I'm one of those DIY tax guys. My father was before me and I hate paying for something I can do myself. I could do it all paper, but I do like to make things easy for myself. I used to use the free online tools for H&R Block or TurboTax, but I haven't qualified for those in awhile. These are mostly for simple tax returns. I use H&& Block for no particular reason. My wife used to TurboTax before we met. They are basically the same so pick whatever you like. Unless one doesn't work for you I would recommend sticking with one so you get an understand of the software year after year. What I like to do during this time of year is look for the software at discounted. I look on Amazon, newegg, costco etc. I can usually get the software for around $25 or 40% off. No point in paying full price. This also was a tax write-off. It may only be now if you use the standard deduction.
Start a folder if you don't have one to keep all your tax docs either at your home or on your computer. Best would be a encrypted thumb drive that you backup. You can either buy one, or use software like BitLocker or Veracrypt. This is also a great time to backup all you legal documents and HSA receipts. Copy this information to a external HDD and put it in a safe or lockbox.
Check your IRA contributions either finish up your 2020 contributions or 2021. This year we pulled back on contributing to our IRAs to build up more into our cash savings. After this checkup I will pick how much I will put into an IRA this year.
Check on your investments across all your account and see where your are sitting. I like to be around the 85-75 % in stocks and 25-15% in bonds. With this crazy year it is sure to be out of wack.
Check where your Net-worth is at. This is usually pretty simple. Add up everything you own. Including cars and homes. Then subtract everything you owe. If its a positive number. Great. If its better then last year Even better. If 2020 got in the way. That is OK 2021 will be our year.
What I also like to do is see what my net worth is without House or cars. One because car value decrease so much every year and your house is a place you live and your are unlikely to sell it and not replace it with something close to the same value. Then compare with previous years if you can otherwise write it down in google docs for future reference. I use Personal Capital for this so it is very simple to get.
Also a great time to look at your insurance (home, car, and life). If you don't have a will start getting that done. I've been very bad at this and very over due.
Lastly since it is the beginning of the year it is time to reevaluate your budget. Make sure it still make sense and look how well you did over the year. Adjust accordingly or see if you can trim it a little more.
Lastly talk with you spouse if you have one. This is a great time sine you've done all the work to talk through everything and to make sure you are both aware of your goals. It is very important you are both aware of the state of things. You spouse doesn't have to be onboard with FI/FIRE, but they can't be against you. If they are things will no go well for either of you. I will say hope is not lost if they are not onboard and there are ways to continue the path and still be happy together.
Last of all. Give yourself a pat on the back. You made it 2021. Barely.
No comments:
Post a Comment
As a visitor here, you are part of a fantastic community. Comments help me and others. It is a great way to pass on your experiences.