Financial Advice to Guide You through Life's Ups & Downs
March, 2011 - Issue #77
Start Saving
"Pay" Yourself to get Ahead

One of the smartest choices you can make is to choose to put aside a set amount of savings every month. Make it as much (or as little) as you are comfortable with; it might help to think of it as another bill - you're just "paying" yourself. One of the easiest ways to get started is to begin having a percentage (or set dollar amount) automatically deducted from your payroll and deposited directly into a savings account. Many employers are happy to help you set this up and, once you get started, you will be amazed at how fast your savings grow. If the automatic payroll deduction doesn't work for you, consider setting up an automatic transfer with your bank. Once or twice a month, have a set amount transferred from your checking to your savings account. How you do it is much less important than getting it done.
Mission Valley Bank is a full service, community-based business bank serving the Santa Clarita and San Fernando Valleys;

Plan for Retirement
Even High Schoolers can Start Saving with a Roth IRA

Roth IRAs allow savings to grow tax free; distributions are tax free, too (as long as the five-year holding period is followed). Even young people can contribute as long as they have earned income. Roth IRA conversions are attractive for those who have traditional IRAs, but have found themselves in a situation where they can afford the tax hit when they convert the traditional IRA to a Roth IRA. There is no income phase out for conversions. Distributions from the Roth IRA will be tax free. Unlike a traditional IRA, distributions are only required upon the death of the Roth IRA owner. Additionally, unlike a traditional IRA, distributions prior to 59 AŻ are not subject to the 10-percent penalty as long as the five-year holding period is met.
Michael L. Green is an enrolled agent and a certified financial planner; 257-4111

Get out of Debt
Use your Tax Refund to Ditch your Debt

Here's the one question we hear the most: "Should I file bankruptcy?" The answer is: "It depends." There are many factors that go into the decision to whether you should file bankruptcy, and a website is no replacement for an experienced bankruptcy attorney's advice. Having said that, by providing some basic information to our five-minute "Free Bankruptcy Test" link at our website,, it can help you in your consideration of a bankruptcy filing.
Hale Andrew Antico, Esq. of SCV Bankruptcy; 252-9900

Expect Higher Taxes
Tax Provisions will be Revised in 2012

Although 2010 reflected some favorable 11th-hour tax changes, it's important for you to know that the recent tax changes are temporary. After 2012, many tax provisions will go back to where they were before 2001. In 2011, you should start planning now for higher taxes. Income tax rate brackets are expected to increase for every individual. Every possible deduction, credit or savings that could be beneficial to you should be explored.

For example, a Coverdell Education Savings Account (ESA) can be created by parents and students for qualified higher education expenses as well as qualified K-12 education expenses. The total contribution for the beneficiary of the account cannot be more than $2,000 in any year (no matter how many accounts have been established). The contributions are not deductible, but the amounts deposited in the account can grow tax free until distributed. In 2012, the contributions for qualified higher education and elementary and secondary education expenses will revert from $2,000 per beneficiary back to $500 per beneficiary.
Danielle Cooper is a CPA and owner of Veracity Tax; 362-0818

Consider Loan Modification After Bankruptcy Filing
New Laws Regarding HAMP Loan Mods

Effective last year, mortgage servicers can no longer deny a HAMP loan modification simply because the homeowner filed a Chapter 7 or Chapter 13 bankruptcy. The good news is that people who have filed bankruptcy or those who subsequently file bankruptcy after they've been approved for a HAMP trial period plan no longer need to worry about being automatically denied relief under HAMP. In the past, helpless homeowners often found themselves at the mercy of their servicers who had sole discretion in deciding on whether or not to process or continue to process a loan modification request upon notification of a bankruptcy filing. Under the new regulations, you no longer need to worry about your loan modification being jeopardized simply because you've sought bankruptcy relief. See a bankruptcy attorney who can explain to you in more detail how the new HAMP regulations provide you with additional legal rights and court protection even if you are filing bankruptcy.
Ray Bulaon, Esq. of Ray Bulaon Law Offices, Inc.; 866-477-7772

Any advice included in this feature was not intended, and cannot be used,
for the purpose of avoiding any penalties that may be imposed on taxpayers
by any governmental taxing authority or agency.
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