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Cunningham, Malone, & Morton

The Tax Professionals

Handling Other Situations

Here are a few guides for other situations that might arise which require some basic knowledge to be able to handle appropriately.

Table of Contents

Saving Money: 10 Major Ways To Increase Your Nest Egg

One way to accumulate assets for retirement, education or other major goals is to reduce your spending. Studies have shown that these savings can add up over the years to a substantially increased nest egg.

The familiar expression "A penny saved is a penny earned" overlooks the impact of taxes; a saved penny is, in fact, worth more, often much more, than an earned penny because you pay tax on an earned penny but not on the penny you save.

Thus, tax-free savings, with earnings compounding over the years, can really increase your nest egg, making it worthwhile to explore the following money-saving techniques.

This Financial Guide provides you with 10 tips for making sure that more of your money is slated for saving and investment. More important, it provides you with links to other Financial Guides that help you implement these tips and maximize the ultimate return.

1. Prepare a Financial Plan

While most people appreciate the importance of a financial plan, too many put it off to the tomorrow that never comes. It is important to identify your goals and determine how best to achieve them. A financial plan can help you do this.

Related Financial Guide: Please see the Financial Guide: YOUR FINANCIAL PLAN: Getting Started On A Secure Future.

2. Save Your Income

Use an automatic savings plan to make sure that you save a percentage of your paycheck every payroll period. The percentage should be determined by your financial planning needs. Some people need to save 10% of their gross pay, while others need to save more. If the amount saved goes to a 401(k) plan or other tax-deferred plan, so much the better.

But don't stop with automatic savings. Put aside everything you can. If you invest $50 a month in a mutual fund, you could have as much as $25,000 in ten years, depending on the rate of return.

Tip: A well-thought-out budget will help you determine how much you should and can save.

Related Financial Guide: Please see the Financial Guide: BUDGETING: How To Prepare A Workable Plan.

3. Cut Your Mortgage Costs

  • Consider paying down your mortgage. For most people, paying down a mortgage is an effective way of saving and increasing net worth. Decide that you will pay $100 or $200 per month or more in mortgage principal, and do it faithfully.
  • Consider refinancing your mortgage. See if you can save money by refinancing your mortgage. Go through the calculations and see whether the reduction in your monthly payments would be worth the costs involved with refinancing. The general rule is that a reduction of at least two points will make it worthwhile to refinance, if you intend to stay in the house for at least five years.

Related Financial Guide: Please see the Financial Guide: REFINANCING YOUR MORTGAGE: When And How Do It.

4. Cut Your Consumer Debt

To save interest, consider replacing your consumer debt with a no-fee, no-points home equity loan. However, bear in mind that you are putting your home at risk.

Related Financial Guide: Please see the Financial Guide: HOME EQUITY LOANS: How To Shop For The One That's Best For You.

Tip: Once you have paid off a car loan or other debt, keep sending that payment to a mutual fund or other investment.

5. Cut Your Credit Card Costs

There are many ways to cut your credit card costs, e.g., switching to a card that charges less interest.

Tip: Try to pay for everything in cash. It's a good way of disciplining yourself.

Related Financial Guide: For suggestions as to other ways to cut credit card costs, please see the Financial Guide: CREDIT CARDS: How To Choose And Use Them Wisely.

6. Cut Your Bank Fees

There are many ways to reduce your bank fees. Consider:

  • Is your checking account resulting in wasted fees? Find out what you need to do to get free checking and free ATM usage and do it. Keep a minimum balance in the account, and use only ATMs at your own bank, for example. You may want to join a credit union instead of using a bank, since credit unions typically charge less for banking services.
  • Don't keep too much money in a low-interest savings account. Find out how much money you'll need access to in an emergency, three to six months' worth of expenses, and keep only that amount in savings. The rest of your funds should be put to work.

  • When ordering checks, don't order them through your bank. Many check printers charge less for check orders than the printers used by banks.

Tip: Stop using your ATM card if you find you are withdrawing too much cash. Make yourself go to the bank and withdraw the money instead. This may help you to spend less cash.

