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Turning Tax Preparation into a Positive, Rewarding Activity (Really!)

By Keith Wheelan Subscribe to RSS | April 12th 2012 | Views:

In his song “Golden Moments,” James Taylor said: “All it really needed was the proper point of view”. I doubt he had tax preparation in mind when he wrote it. But if you look at the tax preparation process from a different perspective, it could take on a whole new meaning. Instead of being a dreaded annual task with a narrow purpose, it could be the start of a bigger Financial Management opportunity.

Yes, gathering all the documents and receipts is still a chore. But think about it - you’re taking time to collect, organize and update much of your financial information. Why should that be a once-a-year task to be done and then forgotten for 12 months? Instead, look at it as the starting point for developing a long-term financial plan for your household.Since you’ve already gathered the information, why not use it to create or update your 8020 Worksheet™? That will help you understand your overall financial situation - both your net worth and cash flow. Then, with the help of your accountant or financial advisor you can develop a long term financial strategy. You can even begin taking action on the strategy by setting and achieving one goal at a time using the Goaltracker™ feature of the 8020 Worksheet™.

That’s a complete, ongoing Financial Planning process - all of it jump started by the tax preparation activity.

I’ve always preferred spending time on improvements rather than maintenance activities. Cleaning the house and cutting the grass is just maintenance. But making the house or yard better is an improvement. The same holds true with finances. Why just do your taxes and then forget it? That’s maintenance. Instead, take full advantage of the activity to build and implement a financial plan. That’s improvement.

financial management, financial services, financial strategy, financial worksheet, financial advisor

The lower the price, the sooner you can pay it off and free up monthly cash flow, right? Not necessarily so with a lease. Vehicle dealers and their financing arms structure leases in a way that can create a dependency on them. It goes like this: Lease the vehicle for a low monthly payment and then when the lease expires exchange your vehicle for a new vehicle and a new lease. And a continuation of monthly payments. This cycle can repeat itself indefinitely. This is the lease trap.

By committing yourself to always having monthly lease payments you lose the opportunity to not have any. That option - the option to not make monthly payments - comes with the choice of buying the vehicle. If you buy it with, say, a 5 year loan and keep the car for 10 years you eliminate 5 years of monthly payments. Let’s say your monthly payment is $250. That’s $3,000 saved per year and $15,000 for the full 5 years. Think of the other debts you could pay off with that savings. And if you prepay the loan in 3 years instead of 5 the total grows to $21,000. That can go a long way in helping you get ahead financially.

Keith Wheelan - About Author:
Keith Wheelan, is a professional financial planning advisor for "Cash Flow Navigator" helps to empower members of cashflownavigator community to successfully plan for and achieve financial independence. for more info visit

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