Posted on April 24th, 2022

A few weeks ago, we cleaned out and reorganized our bedroom closet and our garage. The annual spring ritual leaves us feeling better and a few dollars richer as we gave away some clothes, shoes and coats and sold some bigger items online. Now our attention is turning toward a spring cleaning of our financial planning!

What about you? Now that your taxes are filed, what do you need to adjust? Did you withhold enough or too much? If you are expecting a refund, where will it benefit you the most? Paying down debt or increasing your cash reserve fund?

Before you put away your tax calculator until next April, consider some “tax-loss harvesting.” Turn some of that portfolio red ink into a realized capital loss for future tax reduction. But remember to avoid a “wash sale”: After selling a security for a loss, wait 31 days to repurchase the same asset or alternatively, you can immediately replace it with a similar but not identical asset. (Check with your tax adviser.)

In a year of chaos, now is a good time for a gut-check on your financial independence plan. Are you on track or knocked off track? If you are discouraged (“I’ll never be able to retire,” or, “I need to go back to work”), take heart in that you can control several influential variables. You can work a few years longer, switch from full-time to part-time employment, save more, spend less, defer some big-ticket items, reset your investment strategy to be more productive, wean some family members off the payroll, etc.

Original article: https://www.knoxnews.com/story/money/columnists/paul-fain/2022/04/22/your-financial-affairs-could-likely-use-spring-cleaning-paul-fain/7369064001/