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5 Money Tips for Setting Up Your Family Finances for the New Year

Provided by the experts at MoneyStream.

Look for ways to save each month. 
Put some money back in your pocket and eliminate the excess money that you pay in unwanted services. The start of a new year is a good time to take stock of your money inflows and, most importantly, outflows. Take an inventory of all the recurring bills you pay each month. Be sure to look at those recurring charges that hit your credit cards. Those often go unnoticed and can rack up an extra couple hundred dollars a month. Online services like Mint.com and MoneyStream.com can help you track your spending by connecting to your accounts and automatically finding your recurring bills and income. They do the dirty work for you and then organize it all in a calendar for you to view and manage.

Save for College. 
Contributions to 529 plans are tax deductible in the year they are made on many state returns. Some companies are now offering matching contributions to employees 529 plans. Inquire if yours offers this, and if not, suggest they do! UPromise helps you earn cash back toward college expenses when you shop at participating retailers. Right now they have 10,000 restaurants, 21,000 grocery and drug stores, and 950 online stores participating, such as SearsBest BuyTarget, etc. The cash rewards can be put directly into your existing 529, used to pay off a student loan, or even received in cash to pay college expenses. You can even ask family and friends to join and shop at participating retailers on your behalf. It’s a win-win for doing what you do every day.

Keep track of all health care out-of-pocket costs. 
If you are an employee, your insurance premiums are paid with after-tax dollars, so as a rule, they are not tax deductible. But, if you itemize deductions, all of the medical expenses you pay for the year that exceed 10 percent of your adjusted gross income (AGI), are tax deductible. For instance, if your AGI is $60,000 and the total medical expenses you paid for the year exceed $6,000 (or 10 percent of your AGI), the amount over $6,000 can be deducted from your taxable income. So keep every receipt from Jan. 1 on because you never know what the year will bring. And if you are self-employed, you may get a real break. You may be able to take a tax deduction for the premiums you pay for medical, dental and even qualifying long-term care insurance for you and your family. This deduction is in the form of an adjustment to income and is taken on page one of your form 1040. You can claim it even if you don’t itemize deductions or your other deductions are limited. This can also lower your AGI, which helps to lessen the sting of income-related phaseouts of other deductions, such as those that apply to itemized deductions you claim on Schedule A. An added tip: Most doctors accept credit cards, so charge your medical bills (including big ones like orthodontists) to your credit card and earn reward points!

Start doing research and planning for the family vacation early. 
If you know where you’d like to go and what mode of travel you’re going to take, you can take advantage of sites like AirfareWatchdog.com and wait for the best deals. You can also sign up for deal alerts from travel sites like Expedia. Waiting until you’re under a time crunch to get your vacation booked rarely gets you the best prices.

Rethink all those credit cards. 
Most of us have open lines of credit that we never use. Perhaps a store credit card was opened to take advantage of a special savings promotion or an account for a high-ticket item, like furniture, was opened and neither was ever used again. And once it was paid off, the credit card was put away and forgotten. However, it is still an open line of credit and should be closed. What most people don’t realize is that part of your credit score (FICO) is based on the amount of available credit you have compared to your average yearly income. If you have a lot of available credit—even if you don’t use it—it can work against you and lower your credit rating. The way creditors view it, if you ever get into financial trouble, like losing your job, you have the potential to run up a large amount of debt quickly. This is seen as a risk factor—a red flag by those who are considering extending you a loan, such as for a new car. So when the new year begins, make it a point to get a free copy of your credit report from one of the agencies (you’re entitled to one free report each year from each agency), and close those old, inactive accounts. 

MoneyStream recently launched nationwide. It is the first, all-in-one money management service that links, coordinates and consolidates the fragmented tasks associated with banking, bill paying, record keeping, payment scheduling and cash flow management into a single online service.

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