July – the month in which we celebrate our country’s birthday. There’s no better month than July to address Tax Freedom Day! What is Tax Freedom Day? It’s the day at which you’ve paid all of your taxes for the year. Every day after that day is considered profit. Most of us have a Tax Freedom Day between March and April. What if we could make your Tax Freedom Day come earlier in the year?
Suffice it to say, we can only do so much with your tax information after the fact. Your Tax Freedom Day is what it is once we start preparing your tax return. But what if we could look at all your financial aspects ahead of time; your investment holdings, your investment bucket types (IRA’s, Roth’s, Individual accounts), your retirement distribution plans, your Social Security benefits? Could we make Tax Freedom Day come earlier?
With our sample client we made their tax freedom day come 4 days earlier. (Christmas 4 days earlier! Can you imagine?!?!?) In their case, we refinanced their mortgage from a 15 year fixed to a 30 year fixed. We took the savings on their payment and increased their 401k deferral. Not only did we gain 4 days on our Tax Freedom Day, but we increased their overall wealth by $17k in nine years. I know, not huge, but I’d take it!
After nine years they wanted to move (kids out of the home), downsize to pay off their mortgage, and reduce expenses. Even with the increased interest expense on the 30 year mortgage we were able to increase their overall wealth at the expense of Uncle Sam.
Now that is planning! We’re not done with our sample client yet. There’s more planning to be had in preparing for retirement. What about you? Do you want to make your Tax Freedom Day come sooner? Make an appointment today so we can work our magic!