As 2017 comes to a close, it’s easy to get swept up in deadlines, tasks to juggle, and big goals, whether fun or serious. Maybe you want to get in one last vacation, adopt a pet, finally run a 5K, or simply catch up on sleep over the holidays? More power to you! But there’s a still case for clearing a bit of space on your short-term bucket list — and also squeezing in a couple financial to-dos before the clock strikes midnight on Dec. 31. Why?
Just a couple smart moves could pay big dividends come 2018, and some extra cash will feel nice in your pocket while paying off post-holiday credit card bills from plane tickets or shopping. First, get your perennial money chores in order: checking on your credit (and credit security); paying down debt; and earning more cash by switching to a higher-yielding bank or credit card.
Then go into power mode and give “2018 you” a gift — by getting ahead of the game. Need help as you get organized? Here are three easy money tasks you can address right now.
1. Optimize your holiday budget
The average American typically spends about $929 on gifts alone during the holidays, according to a 2016 survey by American Research Group, Inc. That doesn’t include your swanky holiday outfits, hostess gifts for parties or travel, which means the holidays alone could cost you well over $1,000.
In fact, if you crunch average spending numbers, your bills could end up being close to $1,500, taking everything into consideration:
Is there any way to keep holiday spending under control? One way to avoid dipping into savings or adding more to your credit card debit is to establish a holiday fund, which is basically a short-term savings account with your bank, credit union or brokerage company. Go with a liquid account (like a high-rate checking, savings or money market) that doesn’t ding you with fees and start saving as much as you can right now.
Right now, you have a couple months to generate extra cash and avoid debt completely. One money-making side hustle that seems to really pay off is renting your house, apartment — or even just a room — through Airbnb. The average host can make $920 a month, but some can increase that total with smart planning. Not down with renting your home? Consider a seasonal side gig like working for a retailer, house-sitting for friends, or even tutoring high school kids studying for the SATs to bring in some extra cash.
If you just want to cut spending, try putting your restaurant habit on hold for a few months to save a potential $350. You could also go on a grocery shopping hiatus and take the “pantry challenge” where you only eat what is left in your pantry. One woman saved $650 by doing this for one month. You could also cut the cord and give cable the boot to save a little more than $200 before you ring in 2018. Other ways to save money and enter 2018 a little lighter is to get rid of your storage unit, which could add up to $320 over two months. Those four steps alone could get you to $1,500.
Lastly, try reducing your actual holiday spending by saving on flights and gifts. You can save quite a bit of cabbage on holiday travel when you avoid flying during peak times. And homemade hostess gifts like spiced nuts, cookies or jam can be cheaper — and feel more personal — than store-bought items or a pricey bottle of booze. (Check out more tips here on how to end the holidays richer — not poorer; plus this guide to easy budgeting.)
2. Max out company benefits that expire
The phrase “you snooze you lose” could be applied if you let yearly corporate benefits go by the wayside without using them. First up? Make sure to use every single one of your vacation days and any other paid time off that doesn’t roll over to 2018. You don’t have to plan a big vacation to enjoy them, either. Take a day off to go shopping, decorate your home or just relax.
Next, take advantage of free (or nearly free) health benefits at work like your twice annual dental cleaning and that annual free pair of glasses or contact lenses. Consider scheduling a physical as well, since it falls under preventative care and the cost should not be applied to your deductible.
If you have ongoing health expenses and have met your deductible for the year, it’s also a good time to get as many appointments in as possible before the year ends and your deductible resets. For example, a visit to the dermatologist to get that weird mole checked out today could be free, depending upon your plan, whereas you could pay up to $150 for it next year once your deductible resets.
Lastly, check your remaining balance if you contribute to your company’s flexible spending account (FSA). If you don’t use the money for services not covered by insurance (such as a therapist, who can charge $300 a session, and even acupuncture, which could be up to $95 for the first visit), you’ll lose it by the end of the year.
3. Stockpile 2017 tax perks
Tax day is still a few months away but the moves you make now can impact how much (or how little) you end up paying or saving. One smart step is to start thinking about deductions you can plan for in advance, like charitable contributions, medical costs and investments.
First take a look at how much you’ve put in your company 401(k). If you’re not on track to reach 15% of your salary with your current contribution level, consider bumping it up now — you can increase your contribution at any time of the year — to help get you closer. Unlike with IRAs, which give you until next spring to make 2017 contributions, you can only make 2017 contributions to your 401(k) during this calendar year.
Next, if you have investments in a taxable account, consider selling your losers to offset any capital gains. “If your capital losses are more than your capital gains, you can deduct the difference as a loss on your tax return. This loss is limited to $3,000 per year, or $1,500 if you are married and file a separate return,” according to the IRS. You must sell your taxable investments before 2017 to get the capital loss credit for this year.
Changes in income or employment status can also make a difference on your taxes. Let’s say you qualified for an Obamacare subsidy in early 2017 because you started the year unemployed. But boom — you land a job in March and your income status changes. Now’s a good time to report the change in income, martial status or any other qualifying event to avoid having to pay back your subsidy next spring.
Have a health spending account? Now’s a good time to max out your annual contribution — for 2017 that’s $3,400 for individuals and $6,750 for family coverage in 2017 — and lower your taxable income while you’re at it. Technically, you have until next spring to make 2017 contributions, so there’s no rush on this. Same goes for 2017 IRA contributions.
Lastly, with the surge in recent disasters and the need for charitable relief, you may want to give a bit more to help out and get a tax deduction. But before you do, be realistic about how much more you can afford to give and how that will affect your budget.
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