New Year’s Revolution

This time of year I cannot help but think of my sister. She is part of the management team of one of the most successful health care cooperatives in the country. She owns a big historic house in a small town. The kind of house that has a dining room, sun room, living room, TV room, and family room; lots of rooms. To support the local library, most years her home is on the historic homes holiday tour. She decorates every room right down to the bathrooms in the holiday theme with a 15 foot Christmas tree in the living room. On the day after Thanksgiving, she and her life long friends go Black Friday shopping. These women have fun together whether they are hiking, cooking, or camping but they love to shop.

My sister truly enjoys all the things she does and is very organized. We were raised to be productive and hard working; work for money, work to help, and work for fun. It’s what we do. My sister is also under a great deal of stress. Stress that gets etched in her face and makes me concerned for her health.

Why do we make the decisions to do what we do? Do what stresses us out? One answer is conformity. Researchers have discovered that the closer you are to the fringe of your tribe, the harder it is to go against the norms. People who are part of the inner circle of the tribe are much more likely to rebel without repercussions. We all know this intuitively, just think High School.

Another reason is habit. We go into auto-pilot mode and do what we have always done. We do not stop to think about our motivations. Why am I spending my time or money on this stuff? Is this my stuff? Family and community are good at planting their stuff in your brain. What would happen if I stopped? Where do I want to be spending my resources?

I do not buy Christmas presents any more. I stopped so long ago that I have little thought of it. Instead, I donate to my favorite non-profits in honor of my friends and family. Each year I watch as the people around me become more and more stressed as the holiday approaches. “Need that one last gift for so and so.”

Christmas is a menace when it comes to stuff. Most of us get stuff that we do not want or will not use. The gifts are wrapped in so much emotion that we feel guilty about getting rid of them. So there it sits one more bit of stuff to add to our growing pile. Being surrounded by too much stuff can cause fatigue, stress and depression. Researchers have correlated materialism with darker moods. No wonder Black Friday can be so dangerous!

When folks find out that I do not buy gifts on the holidays, they often say they wish they could do the same. When I ask them why they are stressing themselves out with all the shopping, they say that they have a family member that would ostracize them for not bringing gifts or ‘it’s for the kids’. They say they would prefer not to get gifts but they are stuck in the vicious gift giving cycle.

One of the most vital things in life is to be true to your self. This can be difficult. Studies have shown that conformity is often not a conscious decision. If we do not take the time to reflect on what is important to us, we will not see what we may want to change. Few people would say that they enjoy being stressed out but we put ourselves in stressful situations everyday.

Instead of making one more New Years Resolution, instead of auto-piloting your way through the next holiday season, make a New Years Revolution. Take the time to reflect on where you spend your time and money verses what is truly important to you. What can you do differently so you are spending your resources on what you love?

True habits are hard to break and people with the highest opinion of their self-restraint are the first to fail at attempting change. The key is to make baby steps, to change one small thing, and when it becomes habit, change one more. Know up front that there will be set backs and detours, plan how you will handle them up front.

Marina Krakovsky in the article Secrets of Self-Improvement – Scientific American Mind March/April 2012, explains the importance of mental contrasting. To be successful you must imagine both the successful results and the obstacles. Planning for the ‘what ifs’ up front will increase your chance of success.

I invite you to reflect and think big. Instead of pledging to lose weight, save money or organize your stuff, reflect on what means the most to you and have a News Year’s Revolution. If you want to stay home during the holidays and not travel, announce it in March so there is plenty of time for folks to get over it. Suggest that gatherings be held the weekend before or after Christmas or tell the family that you will be attending every other year. If you want to stop the gift giving cycle, tell folks that you will be purchasing small gifts and donated the rest to a charity. Tell them in May, let it sink in.

You may be like my sister and love everything about the holidays. I bet there is something you would like to change in your life though. Whatever you decide your revolution will be, follow the steps for success. Know its not going to be easy, break the change up into small steps, and do mental contrasting so you picture success while imagining how you will handle set backs. Above all be true to your self. If people don’t like it they were not meant to be part of your tribe anyway.

Bledsoe’s Guide to Gifting and Year End Tax Planning

 

I’m honored to present guest blogger David C. Bledsoe, CPA/PFS owner of Bledsoe Financial LLC. David helps people with moola planning and wealth building. He is very knowledgeable and is a top notch human being. I feel luck y to know him. As a fellow artist I fully support contributions to cultural organizations. Also notice that David “never been one to let the “tax tail wag the economic dog”” Take it away David!

