Financial Security

Buying now and paying later. Paying often takes longer than we anticipate. The next thing you know, everybody, but you, has been paid and you are one paycheck away from pushing a grocery cart. If only we took the time to budget.
You can begin saving money with money markets and CD accounts. The disadvantages to money markets and CD accounts are that they offer no tax advantages and the interest rates are poor. Plus, you must agree to tie your money up for a certain period of time without being able to access it. In the event of an emergency monies can be accessed, but there will be a penalty incurred.
For a single person who wants to put away extra money, one possibility is to increase your tax exemptions by one which will free up additional dollars per paycheck by a small amount. These monies can be shifted to a qualified savings plan, such as an IRA or TSA account (educators/non-profit organizations). Before anyone attempts to make changes to your W4 please contact a tax consultant who can assess your tax liability. It is important to have a sound strategy.
The path to financial security that is right for one may not be right for you. One avenue of approach may be an Individual Retirement Account (IRA) which costs about $25 dollars to open. Please refer to IRS publication #501. The IRA has a two-fold advantage; 1) it possibly decreases the personal tax liability depending on the amount of money you make annually and, 2) it acts as a retirement vehicle that will help supplement monies social security may not be able to accommodate. An IRA could also act as a disability supplement. If you are disabled these are monies you can access. In order to access these monies a penalty will be incurred. One type of penalty is imposed by the account trustee or the overseeing entity. An additional penalty is imposed by the state and federal government if you are not beyond the age 59 and a half. Married couples have access to spousal or individual IRAs.
You can get a spousal IRA if one individual is not working. Before doing so, it is important to consult your tax advisor/consultant.
With life insurance, the cash value that accumulates is also money you have access to because of the loan prevision. It is also a possible tax deterrent because as of present, loans are not taxable. These monies can be used for retirement purposes, or anything that will pull someone in peril out of peril. It is important to remember that the monies you have access to are attributed to the loan provision. As part of the loan prevision, any monies due upon demise will reduce the death benefit.
Taking equity is another possibility, but take a couple of things in consideration. Mortgage interest has tax savings, but on the other hand it’s money that’s spent. Instead of digging ourselves out of debt, we sometimes dig ourselves in a little deeper because of interest rate fluctuations. One way to help ease the overbearing interest rate is the bi-weekly mortgage payments, which has been around for more than 40 years. This is a more efficient way of paying your mortgage, because you are consistently bombarding the account with revenue. You are continually making payments which causes the loan to be re-evaluated and reduces the amount of interest paid to the lender. Equity has a tax advantage because it is a write off. It provides greater gain in the end because not only do you consolidate your debt, but rapidly retiring the debt created. Bi-weekly can save you anywhere from $40K to $150K over the period of the loan.
As earlier indicated all individual situations are different. Key factors are short- and long-term goals.

For additional information you can contact a Financial International representative at (213) 487-0587 ext. 101.