Happy New Year!
It is a New Year and that means a fresh start! Many of you may be planning your budget for the year and this includes retirement contributions. Here are some things to start considering in the new year:
1. Contribute to your Retirement Fund
If you haven’t finished contributing to your retirement funds for 2016, you have up until Tax Day to do so, which is April 18th this year.
The contribution limits for your 401(k), 403(b), and 457 plan for 2017 is $18000, same as last year. If you’re 50 or older, you can contribution an addition $6000 in catch-up contributions.
Roth IRA and IRA contribution limits also stayed the same at $5500. If you’re 50 or older, you can contribute an additional $1000 in catch-up contributions.
Remember that these are general guidelines that most working people fall under. If you have special circumstances, be sure to follow what’s on the IRS site.
For my friends in the federal sector who have a Thrift Savings Plan (TSP), the contribution limit is $18000 with an additional catch-up of $6000.
- 401(k): $18000
- Roth IRA: $5500
2. Prepare for Taxes
Your employer should be sending you your W-2 soon. Gather all your W-2s, 1099 forms, and receipts for deductibles to prepare for taxes once you have all of them. There are many sites that will file your taxes for free. If just have a W-2, you can file on TurboTax.com for free. If you’ve never filed your taxes, TurboTax makes it extremely easy to do so with its friendly user interface.
Your taxes are due on Tuesday April 18th, but the sooner you file, the sooner you can get your tax refund (if you’re eligible). It’s also one less headache to get out of the way and you don’t want to miss the deadline or you’ll incur penalty fees.
3. Check your credit report
Annual Credit Report.com is a government funded site that allows you to review your credit report for free. You are entitled to one free credit report check once every year (1 time in 12 months, not per calendar year) from each of the 3 credit bureaus. In theory, you can look at your credit report for free 3 times a year, once from each credit bureau. A good thing to do is to check your credit score once every 4 months. This will also allow you to monitor any irregularities in your accounts and identity.
CreditKarma is another site, non-government, that allows you to view your credit report for free at anytime. Their business model includes targeted ad revenue to offset the costs of credit reports.
If you use Mint, they also offer a pseudo-credit score based on your spending habits and your assets and liabilities.
Credit Score Ranges:
- Excellent: 750+
- Good: 700-749
- Fair: 650-699
- Poor: 550-649
- Bad: 549 and below
4. Complete your Free Application for Federal Student Aid (FAFSA)
For you college students out there, now’s the time to start filling out your FAFSA for the upcoming school year at www.fafsa.gov. Even if you don’t think you’ll need financial assistance, filling out the form does not hurt and you do not have to commit to any financial aid.
5. Budget Spending
If you’re one of those who like to plan out their budgets, now’s a good time to start thinking about your monthly spending for the year. Plan out that summer vacation you’ve been wanting to go on. Or that cousin with whom you hardly speak but are obligated to go to their wedding across country. Use this spreadsheet I created to help track your monthly expenses if you don’t already have your own: