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The End to Beginning

I can’t believe how fast time flies.  Here we are at the end of another year, which coincides for a brief moment with the beginning of the New Year.  As such it is time to take stock of where we are financially.


  • If you’ve some capital gains in your portfolio, look for some capital losses to offset those gains and remove them from income taxation. You may deduct an additional $3,000 in losses (above your capital gains) from your ordinary income.
  • Americans are addicted to income tax refunds. Like other addictions, you need to control your impulse to loan Uncle Sam money for the year while not charging him interest.  Seriously, if you have a substantial refund coming each year, reduce your withholdings by filing a revised W-4 with your employer.  If you’ve changed your family structure; divorce, marriage, or children, a tax estimator like this one from the IRS: may help.
  • On the other hand, if you’ve underpaid your taxes and think you’ll owe taxes, prepay additional taxes to avoid being charged a penalty. The final date for prepayment is January 15, 2016.
  • If your income is dropping next year, move as many deductions as you can legally move to this year. On the other hand, if you expect next year’s income to exceed this years, you will benefit from moving deductions to next year.
  • If you have a flexible spending plan for child care and/or medical care expenses and have over $500 in these plans that is not carried forward by your employer, spend the balance on qualified expenses. For a list of allowable expenses read
  • If a favorite charity accepts gifts of appreciated securities, such as stocks, donate some from those which have appreciated. You receive the entire deduction for the full market value on the day of the gift and you do not have to pay taxes on the gains.  If your favorite charity does not accept the gift of securities, set up a donor advised fund which allows you to deduct the gift and you can decide on the beneficiary later.  Charitable gifts from an IRA of those 70-1/2, in lieu of taking distributions from the IRA, is no longer allowed under most cases.


  • Be cautions when buying mutual funds in December. Many funds make their annual distributions to shareholders in December and this flow of money is taxable in the year they are paid.  Thus, some of the money you’ve already been taxed on will be taxed again and the value of the mutual fund will fall by the amount of the distribution.
  • Rebalance your portfolio to assure that it reflects the diversification you want. You may have to sell some securities that have appreciated (taxable event) while others may have gone down in value.  This forces you, in a small way, to sell high and buy low.  Proper diversification is important for long-run investment success, but rebalancing too often can lead to greater costs of investing which removes some of the benefits of rebalancing.
  • Calculate your net worth to see if the difference between you assets and debts is greater than it was the year before. If you did not do this last year, you will not know.  Yet doing this year after year is a great way to keep score in your financial life, as we want to see your net worth grow by at least the rate of inflation each year.
  • Review your savings. Are you saving enough money for your goals; retirement, education, second home, vacation, and etc.?  This year the market has been relatively flat for the year with the SP500 standing at 2058 in January and 2052 at the time of this writing. If this indicates that you need to add to savings to reach your goals, add to your savings.


  • Which of your debts have the greatest interest rate (APR)? Add to your monthly payment to the one with the greatest APR until it is paid off. Then, pay more to the next highest APR loan.  Keep doing this until all your loans are repaid with the exception of, possibly, your mortgage.  Yet even a modest mortgage interest rate represents money that you’re paying out instead of taking in.   In the process do NOT skip payments on any loan for it will reduce your credit rating.
  • If you’ve many debts with some at high rates, it may pay to consolidate them into a home equity loan since rates are relatively low. You must have home equity to do this. (That is, you must be a home owner with a home worth substantially more than the mortgage.)  In this way, the interest you pay may be reduced and is tax deductible, in most cases.


Much of the above is common sense and has been repeated in other weekly Tips.  It is good, however, to ask ourselves the question of what we can do differently to improve our lives, beginning with our finances. That said, we might find that we are successful in our financial lives but lacking in our personal lives.  Money is not everything, yet it is a long way ahead of what comes after it.  Be a good shepherd of your money and remember to be grateful for the gifts you’ve been given. The writer William Arthur Ward once said, “Feeling gratitude and not expressing it is like wrapping a present and not giving it.”  So, wrap your presents to give to others.  As a gift to yourself, freely give your thanks for those you love and believe that they love you.  Be grateful for your financial success and celebrate the diversity of our great nation.

– Rob Weagley