Related Financial Guide: For suggestions as to other ways to cut bank fees, please see the Financial Guide: BANK ACCOUNTS: What To Look And Ask For.

7. Fine Tune Your Insurance Coverage

Here are some ways to save on insurance of all types:

  • Do some shopping for a life insurance policy. It pays to check prices on life insurance policies periodically. Rates change frequently. Also, if you've quit smoking, you may be entitled to better rates after a few years.
  • Examine your life insurance needs to see whether you are paying for too much coverage.

Related Financial Guide: For suggestions as to other ways to cut life insurance costs, please see the Financial Guide: LIFE INSURANCE: How Much And What Kind To Buy.

  • Insure your home and autos with the same insurer. You may be able to get a break by doing this.
  • Shop for auto insurance to try to get a lower rate.

Related Financial Guide: For suggestions as to other ways to cut auto insurance costs, please see the Financial Guide: CAR INSURANCE: 10 Cost-Cutters To Save You Money.

  • Install smoke detectors, burglar alarms, and sprinkler systems to save on homeowner's insurance. Ask your insurance agent about other savings.

Related Financial Guide: For suggestions as to other ways to cut home insurance costs, please see the Financial Guide: HOMEOWNERS' INSURANCE: How To Get The Best Coverage And Value.

  • Get rid of private mortgage insurance. Once you have enough equity in the home, ask your lender to cancel your private mortgage insurance.

8. Cut Your Utility Costs

Here are some thoughts to keep in mind in cutting utility costs:

  • Your utility may have a program that subsidizes making your home more energy-efficient. Look into this possibility. Even if there is no help available from the utility, it is worth it to caulk your windows and make sure your insulation is of a high enough "R" factor.
  • Use CFLs (compact fluorescent lights) instead of incandescent bulbs.
  • Keep the thermostat set at the lowest comfortable temperature in winter and the highest comfortable temperature in summer.

9. Cut Your Phone Bills

Today's cost-cutting competition among phone service providers offers many opportunities for savings on your phone bills, such as:

  • Make sure you're paying as little as possible for long-distance charges. Take the time to investigate which long-distance carrier will save you the most, and switch to that carrier.
  • Don't dial "Information." Look it up online or in the phone book.
  • Use e-mail or a VoIP such as Skype to correspond with relatives and friends.

10. Forego One Big Expense per Year

For instance, skip your yearly vacation this year or take a less expensive one. Another way to save one big yearly expense is to swap an expensive health club membership for a YMCA plan.

Recordkeeping Guide: How Long You Should Retain Your Records

Some documents and records need to be kept indefinitely, but most can be discarded after a prescribed period. Here are some rules of thumb as to how long you should keep them. Keep in mind that certain circumstances - legal considerations, for instance - dictate that documents be kept longer. The basic rule is: When in doubt, don't throw it out. If you have any questions, check with your financial advisor.

Some documents and records need to be kept indefinitely but most can be discarded after a prescribed period. Here are some general rules of thumb as to how long you should keep them. Keep in mind that there may be individual circumstances in which legal considerations, for instance, dictate that documents be kept longer. The basic rule is: When in doubt, don't throw it out. If you have any questions, check with your financial advisor.

Keep Indefinitely

  • Birth certificates
  • Adoption papers
  • Custody agreements
  • Death certificates
  • Deeds to property
  • Divorce papers
  • List of financial assets held (keep current)
  • Wills and other estate planning documents
  • Life insurance policies
  • List of previous employers
  • Marriage certificates
  • Passports
  • Photographic or video record of house and household contents
  • Military records / record of any governmental employment (e.g., armed forces)
  • Tax forms and supporting records relating to non-deductible IRA contributions
  • Records of paid mortgages

