In no particular order, here’s a few interesting things I heard and read recently that I wanted to share:
Tax Changes Are Coming Next Year, but You Can Plan for Them Now (NY Times, by Paul Sullivan)
Since this will be one of the last posts of the calendar year, I thought I would mention a few things that I have been sharing with clients about year-end tax moves. We currently have a major tax bill overhaul in process, and all signs point to changes in the coming year. If the bill passes, here’s some bullet-pointed things to consider doing in 2017 (rather than 2018):
- pay your state tax, local taxes, and your property tax, this year versus next
- accelerate charitable giving this year, versus next
- harvest tax losses now – the ability to choose individual lots may be going away
Regular/annually reviewed items include the review of gains and losses (potentially neutralize the current tax impact), consideration making a tax-free gift of up to $14k per person or to a 529 plan (family member, grandchild, etc.), and possibly deferring income to 2018 (if controllable). With that said, there is still some uncertainty with the pending bill details and the timing of it. I think it is worth preparing for nonetheless. I’ll also note that each situation is unique, but I work with accountants to review each individual scenario. Please inquire for more details.
Poll: Holiday gift spending will leave many in debt for months (USA Today, by Adam Shell)
I was perusing the newspaper (I have an online USA Today subscription) and was shocked when I read this one: 25% of Americans will be paying their post-holiday credit card debt for 6 months or more! WHOA. I mean, I realize the holidays mean a lot to families, but I had no idea how many either 1) didn’t stay within a budget or 2) leveraged themselves to the point where they overspent their bank account. What worries me this holiday season is the “wealth effect”, i.e. with markets hitting record highs – people feel wealthier and tend to overspend. And with interest rates on the rise (the Fed recently raised the Fed rate again!), this means a domino effect of higher rates on things like equity lines of credit and credit card rates. According to bankrate.com, the average credit card interest rate is 16.75% and trending higher with the rate hikes over the past couple years. My advice to folks: don’t spend more than you can afford to pay off next month, and set a spending limit for each person you are shopping for. If you want to take it a step further, feel free to adopt with I do. My family has adopted a Secret Santa gift exchange, and we have a maximum gift limit in place. This makes things much more manageable, and we avoid the New Years Resolution of “pay down credit card debt”.
Everybody Lies (The Guardian, by Seth Stephens-Davidowitz)
I just finished this audio book entitled Everybody Lies – Big Data, New Data, and What the Internet Can Tell Us About Who We Really Are by Seth Stephens-Davidowitz. The above link is to his article summary which serves as a Cliff note version of the book. There was a lot of eye-opening studies done which I found interesting, and you might too…unless you don’t want to know that the world is not as rosy as it may seem (LOL). Bottom line: “big data” tells us so much more about ourselves than we care to admit. Based on years of collected data from people that look up things on the internet (think Google searches), people admit to things that they would not admit anywhere else. Much of this is attributed to the fact that people are not monitored (so they admit more), and no one is humiliating them on the internet (not questioning their curiosities). You’d be surprised to see how often people are not truthful about topics such as religion, abortion, health, and human sexuality. I was looking for some financial-related topics to tie in to my discussion, but only found these: people lie about how much money they make, as well as how much they donate to charity. In general, people consistently give wrong information to make themselves look good. So the next time you hear someone boast about their GPA or how they produce above-average work, make a mental note…there is a good chance they are not being honest!
Enjoy the light reading!