A Better Alternative to New Year’s Resolutions

New Years Resolutions
Do this instead

If you’re like most people, you’ve adopted a set of New Year’s resolutions for 2018. Things like losing weight, quitting smoking or drinking, saving a certain amount of money and finding a new job are among the most common resolutions.

Also, if you’re like most people, you won’t keep them. Sociological research has shown only about 10 percent of resolutions are maintained more than a few months. Rather than setting resolutions for yourself this year, try this approach instead: adopt new habits.

Here’s why habits can be more useful than resolutions:


One Habits get to the heart of the matter.

By focusing on habits, you are encouraged to address the root of a problem and the behaviors that cause it. If you want to lose weight, by focusing on your habits you will inevitably have to address how you eat and how you exercise. Addressing these root causes of weight gain brings you the benefit of better health long after you meet a specific weight goal.

Resolutions, on the other hand, are focused on end points and encourage short cuts. If all that matters is losing weight, you may try to get to your ideal weight as soon as possible by using drugs or fad diets that are unlikely to work long-term.

Two Habits avoid the feeling of failure.

Resolutions often drift into obscurity because you feel like a failure when the goals are unmet. Any setbacks or backsliding on the way are devastating, because you are that much further away from meeting your goal.

As soon as you practice a habit you feel like a winner. By eating a salad as part of a healthy eating habit, you get a positive feeling of achievement: “I’m doing something that’s good for me right now.” If you were focused on a weight loss resolution, eating a salad seems like a futile gesture: “I’m still ten pounds from my weight loss goal. How long do I have to keep eating like this?”

Three Habits avoid the letdown of success.

Strange as it may sound, achieving a resolution can be just as harmful as not achieving it. If you’re one of the 10 percent of people who achieve a resolution, you might be surprised that you feel let down afterwards. “Is that it? Is that all I’ve been working for?”

This famously happened to Alexander the Great, who set out to conquer the entire known world of the classical era. When he’d beaten everyone, Alexander supposedly “wept, for there were no more worlds to conquer.”

With a focus on habits, you no longer get hung up on the goal line. Why not consider changing a habit or two? Perhaps the true feeling of success is practicing a positive habit over and over again, with no end in sight to the satisfaction it brings.

Five Home Office Deduction Mistakes

Home office deductions

If you operate a business out of your home, you may be able to deduct a wide variety of expenses. These may include part of your rent or mortgage costs, insurance, utilities, repairs, maintenance, and cleaning costs related to the space you use.

It is a tricky area of the tax code that’s full of pitfalls for the unwary. Here are some of the top mistakes people make.

Bullet Point Not taking it. This is probably the biggest mistake those with home offices make. Some believe the deduction is too complicated, while others believe taking a home office deduction increases your chance of being audited. While the rules can be complicated, there are now simple home office deduction methods available to every business.
Bullet Point Not exclusive or regular. Your home office must be used exclusively and regularly for your business.
Exclusively: If you use a spare bedroom as a business office, it can’t double as a guest room, a playroom for the kids, or a place to store your hockey gear. Any kind of non-business use can invalidate your deduction.
Regularly: Your office should be the primary place you conduct your regular business activities. That doesn’t mean that you have to use it every day nor does it stop you from doing work outside the office, but it should be the primary place for business activities such as record keeping, billing, making appointments, ordering equipment, or storing supplies.
Bullet Point Mixing use with other work. If you are an employee for someone else in addition to running your own business, be careful in using your home office to do work for your employer. Generally, IRS rules state you can use a home office deduction as an employee only if your employer doesn’t provide you with a local office.Unfortunately, this means if you run a side business out of your home office, you cannot also bring work home from your employer and do it in your home office. That could invalidate your use of the home office deduction.
Bullet Point The recapture problem. If you have been using your home office deduction, including depreciating part of your home, you could be in for a future tax surprise. When you later sell your home you will need to account for this depreciation. The depreciation recapture rules create a possible tax liability for many unsuspecting home office users.
Bullet Point Not Getting Help. There are special rules that apply to your use of the home office deduction if:
You are an employee of someone else.
You are running a daycare or assisted living facility out of your home.
You have a business renting out your primary residence or a vacation home.