Keep for a Prescribed Period

  • Income tax returns (note that the IRS can audit you for 3 years after you filed a tax return, 6 years if you're self-employed or under reported 25% of your income, and if you don't file a return at all or filed a fraudulent return, there is no limit on the statute of limitations)
  • Records supporting income tax returns and deductions (W-2s, 1099s, receipts) - 1 year, 3 years if used for tax purposes and 6 years if self-employed
  • Loans that have been paid off (canceled notes or other evidence) - 7 years
  • Bank statements - 1 year, 3 years if used for tax purposes and 6 years if self-emplyed
  • Brokers' confirmation slips for stock and mutual fund purchases - until security is sold
  • Records of selling a stock - 3 years
  • Canceled checks - 1 year, 3 years if used for tax purposes and 6 years if self-emplyed
  • Contracts - 7 years after expiration
  • Medical bills - 3 years
  • Credit card statements - Until the monthly bill is marked paid, but keep 1 year, 3 years if used for tax purposes and 6 years if self-emplyed
  • Utility statements - Until the monthly bill is marked paid, but keep 1 year, 3 years if used for tax purposes and 6 years if self-employed
  • Pay stubs - 1 year, until you received and reconciled with annual W-2 and social security statement
  • Receipts for home improvements that can be added to tax basis of home - 6 years after home is sold in a transaction that is not a "rollover" transaction
  • Insurance papers (all types of insurance) - after policy is renewed or 4 years after expiration or cancellation
  • Records of selling a house - 3 years after paid off
  • Owners' manuals for appliances - until item is discarded or sold
  • Receipts for major warranted purchases - until item is discarded or sold
  • Warranties and extended service agreements - until expiration
  • Property tax records and disputes - 6 years after home is sold
  • Vehicle records (title, registration, purchase receipt, repairs and maintenance recipets, etc) - until sold
  • Savings bonds - until cashed in

Throw Out Now

  • Owners' manuals and warranties for appliances and cars you no longer own
  • Receipts for credit card purchases if not major or related to a tax deduction - after reconciling with monthly credit card statements
  • ATM receipts - after reconciling with monthly bank statements
  • Sales receipts (unless used for tax purposes, then 3 years if used for tax purposes and 6 years if self-employed)

Document Locator System: A Handy Aid For Keeping Track of Your Records

Are you able to locate insurance contracts, wills, and other important personal records quickly and easily? With this simple document locator system, you no longer need to wonder where to file a paper or where to find it.

The Document Locator System

Most people have no idea where to start searching for their important records. They usually keep them scattered in various locations - tax records in a file cabinet, savings bonds in a home safe, wills at an attorney's office, some contracts or deeds in a bank safe deposit box.

There's a reason many people do not have an organized recordkeeping system: Organizing your records is stressful and confusing.

The Document Locator System is effective because it takes away that stress and confusion. This simple recordkeeping system provides an easy way to keep track of your important personal (not business) records, keeping them organized and available. You will not miss out on a tax deduction because you did not keep the necessary receipt. More importantly, the document locator system will help a spouse or executor locate your documents in case of death or disability.

Set Up Tabbed Sections

Set up tabbed sections in your files with the following captions (customizing sections as appropriate to your particular situation):

  1. Banking
  2. Children
  3. Credit and Loans
  4. Employment
  5. Estate Planning [including wills and post-mortem matters]
  6. Important Personal
  7. Insurance
  8. Investments
  9. Major Assets
  10. Professional Residences
  11. Tax Records
  12. Vehicles [including boats]

File the Documents

File the documents and other records listed in Column 1 in the file sections recommended in Column 2 of the Document Locator. Where the original or a copy is filed elsewhere, note this location in Column 3 of the Document Locator. You can also use Column 3 for any notes regarding the document (such as: Passport - "Renew by October 12, 2022" or IRA - "Take first distribution by December 31, 2022"). Where your filing system suggests a file section other than that recommended in Column 2, just substitute your location for the recommended one. For items other than those named here, use the blank spaces at the end of the Locator.

This Document Locator is shown at the end of this Financial Guide.

Tip: Put a photocopy of the Document Locator, which will contain the locations of all your important documents, in a fireproof safe or safe deposit box.

