In other financial news, I’m still on track to have my car paid off by June but it’s debatable whether or not I’ll max out my IRA.   I was a bad girl and dropped some loot to go on a ski trip in April.  I also have spent entirely too much money at the hair salon but we won’t talk about that.  There are a couple of other financial decisions in the works but I’ll discuss those later.  We’re one month into the new year.  How are YOU faring with your financial goals?

The next quarter starts September 30 so I need to register for the next segment of the class.  I’ve been slacking and never bothered to take the necessary steps to get the $120 refund I’m owed from the school for cancelling a class.  I guess that money will transfer over for the next class I’m taking.

Biting off more than I can chew has cost me.  I was taking an online course as well (a bad idea, I know) and that course is set to complete this Friday.  However, I am nowhere near finished so I will have to pay $100 to extend the course for three more months.  I can’t afford to procrastinate again.

Mr. Savvy and I are contemplating starting another small business.  I haven’t done all the necessary research yet but if we do, it definitely won’t be until after the beginning of the year.

As to why I was out of town for two weeks – a much needed vacation.  Mr. Savvy and I went to New Zealand and Fiji.  Though the weather was horrid the first week (cold and rainy), we made the best of it.  We had great fun but it was definitely a hit to the finances.  Needless to say, budget talks are on the agenda for this weekend.

What’s going on in your financial world?

photo credit: Latente § piove merda e dicono che è ciocolata

Like most of you, my 401(k) has steadily been declining despite the money I contribute with each paycheck.  When I checked my balance last night, it looked a lot like my 2005 balance!  So what am I going to do?  Nothing, or rather stay the course.  No one can predict the future so there’s no point shuffling money around and making matters worse.  So I will leave my contributions as is and evaluate my asset allocation at year end, as usual.  Then I will make any necessary adjustments.  Retirement is more than ten years away for Mr. Savvy and I so there’s no need to panic.

But enough about what we can’t do anything about, here’s what we CAN do something about.  As of yesterday, Mr. Savvy’s ‘hobby’ is now a business.  Therefore expenses he has occurred in the pursuit of such can now be written off against the income he’s bringing in.  Also, since he now has a business (a sole proprietorship, by the way), we’ll be opening a SEP-IRA in order to shelter some of that income.   So in addition to working to maximize our income, we utilize all possible (legal and moral) ways to keep as much of that income as we can.

We will also probably delay an upcoming major purchase.  We will still make the purchase but I’m comparision shopping in order to get the best price and I suspect there will be more deals to be had as the year ends.  What, if anything, are you doing differently during these financially trying times?

Those who are self-employed or have small businesses have many choices for funding their retirement. Below I’ve highlighted some of the most popular.

• Self-employed (or solo) 401(k) – This is for individuals who are self-employed or business owners who have no employees. Just like a regular 401(k), your contributions reduce your taxable income. Salary deferral contributions are capped at $15,500 for 2008. However, those age 50 or older can contribute an additional $5000. In addition, business owners can make additional profit-sharing contributions of 25% of compensation, up to $46,000.

• SEP-IRA – Only the employer can make contributions to the SEP-IRA for him- or herself and on the behalf of the employees.Also, the percentage contributed must be the same for every employee. The annual contribution is the lesser of 25% of compensation or $46,000.While earnings grow tax-deferred until withdrawn, there are no loans allowed against the value of the SEP-IRA.

• Simple IRA – This is a relatively inexpensive plan to establish.The employer can contribute for himself as well as on the behalf of the employees.The annual limit on these contributions is $10,500 or 100% of compensation, whichever is less.No loans are allowed against the value of the Simple IRA.