financial health resolution

Five Steps for Assessing Your Financial Health in the New Year

financial health resolution


Whether you have made financial resolutions for the New Year or not, it is a great time to evaluate your finances as well as your waistline. While thinking about your health, consider your financial health. While making plans and setting goals for the year ahead, make sure you have a financial plan to make those things happen as well. Here are five ways you should be getting a financial check-up for 2016.



Take an honest look at all of your sources of debt and the minimum monthly payments. Remember to include all of your debt obligations – credit cards, student loans, car loans, mortgage, or any other monthly debts. Are you only paying the minimum? Are you taking on more debt every month or in the process of paying down your total outstanding balance? Do you have a plan to address your debt situation?



Americans are not great at saving, but the good news is that many of us are starting to get the picture. Although far off the historical average of over 8%, the savings rate in the United States is up from last year to 5.5%. How are you doing at saving? If you have a plan for saving, stick to it. If this is a place you are falling short, make a plan to turn it around and increase your savings now. Consider having a portion of your pay automatically transferred into a savings account. Try a twelve-month savings challenge such as this one that I did last year.



The New Year is a great time to re-evaluate your budget. Is it still working for you? Where do you need to make adjustments? Is there a certain category where you keep going over budget every month? If so, think about what you can do to get that back in line or where you can make adjustments to other categories to account for higher costs. Simply continuing to go over budget is not a long-term viable solution. Do your New Years resolutions include things like gym memberships, travel, and eating out less often? Update your budget accordingly.



Some people watch their retirement accounts like a hawk and are constantly making trades. I am not one of those people. First, I have a long way to go until I hit retirement age. This is not one of those posts telling you how to retire by 40. Second, I invest my retirement savings with a rather simple long-term philosophy. When you are over twenty years from retirement, put most of your money into the stock market. Spread a little across real estate, money market, and bonds. When you cross over that line and have fewer than twenty years to retirement, slowly start flipping that equation in the other direction to take money out of stocks. I do, however, recommend rebalancing your retirement account every quarter. So, go ahead and do that this month.



Unfortunately, its’s about time to start thinking about filing your income taxes again. The most horrible time of the year, right? Before you start having a tax panic attack, do one simple thing. Make sure that your employer is allocating the proper number of allowances on your W2 for the upcoming year. This will save you a lot of grief next year at this time.

Avoiding Capital Gains Tax When Selling Your Home

capital gains tax sell home


Many home owners are not aware that they may owe capital gains tax on the sale of their home when it comes time to file their federal tax return. With capital gains tax rate reaching up to 20%, this could be an unwelcome surprise. There are ways, however, to avoid paying capital gains tax. Sellers should be careful to note the details of these exclusions.


What Is Capital Gains Tax?

Simply put, the capital gain on the sale of a home is the profit earned on the sale. A more detailed explanation is that the capital gain is the difference between your selling price and your current basis in the home. Your basis is the original purchase price plus expenses plus the cost of capital improvements minus depreciation, casualty loss, and insurance. Unless the seller qualifies for a tax exemption on the sale, he will pay capital gains tax on this amount.


Capital Gain = Selling Price – (Purchase Price+Expenses+Cost of Capital Improvements)-(Depreciation+Casualty Loss+Insurance)


Capital Gains Tax Exclusion

Under certain circumstances, sellers are able to avoid paying some or all of the capital gains tax. Home owners can exclude up to $250,00 of the capital gain if they are single and up to $500,000 of the capital gain if they are a married couple filing their taxes jointly. To qualify for this capital gains tax exclusion they must meet the requirements of three specific exclusion rules.


Rule #1 – The home must be a primary residence.
Rule #2 – You must own the home for at least two years.
Rule #3 – You must live in the home for at least two of the past five years.
Did you sell a home this year? Have you ever been surprised by your tax bill after selling a home in the prior year?