Tip: In addition to the Document Locator System, prepare a post-mortem letter to a spouse or executor. This is also an essential part of helping your heirs and family members get your affairs in order in the event of death or disability. The purpose of such a letter is to provide them with the information needed to locate records or assets. This will prevent erosion of your estate by unnecessary taxes, unfounded claims, or just plain loss of assets.

The key is to develop and follow some type of recordkeeping system, not necessarily the one recommended here. If you have any questions, contact your financial advisor.

Tip: Cull your records every so often. By getting rid of the papers you no longer need, you minimize the ever-encroaching mountains of paper we all have to handle.

Documents You Should Be Able To Locate Easily

Certain documents, records, and other information should be easily locatable in an emergency. These include (1) your personal records, (2) a list of your assets, (3) your estate planning records, and (4) your financial records.

Personal Records

  • Birth certificates of family members
  • Death certificates of deceased family members
  • Marriage license
  • Divorce decree and custody agreement (if divorced)
  • Passports (updated)
  • Social Security numbers for family members
  • The names and addresses of family members, close relatives, and any persons mentioned in a will
  • Military records
  • List of previous employers
  • List of government employers
  • Medical records and health insurance cards for family members

In most cases, the reason these documents are needed is self-explanatory.

List of Your Assets

  • Description of all major assets that you own separately or jointly with your spouse or other person, together with the approximate values and location of deeds, titles, stock certificates, or other evidence of ownership.

Note: Include cash, realty, investments, IRAs, retirement plan benefits, life insurance policies, interests in partnerships or other business entities, jewelry and other luxury items, automobiles, boats, antiques, coin collections, collectibles, art objects, and debts owed to you by others.

  • Appraisals of valuable items
  • Description of the approximate amounts of pension, military, and/or other benefits you or your spouse may be entitled to on retirement or death
  • Insurance policies (including group life, individual life, health, casualty, auto, etc.) and identity and phone numbers of insurance agents

Estate Planning Records

  • The whereabouts of your will and codicils, along with the name and address of the attorney who prepared them
  • Title to cemetery plot or other burial arrangement
  • Post-mortem letter to spouse or family members, to be opened after your death
  • Living will or other directions in case of disability

Financial and Other Records

  • Location of all safe deposit boxes, keys, and passwords
  • Important canceled checks
  • The names and addresses of your CPA, attorney, and any other professionals concerned with your financial affairs
  • Photographic or video record of house and its contents (for homeowners' insurance purposes)
  • One statement for each bank account, IRA, mutual fund, broker, or other account you own, along with the name and telephone number of the primary banker, broker, or other contact person for each account
  • Brokers' confirmation slips for purchases
  • A statement or other reference for any bank account that is not in your name
  • One statement or payment stub for each credit card, line of credit, or outstanding loan
  • Income tax returns for at least six prior years (including all supporting records for the past six years), and all prior gift tax returns
  • Records showing the original cost of any realty owned, cost of all improvements that can be added to tax basis, and depreciation taken (for business or rental property)
  • Bills of sale or receipts for major items
  • Equipment and appliance manuals and warranty information

