Month : August 2016

Investing

Can’t Contribute More to Your IRA? Consider an HSA Instead

IRAIf you find that you are curious about the benefits of opening an HSA, or health savings account, you are not alone. The HSA is one of the more popular new health care management tools on the market today. It also offers several other attractive benefits beyond the simple ability to choose how, where, when and with whom to spend your health care dollars. One of these benefits is the flexibility of the HSA to function as a savings and investment account. For some people who are close to maximizing their annual contributions to an IRA (individual retirement account), opening an HSA account begins to look like a particularly attractive retirement planning option. Before you decide to open an HSA as an alternate savings vehicle, however, it is important to understand how these unique accounts function.

The HSA Defined

The health savings account is a relatively new entrant into the greater health care arena. For employers, the HSA is a way to help employees take charge of their health care choices and also to save money on insurance-related overhead expenses. Opening an HSA allows employees to plan for future unknowns in health care and life. The formal definition of an HSA according to the Internal Revenue Service (IRS) is “a tax-exempt custodial account that you set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur.” The trustee is an IRS-approved individual who has earned the credentials to allow him or her to manage financial accounts on behalf of others.

How the HSA Works

Learning what is a health savings account and what isn’t, who is eligible to open an HSA and how the funds can be used can pave the way towards deciding if this type of investment vehicle is the right choice for your needs.

  • HDHI. The HSA is designed to work in a complementary way with the high-deductible health insurance (HDHI) plan. Only participants in an HDHI are eligible to open an HSA as well.
  • Tax-free contributions. The funds deposited into an HSA are tax-free until a distribution is taken. At that time the distribution is taxed like ordinary income.
  • HSAs and health care costs. While there are undeniable tax and savings advantages to opening an HSA for qualified participants, it is important to remember that the primary purpose for the HSA in the eyes of the IRS is for managing health care expenses.
  • Penalties for withdrawals. As with IRAs and other similar retirement-focused investment accounts, a 10 percent penalty will be assessed for any non-health care related withdrawals made before the age of 65.
  • Income reduction. Because contributions to an HSA account are not considered income, maximizing contributions can help reduce annual income for both federal and state income tax purposes.
  • HSA funds can be used for non-traditional health care expenses. In addition to qualified medical expenses, the funds deposited into an HSA account can also be used for vision, dental, alternative and other types of medical care, including Medicare expenses.
  • HSA funds can be directed towards other purposes. While there is a 10 percent penalty for withdrawal before age 65, and withdrawals are taxed in the year of withdrawal regardless of the participant’s age, there is no restriction on how withdrawn funds can be directed, making it a handy account to turn to in times of crisis or the simple unexpected.
  • Contribution limits. The IRS sets the contribution limits annually. These limits are typically based on the cost of each individual’s annual insurance coverage expenses and are rounded up to the nearest $50. Over-contribution will trigger an automatic six percent financial penalty plus normal assessed income taxes on the amount of over-contribution.
  • Contribution cutoff dates. The cutoff for contributing to an HSA account in any tax year is April 15.
  • Tax forms. IRS Form 8889 is the official tax form that is required for HSA account holders.

Retirement Planning

One of the single best benefits of choosing to open an HSA as part of your investment planning is that all accrued funds can be used to pay long-term health care and living expenses once you reach age 65. With this additional benefit, it is easy to see why the HSA has become such a popular investment vehicle. 

Minolta DSCAbout the Author: Wiley Long has been helping individuals and families get coverage and save money for over 20 years. He owns HSA for America.

Image By http://www.123rf.com/photo_10073848_charismatic-businessman-saving-money-in-a-piggy-bank.html

 

Mind Over Money

Who Is A Financial Freedom Guerrilla?

Do you want to live a life that doesn’t involve having to worry about how your next bill is going be paid?

Do you want to do what you want to do, when you want to do it without having to worry about how you’re going to pay for it?

Do you want to live your life doing what makes you happy and making money doing it?

A Financial Freedom Guerrilla is someone that says yes to all of those questions, and wants to fight for it.

