Posted on

7 Best Money Moves for 2023

3 min read

7 Best Money Moves for 2023In light of our current economy, making sure your money works hard for you is one of the best things to do this year. Here are some ways you can navigate your financial situation, keep tabs on where you are, and adjust if you need to.

Shop for a higher return on savings. These days, every extra cent counts. That’s why it pays to look around for higher rates on savings accounts. Several places to check out are PNC (4.65 percent APY), Sofi (up to 4.4 percent APY), and American Express (4 percent APY). Here are a few others. Rates may increase even more with the Federal Reserve’s rate hike announcement on July 27.

Open an HSA account. When you have one of these, it will help you pay for expenses that your health insurance plan doesn’t cover. If you’re enrolled in a high-deductible insurance plan, you and possibly your employer can contribute pre-tax dollars into this account, from which you’ll use funds you’ve stocked away for qualified medical expenses. Whatever money you don’t use will roll over to the next year, unlike FSA accounts.

Consolidate debt. Why pay a bunch of different interest rates on all your credit cards? If you have debt, find one card with a very low-interest rate and do a balance transfer. Some credit cards offer 0 percent APR as an introductory rate, which will be a big savings to get a jumpstart on becoming debt-free. Here are a few good ones: Bank of America® Travel Rewards Credit Card now offers 0 percent APR for 18 months. Discover it® Cash Back offers 0 percent APR for 15 months. Find other great deals here.

Cut how much you pay on car insurance. Have you shopped around lately? We know this might seem like a pain, as it takes a lot of time, but here’s some good news, and it’s called The Zebra. This amazing site has done all the heavy lifting for you. Here, you’ll find dozens of real-time comparisons from many trusted companies.

Max out your 401K. This year, the maximum yearly contribution limit has been raised by $200 to $22,500 (up from $20,500 in 2022). Even better, if you’re over 50, you can set aside catch-up contributions of $7,500, allowing a total contribution of up to $30,000. This allowance lets older workers add as much as they can so that when they retire, they’ll be in a better financial situation.

Update your W-4. No one likes a shock when it comes to paying taxes. That’s why this is such a smart idea. And the IRS actually has a tool that can help you: The Tax Withholding Estimator. Go here to find out if your employer is taking enough money out for taxes. If you’re falling short, you’ll know. Better to learn and fix this before it’s too late.

Create a net worth statement. When you have a realistic idea of your assets and liabilities, you’ll be able to see whether or not you’re on the right track with retirement. This way, you’ll be able to set up new goals for yourself if you feel you need to.

Keeping up with your finances, while time-consuming, really pays off. If you try one (or all) of these hacks, you’ll be better off in no time.

Sources

https://www.moneytalksnews.com/slideshows/15-of-the-best-money-moves-you-can-make-in-2021/

Posted on

How Businesses Can Identify and Increase Efficiency with Managerial Accounting

3 min read

Managerial Accounting, What is Managerial AccountingManagerial accounting is a form of internal reporting that helps business owners and others involved in the organization’s decision-making. It looks at individual processes and products to see how they are functioning via practical data points. This is done in hopes of applying data analysis to improve the business’ operational efficiency.

It is important to keep in mind the intended audience and data structure with regard to managerial accounting versus financial accounting. While managerial accountants analyze information, it is not subject to GAAP requirements; however, financial accountants must present company information according to GAAP standards – and such information is often intended for external consumers like investors or lenders.

Measuring Inventory Levels

One way that businesses turn to managerial accounting is through scrutinizing their inventory turnover. Companies that analyze how often they have sold and replenished their inventory over a measured time period can make better decisions about their inventory cycle (production, buying new input materials, marketing, and pricing). Managerial accounting professionals help businesses identify the carrying costs of inventory. It’s expressed as follows:

Inventory Turnover = Cost of Goods Sold (COGS) / Average Value of Inventory

Higher ratios usually indicate greater company sales. Lower sales generally indicate there are problems with product or service demand.

Monitoring Outstanding Accounts Receivables

Analyzing accounts receivable can provide beneficial insights into a business’ bottom line. An accounts receivables (AR) aging report categorizes AR invoices based on how long they have been outstanding. The report can categorize how late payables are (30 days or less, 31-60 days, 61-90 days and so on). Based on the results, companies can look at historical data, along with projected sales, to figure out how much they need to allocate for uncollectable accounts. Companies also can proactively reduce credit limits, determine when it’s time to stop doing business with a customer/client, and send unpaid bills to collection.

Price Variance Considerations

When a business looks at price variance, the first step is to take the final price paid for each unit, then subtract the unit’s standard cost from the former figure. The resulting figure is multiplied by however many units were actually bought. It’s a way for managerial accountants to determine the difference, either a positive variance (increased costs above the standard price) or a negative variance (decreased costs relative to the standard price), between the cost planned and the cost at the time of purchase.  

The formula is expressed as follows:

Price Variance = (Actual Price – Standard Price) x Actual Quantity

If a business is planning to make a purchase for its next fiscal year, it may want only 5,000 widgets that cost $10 per widget. The business gets a bulk discount of $1 per widget, bringing it down to $9 per widget. However, when the time to purchase the 5,000 widgets comes along, it realizes it only needs to purchase 3,500 widgets. At the quantity of 3,500 widgets, the business won’t receive the bulk discount, reverting the cost back to $10 per widget, creating a variance of $1 per unit or widget.

Using the formula, it could be expressed as follows:

Price Variance = ($10 – $9) x 3,500 = $1 x 3,500 = $3,500. Since circumstances changed at the business between their initial planning and ultimate purchase time-frame, the price variance resulted in $3,500.

