Make Financial Moves that Pay Off Now and in the Future….

Sept. 3, 2010 - PRLog -- Andover, Massachusetts September 3rd, 2010 –  When it comes to financial advice there are literally hundreds of suggestions, options, and tips that you hear from a variety of sources. While many are good ideas the long term payoffs are not usually guaranteed. During these tough times it’s important to make decisions that you know the outcome of. The following is a list of moves you can make today that will pay off in the future…

1.Max out your retirement vehicles. While it may seem hard to do now during these tough times, maxing out your retirement options when you are young and continuing to do so over the entire time of your working life will lead to huge benefits in the future. The two most common retirement options nowadays are 401(k)’s and Roth IRA’s.
 a.401(k) plans were created to give workers a way of saving for their retirement through their place of work without the costly benefits that a traditional pension used to offer. Companies large and small have embraced 401(k)’s as an affordable and easy way to attract talented employees as well as helping their employees save for the future. Contributions are done pre-tax which means your effective tax bill goes down the more you contribute as each contribution is taken out of your paycheck before taxes are calculated. Remember, the max contribution this year is $16,500 and if you can’t afford to contribute the entire amount, make sure you at least contribute the amount needed to collect the matching contribution from your employer if offered.
  b.Roth IRA’s are relatively new investment vehicles and are designed to give a retirement option to people who are not able to enroll in a 401(k) plan. Unlike 401(k)’s, Roth IRA’s are built up using post tax earnings. This means the money you enroll in it has already been taxed. While this does not provide any tax relief right now, it does mean that when you turn 59 ½ you can cash out your entire IRA without having to pay any taxes on this amount. This is a huge benefit as typically you go up in the tax bracket as you get older and earn more money. The yearly limit on Roth IRA’s is $5,000 for Americans younger than 50 and $6,000 for Americans older than 50.

2.Pay off your Credit Card Debt. While this is an obvious one that is talked about often in Personal Finance circles, the message that credit card debt is extremely costly never gets old. Holding any balance on your card each month is costing you and your family dearly over the long term. Focus on using credit cards like a monthly debit card; always pay off the bill in full each month. If used correctly, credit cards are an easy and convenient way to borrow money for less than 30 days for free. As long as you pay back the balance in full each month a credit card should not cost you a cent (unless you have yearly fees, maintenance fees, etc.). If you do carry a balance each month, every purchase you make will cost you more and it will become harder and harder to become debt free the longer you wait and the larger your balance becomes.

3.Reevaluate your bank and financial planner. While having professional advice is a key component of any sound financial plan for your family it is important to realize that other motives besides your family’s future could be at play. Many financial planners and bank representatives are paid partly or entirely on commission. This means that they could be advising you to take steps that will certainly enrich their lives but not necessarily yours. This has been a huge topic recently as the market crash of 2008 exposed many risky decisions and plans that financial planners recommended to clients. The end result was a very rich financial planner and a very poor American family. You can find professionals that work on an hourly pay basis so do your best to make sure that the person you are trusting with your financial future has your best interests in mind.

4.Minimize the size of your yearly tax refund. Receiving your tax refund check and splurging on consumer goods has almost become an American tradition recently. Many families actually budget a refund into their yearly spending plan and typically do so to purchase luxury goods that not needed or excessive. While splurging once in a while is great, doing so when you have credit card debt is not only dumb but it is also putting you deeper and deeper into debt. Whenever you receive a refund check from the IRS it means that you paid too much in taxes over the previous year. This means you were giving the government an interest free loan for a year only to receive the excess back without interest. What every family should be trying to do is make the tax refund as small as possible without having to owe the IRS money.

5.Create a Budget to find areas of waste. While budgets are typically the first thing on the list of Personal Finance to do lists, I would like to focus on their use as a way to find waste in your spending habits. Creating a budget and analyzing past spending patterns is a great way to find areas where you wasting your money. If you notice that 10% of your monthly net pay is being spent on lunch at work, maybe it is time to start making your own lunch and saving those 10% in a Roth IRA or other investment. Remember, just creating a budget is the easy part. Actually taking the steps necessary to cut your expenses is the hard part and will require significant sacrifices on your part.

Preferred Financial Services is a debt reduction firm certified by the CFC (Center for Financial Certifications) and accredited by U.S.O.B.A. (United States Organizations for Bankruptcy Alternatives). Headquartered in Andover, Massachusetts, Preferred Financial Services has been a leader in the debt reduction industry since 2003. Preferred Financial Services has acquired some of the best experience in the industry over the past 7 years. In 2009 alone Preferred Financial Services reduced over $16.5 million worth of consumer debt for just $6.4 million, for a savings of about 60%- and over 2,900 accounts were settled on behalf of their clients.


For more information, please visit www.pfsdebtrelief.com or follow us on our blog at www.pfsdebtrelief.com/blog/ .

Contact:
Stephan Tavernini
Marketing Coordinator
Certified IAPDA Debt Arbitrator
Preferred Financial Services
stavernini@pfs1.net

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Preferred Financial Services is the leading voice in the debt settlement industry. PFS has worked with hundreds of creditors to help negotiate realistic goals for those drowning credit card debt.