Click here to view the November Newsletter: Ashford Advisors Newsletter – December 2012
This month’s newsletter features the following articles:
RESPONDING TO POLITICAL IDEALS AND ECONOMIC REALITIES
When so much attention is given to the political process, it can be easy to believe that every issue has a political answer. But that’s the “election whiskey” talking. A sober evaluation presents a different picture.
The principal method for governments to effect change is to enact and enforce new laws – with taxes, regulations, incentives and punishments. But a quick glance at current events indicates legislation hasn’t ended global religious and political tensions, lowered unemployment, restored deflated real estate values, or prevented natural disasters. This doesn’t stop governments from trying to control these uncontrollable factors. And the decisions of policymakers definitely impact the financial well-being of individual households. So how does one plan for the impact of national economic policies that may not achieve the intended results?
DISABILITY PROTECTION: “I HAVE COVERAGE…SORT OF…I GUESS?”
An incident of disability is not only more likely to occur than death, but in some ways may be more devastating to household finances. A premature death deprives the family unit of income, while a disability not only disrupts income, but also introduces the financial burden of ongoing care for the disabled individual.
Because disability can be so disruptive, several forms of automatic, universal income protection have developed in the past century to protect workers from financial ruin. But the amount of coverage these programs provide can be spotty and vary greatly with individual circumstance. Does your disability insurance program provide the coverage you need?
WHAT YOU CAN’T DELEGATE
One of the great principles of a free-market economy is the division of labor. Instead of requiring each person to be a jack-of-all-trades, the division of labor allows people to focus their time and energy on what they do best. This results in greater efficiency, more products and services – and higher profits – for everyone.
In the realm of personal finance, the division of labor means letting the experts – accountants, tax preparers, insurance agents, stockbrokers, financial planners, etc. – focus on their areas of expertise. Ideally, their wisdom and experience moves you further toward your financial objectives.
But there is one aspect of financial management you can’t delegate.
MAKING YOUR LIST AND CHECKING IT TWICE (AFTER CHRISTMAS)
Sometime in late December, a flurry of financial documents will begin arriving via the U.S. Postal Service – or, in some cases, appear in your e-mail in-box. This small blizzard of annual statements, required notifications and transaction reports may continue through early February. Many of these documents are required to complete your 2012 tax returns, especially if you itemize, so having a plan to collect and organize them as they arrive will save you both time and money.
MISCELLANEOUS INCOME? THERE’S A 1099 FOR THAT
The IRS has 16 different Form 1099s to report non-wage income. If you receive one of these forms, it almost certainly will occupy a line in your 2012 personal income tax return. And…if you paid someone else in any of these ways, you may be required to send a 1099, both to the individual and the IRS.