Determining financial compatibility with your future spouse before you tie the knot is important to a solid marriage.
The Iowa Society of Certified Public Accountants says it's wise to first consider attitudes toward money. Some people measure self-worth in terms of money and possessions; others value more intangible items. Some people are natural spenders, others are natural savers. Understanding your future spouse's values will help you to be more accepting of his or her attitudes toward money. Other issues to consider are financial goals and whether you each can make the sacrifices necessary to achieve them.
REFINANCING CAN PAY OFF SOONER THAN IT USED TO
Conventional wisdom maintained that it made sense to refinance your mortgage only if the rates dropped two percentage points. That advice has been replaced with new thinking. The Iowa Society of Certified Public Accountants says it may make sense to refinance your mortgage even when the rate reduction is 1 point or less. To determine if refinancing is worth it, you simply need to determine if the amount of money you can save over the long-term exceeds the up-front costs, including closing and other fees.
Some mortgage holders take advantage of lower interest rates to convert to a loan with shorter term in order to build equity in the home more quickly. Others refinance their home as a means to consolidate high-interest debt. Whatever your reason, shop around for a competitive interest rate and be sure that you have the ability to pay all the closing fees.
WHAT YOU MAY NOT KNOW ABOUT ROTH IRA'S
Roth Individual Retirement Accounts provide a tax-advantaged way for many taxpayers to save for retirement, as well as for other big-ticket expenses, such as a first home or the cost of education. The Iowa Society of Certified Public Accountants explains that contributions to Roth IRAs are not deductible, however, you can make tax-free withdrawals, meaning that you can escape paying taxes on the interest that accumulates. You also have the flexibility on making withdrawals at age 59 1/2 as long as the account has been open for at least five years. Be aware, too, that you can avoid taxes on withdrawals of up to $10,000 if the funds are used to pay expenses incurred in buying a first home.
SIMPLIFIED IRA ACCESS IS GOOD NEWS
Owners of IRAs and other qualified retirement plans have reason to rejoice. According to the Iowa Society of Certified Public Accountants, the Treasury Department has issued new rules streamlining the formula used to determine the required minimum annual distribution from a tax-deferred retirement fund or upon reaching 70 1/2 years of age.
The new rules provide a simple and uniform method of calculating life expectancy that basically lengthens, for tax and distribution purposes, the plan owner's life expectancy. As a result of the change in calculating minimum withdrawals, retirees can take smaller annual distributions. A lower annual withdrawal means a lower tax bill and more money left in the plan to accumulate tax-deferred earnings.
See a CPA for more information.