The home office deduction can be tricky, so ask for help, especially if you fall under one of these cases.

The Extension that Never Ends

With the potential for retroactive tax law changes in 2014, please prepare for the extension of the following tax laws that expired in 2013. This expiration and extension treadmill has been going on for years. And while there is no guarantee that changes will be made, by being prepared with the proper documentation you can take advantage of any forecasted law changes.

icon Educator’s $250 tax deduction
If you are a teacher and have out-of-pocket expenses please keep your receipts. You may be able to deduct up to $250 of qualified expenses even if you do not itemize deductions.
Tax Laws
icon State sales tax itemized deduction option
Keep receipts of any large purchases. The sales tax provision allows for you to take either a general sales tax deduction or a state income tax deduction as an itemized deduction.
icon Direct contribution from retirement accounts for qualified seniors
In 2013, qualified seniors who donated funds directly from their retirement plan could exclude the plan withdrawal from income. Hold off using this technique in 2014 until you receive confirmation from Congress this tax benefit is extended.
icon Itemized deduction for mortgage insurance premium costs
Keep your mortgage insurance documentation for a potential itemized deduction.
icon Changes in small business depreciation
Through late November, 2014 there is no longer bonus first year depreciation. In addition Section 179 amounts are greatly reduced from $500,000 in qualified assets to $25,000. Even if the law changes, you have little time to purchase and install equipment. Please plan accordingly.

If other late law changes impact you, rest assured those changes will be applied to your tax return as they become known.

Avoid These Common Financial Mistakes

Throughout life there are many ways to achieve financial success. Some of that success can be achieved by avoiding these common financial mistakes.

Avoid These Common Financial Mistakes

Shield Under-insuring your property. Often policy owners hold an insurance policy for 10 years or more and never conduct a review to ensure their coverage is still adequate. This is made more complicated each year as insurance companies change the details of coverage within legal documents. Your best defense is to review homeowner, life, and auto insurance with your agent one month prior to your renewal dates.
Shield Paying too much interest. If you carry a balance on a credit card you are probably paying some of the highest interest rates in the country. Try to get in the habit of paying enough to cover your current monthly purchases, PLUS the minimum monthly payment, PLUS a little extra. You’d be surprised how much money you can save in credit card interest expense.
Shield A costly divorce. A divorce that goes to trial can easily cost thousands of dollars. Using a lower cost mediation option or settling amicably can be a financially wiser way to go. During this emotional time, financial analysis often takes a back seat. Conducting a tax review of the proposed divorce settlement prior to signing could also save you thousands.
Shield Unhealthy living costs. Bad health habits can not only hamper and shorten your life, but they can also cost you plenty in the form of higher life-insurance premiums and higher out-of-pocket medical expense. This can be especially expensive with higher insurance policy deductibles and the new 10% medical expense itemized deduction threshold. Consider slight health changes now to pay you dividends in the future.
Shield Insufficient emergency savings. If you lost your job or became unable to work, how many months of bills could you pay? Often one major accident is all that is between you and financial hardship. Try to accumulate between six months and one year of financial resources to keep on hand in case this happens to you. Review and consider appropriate short-term and long-term disability insurance.
Shield Purchasing with credit. Consider saving enough money to purchase bigger items versus buying on credit. Do you remember saving money as a child to buy a bike or a favorite toy? For some reason, we have now decided we should buy it first and then pay the bill. Why not return to the old way of purchasing? It might just keep you out of a financial hole.
Shield Protecting against fraud. With advances in technology have come more devious ways to steal your identity. This includes theft of tax information, social security numbers and credit cards. Conduct a regular review of your online profile and credit reports to identify suspicious activity before it gets out of hand.

While it is hard to account for every possible financial pothole in the drive-through of life, by paying attention to the obvious ones, the risk of a large financial surprise can be reduced.

Do You Have Your Health Insurance?

The health care legislation commonly known as Obama Care has many provisions that are being implemented over a number of years. As we start 2013, it is wise to once again
review the major changes impacting individuals for this year and next.
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