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Set your financial goals for the new year

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Posted: Monday, December 24, 2012 12:22 am

FAIRBANKS — The end of the year is looming. Even though you are probably knee deep in Christmas wrapping paper, you should be thinking of financial steps to make next year a little easier.

Here are eight things you should do before the end of the year.

• Charity. Whether you donate money, stocks or excess goods, now is the time to do it. Charitable donations are a good way to increase your itemized deductions for income tax purposes and to help those causes you believe in.

Money is always a great contribution for charities. But remember that it must be a qualified nonprofit organization to be able to deduct the contribution.

If you are interested in getting rid of excess goods, donate clothing or other items you don’t use to your favorite charity. It is a great tax deduction. Make sure you keep your receipts.

• Consider setting up an automatic savings plan. Why not get a head start on your New Year’s resolutions? Start small, $50 per month, then raise it in six months. You will be saving money without thinking about it. If you already have one, raise the monthly contributions by $100.

• Start getting your tax documents together. Charitable donations, work-related expenses, brokerage account statements and medical receipts are examples of things you can gather to get a head start on taxes.

• Shred unnecessary paperwork. As you are gathering tax documents, start throwing away what you don’t need. Much of the paperwork you have can be purged once per year. If your December investment statements summarize the year’s activity, you can shred the statements for the previous 11 months. Any bills, credit card statements and receipts that you are not using as supporting documentation for your taxes can go. 

According to the IRS, you should keep your tax records for “the period of time during which you can amend your tax return to claim a credit or refund, or that the IRS can assess more tax.” Seven years should do the trick for most tax documents, such as returns and any supporting documentation, like canceled checks, receipts or credit card statements.

The one exception is records supporting capital improvements to real estate and the HUD 1 statements for real estate purchase. These should be kept until the property is sold. Identity theft is on the rise, so always remember to shred documents before discarding them.

• Check your score. The end of December is the perfect time to check your credit score to know what challenges await you in the new year. You are entitled to one free credit report from the three major credit bureaus. Go to creditreport.com which is a site established by the Federal Trade Commission to assist consumers in accessing their free credit report.

I advise people to get one free report from one of the bureaus, work on improving the report, and in three months, get a free report from the second bureau. That way you can monitor changes. Don’t fall for any sneaky sales pitches on credit reports — as I often tell folks, freecreditreport.com isn’t free.

• Take a look at what mistakes and accomplishments you have made during the past year. Consider your financial and money management activities throughout the year. What would you change about how you spent or saved your money? What is hanging in your house that still has price tags on it because it has never been used? Recognizing mistakes will help keep you from repeating them.

• Set financial goals. Whether it’s rebuilding a depleted savings account, getting out of debt or buying a new car, it’s important to go through a goal-planning exercise and identify your short-, mid- and long-term goals. You only reach your goals when you take a good look at what you want to accomplish.

Roxie Rodgers Dinstel is a professor of extension on the Tanana District Extension Faculty. Questions or column requests can be emailed to her at rrdinstel@alaska.edu or by calling 474-2426. The Cooperative Extension Service is part of the University of Alaska Fairbanks, working in cooperation with the U.S. Department of Agriculture.

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