| 401k's for the
Self-Employed |
|
 401k's are rolling out, boasting
features equal to, and even better than, their corporate rivals.
Solo 401k assets currently sit at 2.5 billion and may climb to over
90 billion by 2012.
In addition to up-front tax breaks,
borrowing options and higher contribution and savings limits have
sent individual 401k popularity soaring. These attractive plans
allow business owners to save their money at a faster rate than
other conventional retirement options. |
| Deduct Your Tsunami
Donations |
|
 Those who gave money to
the tsunami relief efforts by January 31, 2005 have the option of
writing their donation off on either their 2004 or 2005 tax return.
Since tax return rates are expected to remain the same in
2005, the deductions will have the same value for both years. If you
decide to take the deduction in the 2004 return, check your state
rules to find out if you are eligible to do the same on your local
return. |
| Housing Remains
Affordable |
|
 2004 required some 22% of the median
household income to satisfy mortgage payments; 2005 could see that
number jump to 25%. Although the bubble won't burst entirely, it
will experience some deflation. However, we are no where near the
35% chunk of income that mortgages took in the 1980's.
In
addition, low interest rates and creative loan programs will help
even things out a bit. For people willing to hold out through
inevitable price fluctuations, homes will remain highly reliable
assets. |
| Speculative Buying Could Lead to
Housing Reversal |
|
 Although
the housing demand is steadily increasing, speculative buying has
been on the rise in the last few years. Buyers basing their
investments on capital appreciation alone now count for 10% of total
sales.
This movement has led many to doubt that housing
appreciation will continue over the next year or two. Areas that
will be hit most by a housing reversal are prime metro-markets,
where speculative buying is super hot. |
|
 2005 brings a dip in deals for those
donating their ride. New laws state deductions can only be for the
amount the charity netted from selling your car - and they must send
you a receipt for the amount that it sold.
If you beat the
clock and made your donation in 2004, you can still deduct the full
fair market price of the car. Check the Kelly Blue Book (www.kbb.com) to find your car's
current value. |
| Rising Rates Call for Plan
B |
|
 With
short-term interest rates taking a recent quarter percent hike at the last FOMC meeting, consumers with variable rate debt may
want to consider refinancing to lock in fixed rates before the next
increase comes.
Average rates on a home equity line of
credit stand around 7%, compared to about 6% for adjustable mortgage
rates. With the rate of increase not expected to slow, adjustable
rate mortgages could equal, or exceed, fixed mortgage rates within
one to two years. |
