Health Savings Accounts

With all the talk this year on health care I thought I would share a little bit on some things that can help in medical coverage. For many years  I have enjoyed very good medical care from my employer and haven't had to shop around for medical coverage. Of course times have changed and Patti & I are both self employed.

What is interesting is that you have to carefully look at what you spend each year on medical, dental and Rx. Also, include your share of the medical cost after insurance has been applied. We chose a high deductible to reduce the outflow of cash because the monthly premiums were to high to justify.

If your like us and have medical and dental expenses that are less that 7.5% of your annual income you won't be able to write any of these expense off on your taxes. Your only able to write off in medical & dental expenses beyond 7.5%. Example: If you make $100,000 annually. The first $7,500 is completely out of pocket, you are not able to write this off on your taxes. If you spent 8,000 in one year on medical & dental you would get to write off $500 because it exceeds the 7.5% of adjusted income.

This is why we like the Health Savings Account (HSA). HSA's allow you to deposit funds to a limited amount each year that is not subject to the Federal Income Tax. When you open an HSA you get an HSA debit/credit card that you use on your medical, dental and prescriptions for the year. What you don't spend rolls over to the next year and so on. It's kind of like being self insured, but your basically building a savings account upfront on purchases you spend anyway through-out the course of the year.

Let me try another example: The average grocery store shopper will spend $7,000 per year on groceries to feed there families. That is about $583 per month. We know you can't write off your groceries, but if there was a special Food Savings Plan that gave you that ability reduce your taxable income you would be all over it.

I know this is a little out in left field but the point I'm trying to make is that you will spend money on your Medical and Dental insurance deductibles each year. You will have medical expenses that insurance won't cover. You will most likely have out of pocket prescription expenses through-out the year. If you don't the savings will roll over and you'll have it the next year. And you'll be taking full advantage of the tax breaks and reducing your tax burdens.

Dave Alexander
JustGoFishin.com
Corpus Christi, Texas

The Mormon Way Of Doing Business

Many of you know that I enjoy reading books about business leaders and recently financial advice books.  It's always good to build upon your education in Business and Finance. Some books that  I would recommend are:

• Rudy Giuliani's book "Leadership"
• "The Warren Buffet Way" by Robert Hagstrom
• "The Tipping Point" by Malcolm Gladwell
• Mitt Romney's "Turnaround". 

Those family members that know me... know that I'm not a person that likes to read. In fact I have to admit I have poor reading habits. But these kinds of books just make me want to learn more about their achievements. How they accomplished terrific results and I could apply these principles.

Patti bought a book for me that she new I wanted to read before our trip to New York. The book was "The Mormon Way Of Doing Business". We know that there are many leaders that have been successful over the years that are not of the LDS faith. But this book looks into Mormon leaders that have reached the pinnacle of their careers.

I really enjoyed this book and how these leaders balanced there lives around family, work and church responsibilities. Patti new Kevin Rollins, CEO of Dell. He was in her LDS Ward in Austin.

This book also captures the passion these leaders had for their companies and not getting caught up in the money and power of there title's. 

Dave Alexander
JustGoFishin.com
Corpus Christi, TX

THROW IT AWAY!

Some great suggestions for the New Year: by our D.R. Garrison, CPA, PC

As a general rule, we human beings are collectors. We collect everything. We save “stuff” we won’t ever need and that has no intrinsic value. Getting your finances in order means parting with some of these “treasures”. A list of what you should keep:

1. Federal and State Income tax returns. (To prove you filed.)
2. Investment Information. (What you bought, When you bought it, cost, When & How much sold for.)
3. Retirement Account Records. (Keep year end recaps after verification of activity to prove after tax contributions and trustee accuracy)
4. Insurance Policies. (Toss 2 years after terminated.)
5. Trusts and other Estate Planning Information.
6. Medical Records. (Unless needed for income taxes, toss receipts, etc.)
7. Credit card receipts and Statements. (For one year only).
8. Household Bills & Receipts. (Only keep for possible income tax records such as child care.)
9. Cancelled Checks, ATM receipts, Bank Statements. (Statements & cancelled checks should be kept for no more than 6 years. ATM receipts kept only long enough to match to the bank statements.)
10. Mortgage, Home Equity loan, Second Mortgage, Property Tax records. (Year end recaps should be kept for 6 years after you sell the property.)
11. Home Sale/purchase records. (Keep for 6 years after the sale of property.)

Everyone should have: 1) Current list of accounts & assets. 2) A living Will. 3) A durable power of attorney for health care. 4) A durable power of attorney for financial matters.

FISCAL FITNESS WORKOUT

Here is a workout designed to put you in top fiscal fitness. Year end is a great time to assess your financial condition and begin a training regimen. Here are some exercises that will help you stay in optimum financial shape.

• Warm Up With a Meeting. Meet with your financial planner and develop your 2010 plan.
• Slim Down Spending. Maintaining a budget is the only way to track and control your spending.
• Stretch to Contribute More to Retirement Savings Plans. A comfortable retirement requires active planning and deliberate savings.
• Reduce Credit Card Debt. Paying interest on debt means you are voluntarily paying more for your purchases.
• Run For Coverage. Carefully choose among the insurance coverage choices available to you.
• Get a Personal Trainer. Everyone should have a handle on their financial condition. If your spouse has been handling your financial matters it’s important for you to at least learn the basics. Make time for your spouse to train you or get up to speed with a financial professional.

Inventory Everything You Own. Be sure to take photos, digital or traditional, or video everything you own. Store this data away from your home in a secure place. This pictorial record may prove crucial in the event of a fire or theft.

Get Moving on Managing Your Credit History. Everyone needs a credit history. Be sure each spouse establishes a separate credit history. Review your credit reports on a regular basis.

Power Up Your Legal Documents. A durable Power of Attorney, a Health Care Directive and a Will are the minimum essentials.

Organize Your Financial Records. Keeping financial records in an organized manner can save you time, money and trouble. Be sure your spouse, family and executor are aware where these records are stored.

Sue Shaw
Home Owners Welcome, LLC
Logan, Utah