A Financial Education Event
 

Ellie Kay on Neil Cavuto, Fox News – Fiscal Cliff Strategies

Ellie Kay on Fox News Neil Cavuto - Aug 2011

 

As the wife of a fighter pilot, and now as the Mom of a Marine, I’ve had my share of crisis.  So I’m not really new to the idea of looking a challenge in the eye.

I’ve found myself faced with life-and-death situations where there are two basic responses: panic or strategic planning.  I have found that panic often leads you to “crash and burn” emotionally or financially, while strategic planning will lead to a safer landing.

As we face the Fiscal Cliff, I’ve been asked to appear on Fox News and share my thoughts about proactive ways to handle the crisis from a personal finance point of view.

Ellie’s Fiscal Cliff Financial Strategies

 1)    Maximize Tax Strategies to Offset a Tax Increase

  •  If the AMT (Alternative Minimum Tax) patch is not approved, 60 million Americans will pay more in taxes – an average of $3500 per family
  • Prepay 2013 college tuition and fees if you haven’t maxed out the $2500 American Opportunity Credit
  • If you itemize, make donations to IRS-qualified organizations online
  • Stay informed on updated tax law changes by going to IRS.gov or TaxAct.com to get accurate and up-to-date info on all the tax deductions you qualify for and to get updated tax forms and computer systems
  • Don’t pay for tax prep, when there are free and thorough solutions and don’t trust minimally trained seasonal tax preparers
  • Expect to take more time to get refunds due to these problems. The fastest way to get this year’s refund is to file taxes online, e-file and choose direct deposit

2)    Maximize 401(k) contributions and IRA contributions

  • For 2012 IRAs, up to $5,000 ($6,000 if you are over age 50) + consider converting retirement accounts to a Roth IRA
  • For 2012 401(k)s up to $17,000 ($22,500 if you are over age 50)

3)    Maximize contributions to Coverdell Education Savings Accounts

  •  Contribute up to $2000 per beneficiary because this will decrease to $500 in 2013

4)    Be Smart About the Stock Market

  • Don’t panic and bail out of the market
  • Only sell those stocks you were going to sell anyway or investments that have generated deductible losses to offset any gains.
  • The market is only expected to adjust 3% maximum
  • The average portfolio is 70% stocks and 30% bonds, you could adjust to 60% stocks and 40% bonds, but don’t do any dramatic repositioning

5)    Don’t go “All Cash”

  • This is a sure sign of “The-Sky-is-Falling- Chicken-Little” kind of panic
  • If you do that, you might as well bury your cash in a Mason jar in the back yard

6)    Cut the Fat in Your Household Budget

  • In order to bolster your emergency fund
  • In case taxes take an extra tax bite out of your budget
  • It’s smart to spend smart whether there’s a Fiscal Cliff or not

7)    Delay Purchase of High Ticketed Depreciating Items

  • Now is not the time to get the new Mercedes SLS Roadster or a 96” LED HD 3D Television!

 Be sure to let me know YOUR Fiscal Cliff Strategies and feel free to share this with your friends.

Ellie Kay

America’s Family Financial Expert (R) 

elliek

About elliek

Ellie Kay is the best-selling author of fifteen books and a frequent media guest on CNBC, ABC’s Nightline, MSNBC, Neil Cavuto and Fox News. Ellie is also a gifted keynote speaker, presenting to standing ovation crowds of over 8,000 people.