We are rapidly approaching year end and the elves in Washington certainly have been busy – confusing the rest of us. My crystal ball is none too clear at the moment but I think it goes without saying that our collective “tax burden” will rise next year. Whether this comes from an increase in tax rates or a decrease in deductions and credits (or some combination of the two) has yet to be played out. I have never been one to let the “tax tail wag the economic dog” but if there are issues or concerns that any of you would like to discuss, please contact me. There still is time to take positive action before year end. And remember to set aside those 12/31 statements for our annual updates and reviews.

As this is the time of year when many of you are contemplating charitable gifts, I thought I would put in a plug for the Oregon Cultural Trust. (Non-Oregon residents can skip ahead!)

As a former musician, I like to support the arts and have been a longtime contributor to various arts organizations. With the advent of the Oregon Cultural Trust, it makes it so much easier to be charitable AND benefit those arts organizations that are important to us without such a significant impact on the pocketbook.

Let me explain how this works, assuming a husband and wife filing jointly. The state of Oregon allows a maximum credit of $1000 for contributions to the Cultural Trust. A matching contribution (or contributions totaling at least that same amount of $1000) is made to an Oregon cultural organization (a definitive listing of eligible organizations may be found on the state’s website). For federal tax purposes, one is allowed a deduction for the total amount contributed – in our example, $2000. Oregon allows a deduction for the $1000 contributed to the cultural organization(s).

In addition, Oregon allows a dollar-for-dollar credit for amounts contributed to the trust. The example below (copied from the state’s website) shows the result. Note that for joint filers in the 33% bracket, the total after-tax cash outlay for a $2000 contribution is just $250. It’s a very nice way to leverage charitable gifts to arts organizations in Oregon! For anyone interested in more information, check out their website at www.culturaltrust.org.

 

Please note that you don’t have to contribute the maximum to participate in the “leverage” potential. As long as it’s dollar-for-dollar between the trust and the arts organization(s), the tax effect applies.

Wishing you all the best this holiday season!

David

You can contact David at (541) 929-4949.

Jackie’s Guide to a stress free New Year

There are lots of things that can be done now to make the first months of 2013 easier. Here is a list of actions items:

1. Collect W-9s

Most people know they have to give independent contactors a 1099. Here are some other expenses eligible for a 1099: Interest paid on loans, rent, and household employees. A W-9 should be collected before paying these expenses. You need the W-9 data on hand to create 1099s. If you have not collected W-9s before payment was made, make sure you collect them before year end.

Send out requests for a completed W-9 to all vendors who are subject to 1099 rules. Remember to include a deadline in your request, such as 1 week from date of request, to ensure you collect all your W-9s before 1099s are due. If you send requests via snail mail, you may want to include a self addressed stamped envelope to encourage quick replies.

Form W-9

 

More info on Independent Contractors

More information on Household Employees

2. Catch up your books

You or your bookkeeper will need to have up to date 2012 information to ensure 1099s can be mailed by 1/31/13. It is also good to ensure your bookkeeping is up to date to make tax prep easier.

Busy season is here. If you have outsourced your bookkeeping, ensure you coordinate with your bookkeeper. Commit to a date, early in January, that you will provide the last of 2012 information. This will ensure your bookkeeper has time slotted to complete your books.

For personal taxes, ensure you have a folder/envelope/shoe box created to collect things like medical expenses, donations, and mortgage information.

3. Consult with your CPA/CTP

CPAs and Certified Tax Preparers get busy in January. If you want to review your tax situation, make an appointment in December. Your CPA or CTP will have more time to focus on your needs if you meet early.

4. Clean up QuickBooks

So many folks are on vacation in December, there is usually spare time. Take advantage of this time to clean up your QuickBooks file. Make Customers and Vendors inactive if they have not been used in a specific period of time, say 1 year. Review your Chart of Accounts usage and make accounts inactive that have not been used in a couple of years.

 

5. Files for 2013

Make your electronic and paper files for 2013 in December so everything has a landing place on January 1. File/storage systems should always incorporate an archiving plan. This means having things grouped by date so you can shred/purge older items per your archiving schedule.

6. Payroll Changes

Whether its changing payroll providers or asking employees to fill out new W-4s, now is the time to prep for payroll 2013. Collect all the data you need and make changes to employee or company set up as soon as the last payroll in 2012 is completed.