As you sit down with your family over the Thanksgiving holiday, there's much more to discuss than football, black Friday deals, and leftovers. In fact, with the family all together, you might get everyone involved in some financial discussions that are difficult to organize at other times of the year.
Start by asking everyone around the table, children included, to say what they are grateful for this Thanksgiving Day. It's never too soon, or too late, to appreciate your personal blessings -- and the blessing of living in America.
Then, if you're at a loss for words, there are family financial topics that could benefit from some advance planning.
If you have a student at your holiday dinner table, the talk is likely to be about admissions and applications. But the real issue is how you will pay for college. You've probably applied for financial aid as part of the admissions process. But there are millions of dollars in available scholarships that are not based on need.
Websites including Fastweb.com, Scholarships.com and SallieMae.com/ScholarshipSearch all give you free access to search engines that help match your capabilities with some of the strangest scholarships you can imagine. Perhaps your family history, your parent's employment, or some unusual hobby will result in a few thousand dollars added to your college funding. You'll never know until you try.
Next month is National Scholarship Month, in recognition of the fact that more than 70 percent of scholarships list deadlines in the six-month period between November and April. And since most of these deals are first-applied, first-granted, it pays to take some time over the holiday weekend to fill out the necessary forms. So bring your iPad to the dinner table and search the most outrageous scholarship offers. That should be good for a laugh at the very least, and some money at the very best.
This month is also an important time for those who graduated last spring. It's the end of the 6-month grace period, and you must immediately start repaying outstanding student loans. Even if you don't have a job and an income, contact your lenders to make a plan. You could ask for a deferral, or if you set up an income based repayment plan (www.IBRInfo.org). But don't ignore this important deadline. And, be thankful for your education, which will pay off in the long run.
Year-End Tax Planning
I'm quite sure that tax planning is the last thing you want to discuss at a family gathering. But a number of important tax provisions are set to expire this year. And there are some opportunities to give important financial gifts that must be done by year-end.
Grandparents who have "extra" money might want to open, or add to, a 529 College Savings account. You can give up to $13,000 to each grandchild (and aggregate five years of gifts if you're able to be especially generous). Go online to Vanguard.com or Fidelity.com to print out the forms and bring them to dinner so you can collect all the required information, including the child's Social Security number.
Among the expiring tax breaks at year-end 2013, is the opportunity for those over age 70-1/2 to make charitable gifts directly out of an IRA -- without paying income taxes on the withdrawal. You can gift up to $100,000, but even smaller gifts can give you a tax break while helping others. Perhaps, consider a gift to help a grandchild pay down student loans.
Among other expiring tax breaks, teachers can deduct up to $250 spent on classroom unreimbursed items in 2013. It's a deduction that disappears next year, reminds H&R Block. The tax firm says that in 2010, more than 3.6 million teachers claimed this deduction for a combined total of $915 million. So, shop for supplies on Friday, and be sure to keep receipts.
Also expiring at year-end is the ability to claim a deduction for college tuition and fees. If your adjusted gross income is below $160,000 on a joint return, there's a deduction of up to $4,000 per tax return - a deduction that won't be there in 2014. So, if you have the cash, you might even want to pre-pay fees for next year. H&R Block says that in 2010, 2 million taxpayers received combined savings of $4.36 billion.
A Family Discussion
One of the things to be most thankful for is peace of mind. But in many families there are unspoken questions and worries -- about what would happen if a calamity occurs. This is a perfect time for all adult generations to reassure each other than they have their financial house in order -- including a will, life insurance, long-term care insurance, healthcare powers of attorney, and the list goes on.
To help you start that discussion, please go to my website - www.TerrySavage.com - and sign up in the little yellow box. But return email you will receive a link to my Personal Financial Organizer form. You can print out as many copies as you need, distributing them to family members. Filling out the form will serve as a reminder of all the things you need to do and tell your family in case of emergency. It will literally get everyone on the same page.
Now that nagging worry will be off your mind, and you can truly enjoy Thanksgiving and all your blessings. That's The Savage Truth.
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