5 actions to help financial fitness in the New Year

2015 is almost behind us, and we are heading to 2016. New Year is a fresh way to start. This is truly the time to think and commit to some well thought-out New Year resolutions. Perhaps, you already considered resolutions regarding your family, your physical fitness, and your career. However, have you thought about what changes you would like to make for your financial life? If not, here is something to consider. The actions listed below should help you define your financial fitness resolutions. Read on!   

Prepare yourself to move into your “Dream Home”

Moving into the “dream home” is an important financial goal for many young families. Are you one among them? Is 2016 the year for you to purchase your dream home? If it is, it is important to know if you are indeed “Ready” for the move. In other words, you would want to know:

  • If you can really afford the home
  • If your “dream home” purchase fits with your other financial goals
  • If you have tax consequences when you buy the home

There is no better time than now to do such homework and be on top of your game. Be prepared and get this understanding from what stands between you and your dream home.

Save on taxes when you pay for your child’s college education

Tax law allows us to take tax deductions if we have dependents. Furthermore, the tax code allows certain tax credits when parents fund their child’s college education. So, if you have dependents and pay for their college education, you should be expecting some reprieve in the way of tax savings, right? The sad part is: not in all situations!

Taxpayers are required to calculate tax liability in two parallel systems. 1) The regular tax system and 2) Alternative Minimum Tax (a.k.a. AMT) system and pay whichever tax is higher. Unfortunately, tax liability in the AMT system is higher for many young families with children. If you are one of those unlucky ones and exposed to AMT, you may be missing out on tax savings offered specifically to families with children and families with children in college. To understand this better, and to potentially utilize a strategy to reduce your family’s overall tax liability, read one of my older posts on the subject: Missing on education tax credits because of high income and AMT?

Decide on money stuck in an ex-employer’s qualified plan

If you are a professional in your mid-career or approaching retirement, it is likely that you have changed jobs in the past. Moreover, you may have left your qualified retirement funds in your ex-employer’s plan. Have you? This could be due to not knowing what your options are, or due to lacking time, or even due to pure procrastination. Whatever be the reason, this money may not be working for you the way you would like it to. Now is the time to consider various options you have and commit to an action.

You may want to read one of my earlier posts Retirement money in ex-employer’s plan? Here is what you need to know. This post could act as a starting point and help you analyze options available to you.

Make informed decisions about leveraging debt

Taking a loan or acquiring debt is not always bad. It is one sure way to leverage borrowed funds to achieve your financial goals. For example, you might consider to borrow money for a new car, for your child’s college education, for your new home, or to make improvements in your existing home. All these are legitimate needs for a young family with children. So, it is important to take advantage of debt in order to achieve life’s financial goals. However, it is equally important to be careful and apply due diligence when acquiring such debt.

 My post, what you need to know when you acquire debt, provides a checklist of questions you should ask yourself before considering a loan. Perhaps, this post will help you to make an informed decision.

Educate yourself on how assets are passed to heirs

So, what happens to my hard-earned assets when I pass away? How are they distributed and whom are they distributed to? If you have worked hard and accumulated assets during your lifetime, it is indeed very logical to want to know answers to these questions.

In fact, many assets such as 401(K) and IRA accounts, Bank Checking/Saving accounts, Investment accounts, Life Insurance policies and annuities can be distributed without a Will. For assets such as Real Estate, you may want to specify distribution rules in your Will. If you have more complex Estate or want to keep your Estate distribution private, you may want to consider setting up a “Revocable Living Trust (a.k.a. RLT) for your properties. My post “How are my assets distributed upon my death” addresses these concerns and discusses various options you have.


So, what do you think? Ready to embrace the New Year with a commitment to be fit financially? Don’t lose time. Act now and consider taking the above actions, one at a time. If you need additional help or guidance, please feel free to Schedule an appointment with me. I will be more than glad to advise.

The post 5 actions to help financial fitness in the New Year appeared first on Unique Financial Advisors.

About the author

Vid Ponnapalli, MS, CFP®, MPAS®,CRPC®

I am a Fee-only financial advisor dedicated to working with individuals and families that are keen or organizing their financial life. I believe today’s financial planning need is under-served by traditional financial planning methods, mainly due to minimum income or net worth levels requirements. My goal is to contribute and change this paradigm. So, after a 20+ years career in financial services industry, I launched Unique Financial Advisors in 2014. I am eager to guide you through life’s financial decisions!

I am a CERTIFIED FINANCIAL PLANNER™ practitioner with an MS in Personal Financial Planning. I hold Master Planner Advanced Studies (MPAS®) and Chartered Retirement Planning Counselor (CRPC®) designations. I am a current active member of:

NAPFA (country's leading professional association of Fee-Only financial advisors)
FPA ( Financial Planning Association)
XYPN (A Financial Planners network focused on Generation X and Generation Y clients)

“My Mission is to help you achieve financial security by providing Fee-Only Financial Planning services with a relentless focus on Personal Attention and Trust.”

1. Fee-Only: I do not accept sales commissions; I do not sell financial products such as Investments and insurance. I work solely for you!

2. Personal Attention: I take pride on providing personal attention. I take the time to answer your questions and explain matters in simple, clear terms.

3. Trust: I strive for ethical long term relationships. Your peace of mind and exceptional client service are at the forefront of my agenda.

My wonderful wife, Maha and I live in Holmdel, NJ. Our three young boys are on their path to settling down in life. When I am not working on Financial Planning, I enjoy hiking, skiing, and spending time with family.

To learn more about me and my services, please schedule a free consultation TODAY!

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