In order to get that life you have to want it more than anything else! You have to know that what you’re doing today is setting up the rest of your life. You need to fight for what you want! It’s not enough to say what you’re going to do, you have to do it!

Become a Financial Freedom Guerrilla and fight for your dreams because you can achieve them and you will! Join me in that fight and I will lead you there. I will give you everything you need to accomplish your goals.

I want you to be a Financial Freedom Guerrilla and I want to see you reach your dreams. We all have them, but most of us lose them as we get older and get content. I say no more! There is no reason, nothing at all, that should stop you from reaching your dreams.

Only you have the power to stop you! I want to help you get over yourself and succeed where you used to fail. Follow me to Financial Freedom! I will lead you there but you have to follow and take action.

Sure, you can just sit there and read what I have to say. And that’s what I used to do. But I came to the realization that sitting down isn’t going to get you anywhere. I want you to stand up, stand up and follow me. If something is stopping you, just ask me for help. If you need more than written words to get you going feel free to get some extra help from me.

Join me in the fight and sign up for weekly updates so you don’t miss anything. Plus, every now and then I’ll give you a chance to win a little something something to help you out.

Fight for what you want because that’s what life is all about…..living your dreams.

What do you want to fight for? Are you going to join me in the fight?

Be sure to tell your friends about the fight by re-tweeting this post and Facebook sharing it

Money Management

What did we do before fuel cards?

No, seriously what did we do before fuel cards for businesses? I’ve run a maintenance and repair company for over 10 years now and wake up with cold sweats thinking of my life before Texaco cards from chooseafuelcard.com.

Before I selected a business account fuel card from ‘choose a fuel card’ I had to:

Sift through hundreds of receipts on a monthly basis; I have over 100 operatives each with their own personal vehicle. As you can imagine, come paperwork time at the end of each week, retrieving valid and accurate receipts from every member of staff was a nightmare, more than a nightmare. Weekly memos went out at the beginning of every week to remind staff they must retain a valid VAT receipt for tax purposes, and yet every week receipts were failed to be collected and returned to the office, meaning my company was losing out in thousands of pounds in company tax returns. With my new fuel card ‘online accounts management’ system I’m now able to track every single transaction carried out by my operatives and claim the VAT back easily with ‘HMRC approved weekly invoices’.

Worry about company credit card bills, constantly. Before the fuel card system was put in place my operatives used company credit cards to pay for their fuel. Not only did this mean I had interest accruing on the monthly bills but often (more than likely over the weekends) staff abused the company credit cards for personal use. Warning after warning, this misuse and misconduct led to all sorts of disciplinary action, which is not what I wanted or needed amongst my generally hard working staff. With the fuel cards in place I receive interest free monthly bills all collected via direct debit. This eliminates any abuse of the system, reduces my outgoings as I’m not paying interest and frees up my time sifting through paperwork by taking the payment via direct debit.

Estimate how much I was spending each month on fuel, by gathering the receipts received from staff and overview of the credit card spending, this (as stated above) never matched up, leaving my monthly forecasts often falling short. This misjudgement in spending could often leave the monthly cash flow short, and the company struggling to pay suppliers, clueless to what the company was actually spending on fuel. With the fuel card account all transactions are recorded online, and not only can you track how much you are spending monthly, you are able to review a breakdown in costs; how much fuel each vehicle consumes.

Deal with national price fluctuations in fuel costs. This was becoming a major concern for me as a business I work nationwide and customers in particular parts of the UK were beginning to wonder why their maintenance costs were much higher than others, and the simple fact is because in some areas the cost to run the business is higher. In the South of England for example, I was paying much more in fuel costs than most other places, this cost had to be absorbed somewhere. With the fuel card in place the regional price fluctuations are eliminated by fixing the monthly prices. This allows me to charge my customers fairly and saves my hundreds of pounds a month.

