that). . After the stocks are sold and removed from the IRA, transfer the remainder to an IRA to gain maximum flexibility and options. The capital gains on the stock you just sold are no longer subject to taxes, only the interest and capital gains on this cost basis will be taxed if you invest the money held in a non-existent brokerage account. To manage your taxes effectively and avoid high expenses, a well-researched growth ETF can be a good choice here. Just make sure it fits your asset allocation model.

5. DON’T CHECK YOUR CREDIT

Due to the recent financial meltdown, debt and liabilities have become four-letter words. But while credit CAN be bad if used improperly, it can save lives and allow you to buy many necessities that you couldn’t pay for in advance because of their cost. Those who pay attention to their credit scores and research what makes a person’s score look better and what different credit agencies require pay less in interest on cars, houses, home loans, and credit cards. Not to be a brag, but several months ago when it seemed like doom and gloom would last forever, I was sitting in my kitchen opening email and some of the applications were ready to lend me over $50k in unsecured cash. for my good credit, and these TV people were being foreclosed on for less than that.

Another area where good credit will help you with lower payments is insurance. ALL insurance companies use something called an “insurance score” when determining your insurance score. For example, when you buy auto insurance, it makes sense that insurance companies will check your driving and driving record, but what the heck is my credit score supposed to do and what kind of driver am I? Can I not be wise with money but be a good citizen on the road? Well, according to research done by insurance companies, no you can’t. Your insurance points are basically a part of how you live your life, and those who live a responsible life get to save money. One of those areas is money and how responsible you are with it. Likewise, having a DUI on your driving record can affect your premiums for your home, health, and life insurance, as well as your car insurance.

SOLUTION- You get a free credit report every year at annualcreditreport.com take advantage of it. I would recommend that you annually or annually spend about $40 and get a combined credit report, or “triple merge” from all three companies. This combined report will give you more information than a freebie, and it’s what banks and mortgage brokers use to decide who gets a loan (at least they did until the government stepped in and told them they had to lend to deadbeats after all. The whole economy is in shambles. But I digress). Go through this process with a fine-toothed comb. One year I had a credit card account that I closed years ago and the bank failed to report to the credit bureaus as closed. This is your “face” and reputation at stake, DON’T know what it says.

Well here are five things you can work on to get you started, if I think of more ways I will write a sequel to this article. In the meantime, take care of your money, and it will take care of you.

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