Would You Call in Sick for a Little Financial Housekeeping?

Do you have a list of financial to do’s that you want to get done but just haven’t made time to complete? I’ve had a growing list for a while now that I finally sat down and tackled yesterday instead of going to work.

I was actually at home sick but not ill enough that I couldn’t man the phone and computer for a few hours to take care of some financial housekeeping that I’ve been putting off.

Flexible Spending Reimbursements
We have both flexible spending account and dependent care spending account balances from 2007 that I need to file claims for.  It’s a pretty silly thing not to do this right away since they have my money sitting in their account, not earning me any interest.  I like to kind of batch a bunch of receipts together and submit them all at once but I let these slide for too long.  Turns out, we haven’t actually spent all the pre-tax money we put aside for 2007 yet so I’m glad that our plan gives us until March for a grace period to use up the funds for last year.

Emergency Fund Tax Strategy
One of my good friends let me know about the kiddie tax in 2007, basically reporting income in your kid’s name in order to pay lower taxes on it. Unfortunately the rules were changing so the available tax savings weren’t as good but there was still an opportunity to reduce taxes on interest, dividends or capital gains up to a certain amount. 

Our emergency fund is in an account with ING Direct and brings in hundreds of dollars in interest each year. Yesterday I added a joint ING account in our son’s name, under his SSN, and transferred the balance into his account.  As a joint owner, I can transfer money back into our account when needed.  It was pretty easy to setup, well worth the time if some of that interest income will see a tax savings. I actually thought I had done this a while back but things didn’t work out with the application process so I needed to address it again. I’m not sure what the rules are for 2008 but hopefully I didn’t miss the boat entirely.

529 Plan Changes
The 529 Plan that we have for our son was setup with a conservative investment option, which doesn’t really make sense for someone who won’t be going to college for at least 17–18 years.  I’ve been meaning to change the election and move the balance into a more aggressive plan for some time now but just haven’t gotten around to it. 

Yesterday was the day, now it’s setup for a growth strategy instead of a capital preservation plan.  Hopefully we can take advantage of any growth in the market over the next two decades to help alleviate the cost of higher education. Maybe with the S&P 500 at a point where is hasn’t been since the fall of 2006, we were buying cheap as I moved the balance out of fixed income investments into a majority of stocks.

All in all, it was a very productive afternoon for a sick day. It feels nice to get those things off of my list. Now I can start thinking about my 2007 taxes : )

Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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