“O'Connor: Fall’s money tasks and Pumpkin SpiceDrano
Every year, when Labor Day rolls around, we bid a sad adieu to summertime at the Funny Money household.
Ha! Who am I kidding? The only long face at our house is on my teen boy, Funny Money Jr. or, as I call him, Li’l Money (’cuz that’s all he leaves us). This is because he senses the imminent end to his summer habit of rousing for breakfast and a brisk video game at the crack of 2 p.m.
Financially, of course, the end of summer is an important time, and not just because of all the money freed up when Mrs. Funny Money, the boy’s long-suffering mother (and my longer-suffering wife), cuts back on her tequila.
It’s important because this season of fresh-picked sweet corn and home-grown tomatoes means not only that winter’s closing in — bringing with it not only ice, snow and Pumpkin Spice Drano — but also the end of the tax year and a host of other financial obligations. Let’s take a random 10 of ’em in their order of occurrence:
1.Summer day camp receipts: Save these, because this is an expense you can write it off on your taxes. You’ll need the name, address and tax ID of the care provider, so forget it if you paid cash to the lady down the street. But not everyone can claim this write-off.
Sleep-away camp doesn’t count, because the IRS knows you’ve already been rewarded enough by getting to dine at restaurants that don’t hand out crayons with the menus. Also, this deduction stops when the kid turns 14 because the IRS also believes it’s absolutely fine for our adolescents to roam unsupervised because they’d never, ever so much as think of trying that leftover Pumpkin Spice Drano.
2.Back to school shopping: Did this catch you by surprise again this year? If so, start saving now, especially if you’re underwriting an expensive college kid or student athlete. It’s also a good time to crank up next year’s vacation savings, too, so that neither of those expenses goes on plastic. Believe it or not, many credit unions still offer vacation club accounts.
3.Educational IRA: Speaking of back to school, consider setting up an educational IRA, or as it’s actually called, a Coverdell Education Savings Account. This allows you to put up to $2,000 a year into an account where the gains grow tax-free until the recipient is 30. The good news is that Coverdell money can be used to pay for any schooling, from kindergarten to defending a doctoral thesis, as well as books, supplies, uniforms, room and board, special education costs and computers.
The bad news is that while your gains aren’t taxed, your contributions aren’t deductible, so this is something to do well before Junior heads off to East Dakota State Normal School. So, if you had a baby this year (hint: look under the sofa cushions) give it some consideration.
4.College renter’s insurance: Speaking of higher education, if you recently dropped Missy off at Southwestern Technical Institute of the Northwest, you probably didn’t buy renter’s insurance for her, but maybe you should. If she’s in campus housing and her laptop goes missing, it’s covered under your homeowners, usually up to some portion of your coverage limit. But if she’s in an apartment, rental house or other non-official housing, you’re out of luck.
Renter’s insurance also offers some liability coverage and, if the place becomes uninhabitable after a covered event, pays for some living expenses. Premiums range between $15 to $30 per month. If you’re paying for renters insurance in on-campus housing, check your homeowners policy and see whether you can cancel the rental coverage.
5.Don’t check your stocks: The market is either up or it’s down or it’s doing nothing, and you don’t need to care. No one knows where stocks will be next month, but we do know that in 20 years they’ll be up. If your investment plan calls for you to be in stocks, rebalance your asset allocation every six months and ignore your portfolio the rest of the year.
If you don’t have a plan, get one. If you bolted from the markets during the meltdown and still are sitting on the sidelines, get with an independent investment adviser who, you hope, will be professional enough to avoid mentioning that the markets hit a record high this year.
6.Refinance debt: Someday the Federal Reserve will hike interest rates by a whopping quarter of a point and rates on loans will eventually move significantly higher. But not yet, so you’ve still got time. But if you’re paying much more than 4 percent on your mortgage, why wait?
Look at any other high-rate debt you’ve got, as well. Credit card issuers are still making generous 0 percent interest balance-transfer offers to folks with good credit, and credit unions are happy to refinance expensive auto loans. You could even take advantage of low home-equity loan rates to pay off private student loans or other debt.
7.The holidays are nigh: Coming sooner than a Fed rate hike are the winter holidays, so consider how you’ll pay for all that. If Santa is broke this year, start a conversation with your family about what priorities you want to set. If Santa is not broke, there’s no reason to put the Yule log and roast beast on a credit card, so start saving.
Also, you can throw out that poinsettia you stuck next to the fireplace in January hoping to keep it alive all year and then, promptly forgot about it. It now looks like nothing more than an oversized but festive foil-wrapped ashtray.
8.Check your withholding: One way to free up Christmastime cash is to check your federal tax withholding. There’s no reason to give Uncle Sam an interest-free loan until April 15 just to get your own money back. It’s also good to know ahead of time whether you’re going to owe taxes. That way you can beat the rush and start ginning up extra deductions now. Go to IRS.gov and search for the withholding calculator.
9.Up your donations: One way to trim your tax tab is with charitable donations, and it’s better to plan those now and avoid scrambling to make the Dec. 31 deadline. You’ll need time for an appraisal if you plan on gifting the Met that Picasso you found in the attic. Then you’ll need time to get over hearing the appraiser inform you that Picasso didn’t work on black velvet.
10.New Year’s resolutions: Whatever it is you think you want to fix in your finances in 2017 can just as well be started now. By the time you’re falling asleep trying to watch the ball drop in Times Square, you can be four months ahead.
Don’t make it just some financial obligation, but also some fun, motivating financial goal, like a dream trip or buying a Steinway for the library. Or adding on a library that can hold a Steinway. Round up all your spare change, throw in a couple of bills and start now. Then look for ways to regularly add. You’ll be well on your way by Dec. 31 so that when someone says, “Happy New Year” you’ll be able to say, “Yes, it will be.”
Also, do it in cash because it’s highly motivating to watch those greenbacks pile up. You can use an old pickle jar, a gift box or anything. For me, nothing beats an empty container from Pumpkin Spice Drano.