Deal with general lack of control over the fuel management process; this was by far the worst problem with the fuel management process. I felt like I had no control over my fuel outgoings and cash flow, I had management systems inline for my accounts, for my sales calls and ordering processes but no strict protocol for the fuel bills, best bunded tanks for mass fuel storage, this left me feeling out of control and a victim of unpredictability. The fuel cards have managed to give me back that feeling of control over my finances and prevent any unpredictable and unwanted cash flow dramas. I can see an online overview of my spending, review past spending; match vehicle to vehicle spends and produce monthly invoices for tax approved receipts.

Seriously, what did we do before fuel cards? Lose many nights sleep worry over receipts and credit card bills, that’s what.

Money Management

Getting your Finances Back on Track

Many people have gone through a period of adjustment as their wages continually buy less and less at the supermarket and the running costs of a home and car seem to rise like a well-baked loaf. There are some changes that we can all make which will benefit us immensely. These changes are not drastic, but they are simply removing a luxury or two that we have taken for granted, but barely missed by most people.

Reducing Fuel Bills

The rising cost of fuel is something we all complain about but many of us are reluctant to change the way we use it. If you are guilty of taken the car to the shop that you can walk to and back in ten minutes you are not alone. These little trips may not seem like much, but it is more about the change in mind set that is important.

If you cook food for the family, it is a good idea to make sure everyone eats the same thing, or at least make sure the oven or hob are used at the same time. This used to be the way things were done in the past, which is why people sat around a table as a family more often. Buying fresh food and cooking for the family is not just healthier, but it will cost less than buying pre-prepared food and cooking meals individually.

The greatest problem with fuel these days is the amount of fuel we waste. If you are using just one or two rooms in the home, why bother heating the rest? It is okay to warm the bedrooms for an hour before going to bed, but why leave a radiator on all day and night? If you are worried that the rest of the home is too cold, instead of turning the radiators off, just turn them down a little.

Stop Spending on Credit

This may be difficult for some people, but spending money on paying interest charges is a quick way to a lower standard of living. If you pay the minimum monthly payment on credit cards, catalogues or any credit agreement you have, you will be paying far more for the right to have credit than you often realise. Try paying as much as you can off with each payment and reduce the amount of credit you service. Having more credit does not allow you to do more with money you don’t have, credit will eventually restrict your ability to spend because of the interest you are paying.

Exercise your Right to Claim

There are hundreds of thousands of people claiming money each year. The money they claim is rightfully theirs. If you have ever been mis-sold PPI (Payment Protection Insurance), mis-sold a pension or mis-sold an endowment policy, you should make that claim now. The major banks and lenders have set aside billions to repay customers who were mis-sold PPI and there are hundreds of thousands of people making PPI Claims against their banks every year. This in no way a hand out or a bonus, but money that is rightfully yours because you we mis-sold a product..

Plan Ahead and Save Money

This is one aspect that covers everything in this post and it is probably the most important of all the moves. If you have a plan for your finances, your fuel costs, your grocery shopping and you monitor everything you spend, you will save money in more places than you anticipate. There was an old saying that is very apt in today’s world, watch the pennies and the pounds will take care of themselves.

Book Reviews

Should I Buy This Book? Review: Dating Your Money

DatingYourMoney I will say it’s an interesting book. It kinda scared me off a bit in the beginning by talking about The Secret. But as I read on it really turned into a great book about getting to know yourself and your relationship with money. I really like it because I feel like it gets into the mental aspect of people and money.

The Negative

Most of the beginning of each chapter kept talking about feeling….a little too much. There’s also an included money mood meter which I could not understand at all.

The Positive

It really dives into why you spend and how to change the way you view money. It can really help you out if you spend excessively. There’s also a lot of extra content on the authors site, so I thought that was pretty neat.

Would I Buy It?

No, but it’s a book aimed at the female demographic, so if I was then I would buy it. I did find it good and would recommend it for women out there that have a hard time getting control of their money.

Buy It

Dating Your Money New

Dating Your Money Used

P.S. Some of the links in this post I earn a little bit of money from, in order to pay my bills. But I promise to never intentionally lead you to a bad company and to never let the money affect my opinion.