Where to File What

Document Locator
Accident reportsInsurance 
Adoption recordsImportant Personal and/or Children 
Address bookImportant Personal 
Alimony recordsTax Records 
Apartment - records forResidences 
AntiquesMajor Assets 
Appliances - receipts, warranties, and contracts forMajor Assets 
Appraisals of assetsMajor Assets 
Assets - list ofMajor Assets 
AttorneyProfessionals and/or Estate Planning 
Auto insuranceVehicles and/or Insurance 
Auto loansCredit and Loans 
Auto mileage logsTax Records 
Automobile titleVehicles 
Bank account statementsBanking 
Bills of saleMajor Assets 
Birth certificatesImportant Personal and/or Children 
Boat insuranceInsurance 
Boat recordsVehicles 
Broker account statementsInvestments 
Business interestsInvestments 
Canceled checks - generalBanking 
Canceled checks - insuranceInsurance 
Canceled checks - tax relatedTax Records 
Casualty loss recordsInsurance 
CDBanking and/or Investments 
Cemetery plotEstate Planning 
Charitable giftsTax Records 
Checking account statementsBanking 
Child support papersImportant Personal and/or Children 
Claims - insuranceInsurance 
Coin collectionMajor Assets 
CollectionsMajor Assets 
Confirmation slips - from brokerInvestments 
Credit cards - list ofCredit and Loans 
Credit card statementsCredit and Loans 
Credit report - from credit reporting agencyCredit and Loans 
Credit union papersBanking and/or Credit and Loans 
Custody agreementImportant Personal and/or Children 
Day care recordsChildren 
Death benefitsEmployment 
Death certificateImportant Personal 
Debts owed to youInvestments 
Debts you oweCredit and Loans 
Deeds to homesResidences 
Disability insuranceInsurance 
Dividends - records ofInvestments 
Divorce decreeImportant Personal 
Dues - professional or unionTax Records 
Employee benefits - description ofEmployment 
Employers - list ofEmployment 
Equipment - business use ofTax Records 
Equipment - warranties forMajor Assets 
ExpensesTax Records 
Fees - deductibleTax Records 
Financial statement - your personalCredit and Loans 
Forms - taxTax Records 
Funeral arrangementsEstate Planning 
FursMajor Assets 
Gifts - taxableTax Records 
Government employers - list ofEmployment 
Health insuranceInsurance 
Home - contents of, photographic recordsInsurance 
Home officeTax Records 
Home improvementsResidences 
Inherited property - record of basisResidences 
Insurance policiesInsurance 
Interest - record ofResidences and/or Tax Records 
JewelryMajor Assets 
K-1 FormsTax Records 
Safe deposit box keysBanking 
LawyersProfessionals and/or Estate Planning 
Lease - homeResidences 
License - driver'sVehicles 
Life insurance policiesInsurance 
Limited partnership documentsInvestments 
List of assetsMajor Assets 
List of automobilesVehicles 
List of bank accountsBanking 
List of brokerage accountsInvestments 
List of children's schoolsChildren 
List of credit cardsCredit and Loans 
List of debtsCredit and Loans 
List of employers - government and privateEmployers 
List of home improvementsResidences 
List of life insurance policiesInsurance 
List of safe deposit boxesBanking 
Living willImportant Personal 
Loans - list ofCredit and Loans 
Maintenance of appliancesMajor Assets 
Marriage certificateImportant Personal 
Medical expensesTax Records 
Medical professionalsProfessionals 
Mileage logs - expensesTax Records 
Military dischargeImportant Personal 
Military employersEmployment 
Mortgage noteResidences 
Mortgage payments and yearly statementResidence and/or Tax Records 
Moving expenseTax Records 
Mutual fundsInvestments 
Naturalization papersImportant Personal 
Owner's manualsVehicles and/or Major Assets 
Partnership statementsTax Records 
PassportsImportant Personal 
Paycheck stubsEmployment 
PetsImportant Personal 
Pension benefits - descriptionEmployment 
Photos of family membersImportant Personal 
Photos of home contentsInsurance 
Properties owned - list ofResidences 
Property damage - recordsInsurance 
Real estate ownedResidences 
Real estate taxesResidences and/or Tax Records 
Rent - records ofResidences 
Residence closing - records ofResidences 
Retirement accountsInvestments 
Safe deposit boxesBanking 
Savings accountsBanking 
Schools - list ofChildren 
Service - militaryEmployment and/or Important Personal 
Social Security numbersImportant Personal 
Stock certificatesInvestments 
Survivors' benefits-descriptionsEmployment 
Tax returns and formsTax Records 
Traffic ticketsVehicles 
Titles to vehiclesVehicles 
Travel expensesTax Records 
Trust documentsEstate Planning 
Unemployment compensationEmployment 
Vacation homeResidences 
W-2 formsTax Records 
WarrantiesMajor Assets 
WillsEstate Planning 

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Eureka, CA 95501

Phone: (707)-441-1111
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