cord and getting rid of her cable service as this is really her only flexible

Cord and getting rid of her cable service as this is

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cord and getting rid of her cable service as this is really her only flexible housing expense. Doing these things will leave Michelle with a higher surplus in cash flow that can be then allocated to her emergency and financial goal funds. Taxes The following forms were used for Michelle’s 2018 federal and state tax returns: - W-2 Form o Income earned from employer the previous year - 1099-INT Form o Interest income earned from checking and savings accounts - 1040 Form o Used to file annual tax return Michelle Smith, 2018 Federal Tax Return, Single 0 dependents Tax rules change often and can be complicated so it is important to develop a tax plan. Doing so will allow Michelle to know how much she will end up paying or getting back when she files her return. She should work with her CPA to practice tax avoidance, which will reduce her future tax burden. Increasing her contribution to her 401k will give her a larger tax break. Michelle should also consider putting money aside in a Roth IRA in which withdrawals in retirement are not taxed. Another great tax strategy for Michelle would be for her to open a Health Savings Account (HSA) to pay for medical expenses. Contributions to this account are tax-deductible and the withdrawals are tax-free. Additionally, when Michelle has children, she will be able to take advantage of even more tax strategies such as a 529 account for education savings, and child care tax credits. These tax strategies will all help Michelle reach her future financial goals. 7
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Savings The following factors should be carefully investigated when analyzing savings plans: Currently, Michelle has a checking and savings account at People’s United Bank. Her accounts are earning minimal interest and she should consider other alternatives. My recommendation would be for her to review various cash management providers and build a relationship with one that provides the best return on her savings, minimizes the cost of checking and payments services, and allows her to borrow money if needed. Today, the best savings account interest rates are close to 2.00% or higher and typically don’t charge monthly fees. At a traditional bank, savings rates are closer to the national average, which is currently 0.09%. To earn a high rate and pay the lowest fees, Michelle should consider storing her savings online. Without the added expenses of physical branches, online banks are able to offer more favorable returns than national traditional banks. It is important to keep in mind that rates are variable and may change at any time so they should be reviewed on a regular basis. Michelle should also deposit funds into a CD for a predetermined period of time, which will allow her money to earn an interest rate premium. 8 - Type of savings plan such as a regular savings account, CD, interest-earning checking account, and money market account - Rate of return - Safety such as FDIC or NCUA insured - Account minimums such as initial deposit, balance requirements - Restrictions, penalties and fees
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Consumer Credit The following chart provides an overview of one of Michelle’s credit cards. She currently has the Discover It Cash Back card. Michelle pays her balances off every month making her a
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  • Spring '08
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