Financial tips for the start of new year


Joe B. Richardson, owner of SH Services LLC, outside his office at 1135 NW 23rd Ave. in Gainesville.

AIDA MALLARD/Special to the Guardian
Published: Wednesday, January 16, 2013 at 2:44 p.m.
Last Modified: Wednesday, January 16, 2013 at 2:44 p.m.

Whether you are financially comfortable or living from paycheck to paycheck, there are steps you can take to make your money go farther and plan for a worry-free retirement.

So to help you navigate financial waters, Joe B. Richardson, a Gainesville financial adviser and tax expert, shares financial advice, tax tips, and what to do and what to avoid to help you have a better year and to position yourself for a more financially secure future.

"I try to care for the individual's financial needs," said Richardson, who, as the owner of SH Services LLC at 1135 NW 23rd Ave., has for nearly 20 years offered financial planning, income tax services, retirement insurance, life insurance and Medicare supplemental insurance in Gainesville. Richardson is also an enrolled tax agent, which according to the IRS website, is the highest credential the IRS awards. He holds a bachelor's degree in economics from Southern University in Baton Rouge, La., and a master's degree in food and resource economics from the University of Florida.

"If you follow these tips, you should have a better year," Richardson said. They are:

— Make a spending plan, or budget, and stick to it. Set money aside for savings and update your spending plan when your income changes.

— Pay down your debt as much as you can each month. Debt can impact your chances of buying a house, a car, and even getting a job.

— Set a retirement plan as early as you can, even if you can only save $1 each week. By the age of 20, you should be saving 10 percent of your income for retirement, and by age 30-40, you should be saving 25 percent to 35 percent of your income. It is suggested that couples try to live on one paycheck and put the smaller paycheck into a retirement account.

— Write down all your expenditures, and at the end of the month, look at how your money was spent to see what expenses you can cut out or decrease.

Below are things to AVOID:

— Using a credit card to pay for things you can't afford.

— Using a credit card to pay for investments, such as starting a business, because you may pay more interest on the credit card than you will earn from your investment.

— Buying too much house for your income.

"The big house will always be there, and it doesn't have to be your first home," Richardson said. "You could end up losing your home and your credit."

When choosing a tax preparer, Richardson advises making sure he/she has the skills needed to help with your tax situation. Richardson also offered the following tax tips:

— Don't spend your tax refund before you receive it and beware of those who will advance you money predicated on the refund you may receive.

— Document your expenditures by date, amount and purpose.

— Don't forget to deduct your documented contributions to charity.

— Keep record of all donations.

— Plan ahead for major purchases such as cars and major appliances.

When asked about choosing a bank vs. a credit union, Richardson said they are very similar in the services and fees they offer.

Regarding the Social Security retirement age, Richardson said people who are age 62 and not working, or don't plan to work, may want to consider retirement at age 62, which is the earliest age for retirement. He said full retirement is based on the year an individual is born. For instance, people born in 1950 will reach full retirement at age 66. Those who retire at full retirement can work without increasing or decreasing their Social Security benefits; however, they do have to pay taxes on the earned income.

When it comes to life insurance, Richardson said the younger the person, the better the preminum rates they will pay. Below are types of life insurance policies:

— Term life: Affordable temporary coverage that provides death benefits protection, but no cash value.

— Whole life: Traditional form of permanent life insurance that provides the certainty of level premiums, a guaranteed interest rate, death benefits, and cash value accumulation.

— Indexed universal life: Combines death benefit protection with the cash value through an account that credits interest based on the upward movement of stock market indexes without the risk of investing directly in the market. It features a zero index floor that guarantees the account won't earn less than zero percent due to poor market performance.

— Variable life: Provides variable levels of premiums or variable levels of coverage. The return varies and can cause the loss of some or all of your premiums and lapse of contract. Richardson said variable life is the riskiest type of life insurance because it is tied to the stock market.

For more information, call Richardson at 352-371-8400.

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