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Saving Money: 10 Major Ways To Increase Your Nest Egg
GROW YOUR NEST EGG SLOWLY
10 tips in 10 days to see it grow in 2013
1. Prepare a Financial Plan
2. Save Your Income
3. Cut Your Mortgage Costs
4. Cut Your Consumer Debt
5. Cut Your Credit Card Costs
6. Cut Your Bank Fees
7. Fine Tune Your Insurance Coverage
8. Cut Your Utility Costs
9. Cut Your Phone Bills
10. Forgo One Big Expense Per Year
DAY 3: Cut Your Mortgage Costs
Consider paying down your mortgage. For most people, paying down a mortgage is an effective way of saving and increasing net worth. Decide that you will pay $100 or $200 per month or more in mortgage principal, and do it faithfully.
Consider refinancing your mortgage. See if you can save money by refinancing your mortgage. Go through the calculations and see whether the reduction in your monthly payments would be worth the costs involved with refinancing. The general rule is that a reduction of at least two points will make it worthwhile to refinance, if you intend to stay in the house for at least five years.
How Does Refinancing Affect Your Tax Situation?
With a lower interest rate on your home loan, you will have less interest to deduct on your income tax return. That, of course, may increase your tax payments and decrease the total savings you might obtain from a new, lower-interest mortgage.
Interest (points) paid up front for refinancing must be deducted over the life of the loan, not in the year you refinance, unless the loan is for home improvements. This means that if you paid a certain number of points, you would have to spread the tax deduction for those points over the life of the loan. If, however, the refinancing is for home improvements (or a portion of the loan is for this purpose) you may be able to deduct the points (or a portion of the points) under certain circumstances.
If you are thinking about refinancing your mortgage, you might want to consider other types of mortgages. For example, you might want to look into a 15-year, fixed-rate mortgage. In this plan, your mortgage payments are somewhat higher than a longer-term loan, but you pay substantially less interest over the life of the loan and build equity more quickly. Of course, this also means you have less interest to deduct on your income tax return.
AABS can provide a financial guide with these 10 tips for making sure that more of your money is slated for saving and investment. More important, it provides you with links to other Financial Guides that help you implement these tips and maximize the ultimate return.
Call Melissa at 919-303-3345 for more information on how we can help.
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