- Max out on your 401(k). To save on taxes and upgrade your financial future, make sure to contribute the maximum amount to your 401(k) plan. The maximum allowable contribution limit for 2012 was $17,000. For 2013, that figure jumps to $17,500. That's less money you have to pay in taxes this year and more cash socked away for your golden years.
- Build a rainy day shelter. To alleviate the financial pain of a short-term job loss or a big home or auto repair issue, set up a rainy day fund. Aim for six months worth of your annual income. It might take time, but just 10% of your paycheck steered into an emergency fund can pay big dividends down the line.
- Refinance your mortgage. Standard 30-year fixed mortgage rates are at a bottom-scraping 3.54%, according to the BankingMyWay Weekly Mortgage Rate tracker. FINRA says to move quickly and take advantage of those low mortgage rates and refinance your house. "If you haven't fallen behind on your mortgage payments, but have been unable to get traditional refinancing because the value of your home has declined, you may be eligible to refinance through the Home Affordable Refinance Program," FINRA says. Visit MakeHomeAffordable.gov for information.
- Get drastic about the plastic. Credit card debt is a real bank account drainer. As FINRA puts it, "digging yourself out of credit card debt is a lot harder than getting into it." Put the credit card down and use a debit card. Also, make more than the minimum payment on your credit card. Your debt will dissolve faster, and your credit rating will improve once you start reducing your credit card debt.
- Trust, but verify. Take a cautious approach and vet financial advisers, accountants, tax preparers or stockbrokers you're working with. Most consumers don't bother, but FINRA says there are enough scam artists out there to warrant a closer look at the people managing your money. FINRA offers a useful tool for checking out brokers called FINRA BrokerCheck. The Better Business Bureau also holds data on financial professionals.
5 Steps to Avoiding Your Own 'Fiscal Cliff'
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