While managerial accounting has many different tools for analysis, the one common thread is that regardless of the tool used, managerial accountants help businesses find higher levels of operational efficiency.

Posted on

What Actions Can Data-Breach Victims Take?

4 min read

What Actions Can Data-Breach Victims Take?Over the years, millions of individuals have been affected by data breaches, where their sensitive data is accessed by unauthorized cybercriminals or publicly exposed. A data breach can result in huge financial loss if stolen data is used to compromise consumer identity, which also can affect a credit score.

Unfortunately, there is a great number of people who don’t know what to do if affected by a breach. At the same time, there are those in the know who do nothing.

What is a Data Breach?

A data breach is a cyber security incident that exposes sensitive data such as names, contact details, bank details, Social Security numbers, etc.

Data breaches are the work of criminals who aim to obtain specific data. Criminals do this through various methods, including phishing attacks, malware attacks, targeted attacks, vulnerability exploits, and loss or theft of devices. However, data breaches are also a result of technical or human errors. For example, a misconfiguration error exposed the car location data of 2 million Toyota customers in Japan and overseas for 10 years; and the work of an insider led to Tesla’s massive data breach.

Unfortunately, data breach cases keep rising. May 2023 alone saw numerous breaches from different organizations, including healthcare organizations, education institutions, the transportation department, and even tech giants.

For companies, the consequences of data breaches are reputation damage, loss of consumer trust, intellectual property theft, financial loss, and fines due to failure to conform with data protection legislation. While cyber criminals mainly target organizations, individuals also experience identity theft and financial crimes. This especially happens when stolen data is sold on the dark web or publicly published.

What action can data-breach victims take?

Unfortunately, no one is immune from a data breach. However, victims can survive a breach with less disruption. Once a data breach has occurred, the U.S. breach notification law requires businesses or governments to notify those affected immediately after its discovery.

Although companies are responsible for securing customer data in their possession, customers also have a role to play in securing their data. Essential steps to take include:

  • Being aware of any site claiming to be a data breach check site.
    Such sites could ask for personal information or ask a victim to click a link to verify their details. Hackers also take advantage of a breach and pose as the affected company to lure victims into clicking malicious links, primarily through emails. A user must, therefore, first confirm that a breach happened. This can be in the news or on the affected company’s website.
  • Change passwords for accounts exposed.
    In most cases, affected companies will notify victims of their affected accounts, and their security team will provide instructions on how to stay safe. Such instructions include changing passwords on the breached site or any other account that uses similar login credentials.
  • Set up two-factor or multi-factor authentication (2FA/MFA).
    This extra security measure will require a one-time user code to log in to an account in addition to the login and password.
  • Notify the bank.
    If financial-related data is stolen, such as credit card information, the bank must be notified immediately to freeze the cards.
  • Credit freeze.
    Cybercriminals can use stolen data to open new accounts and take loans. To avoid a ruined credit score, individuals can request a credit freeze from major credit bureaus such as Experian, Equifax, and TransUnion.
  • Monitor personal accounts for any unusual transactions.
    Although it depends on the type of data breach and exposed data, victims must look out for unauthorized transactions, including bank account transactions, medical bills, insurance claims, and tax refund claims.
  • File a report with the Federal Trade Commission (FTC).
    If criminals have already used personal data, filing an identity theft report will serve as proof to clear one’s name or dispute a fraudulent transaction.
  • Practice cyber hygiene.
    These are practices that help individuals remain safe online. Aside from account security, consumers must use up-to-date software and operating systems, antivirus software, and avoid publishing too much personal information to minimize online footprints that fraudsters can easily access, such as on social media.

It is worth noting that data breaches are not detected immediately, which means that by the time users get notified, cybercriminals already have had access to the data for some time. And as technology advances, cybercriminals are taking advantage of new technologies, such as generative AI, for phishing attacks. This means that more data breaches may continue to be witnessed.

However, users can help prevent future data breaches by using strong passwords, being cautious of phishing scams, and regularly monitoring financial accounts.

Posted on

Raising the Debt Ceiling, Protecting Air Travel and Repealing the Iraq AUMF

3 min read

Raising the Debt Ceiling, Protecting Air Travel and Repealing the Iraq AUMFFiscal Responsibility Act of 2023 (HR 3746) – This Act represents a compromise reached by House Republicans and President Biden. Republicans negotiated concessions in exchange for voting to raise the debt ceiling to maintain the solvency of the federal government. These concessions included universal cuts to federal spending, the suspension of student loan repayments that began during the pandemic, additional work requirements for some Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance for Needy Families (TANF) recipients, and suspending the current $31.4 trillion debt ceiling until 2025. The bill was introduced by Rep. Patrick McHenry (R-NC) on May 29. The legislation was passed in the House on May 31, in the Senate on June 1, and signed into law on June 2 – just in time to avert the global financial crisis, it would have triggered by June 5.

NOTAM Improvement Act of 2023 (HR 346) – This bill was introduced in the House by Rep. Pete Stauber (R-MN) on Jan. 12. This Act instructs the Federal Aviation Administration (FAA) to establish a federal NOTAM system (notice to air missions, as required by international or domestic law) as well as an accompanying task force. The task force is directed to evaluate existing regulations, policies, systems, and international standards relating to NOTAMs; determine best practices, and make recommendations to improve the publication and delivery of NOTAM information. This bill passed in the House on Jan. 25, passed with changes in the Senate on May 9, finalized in the House on May 22, and was signed by the president on June 3.

A bill to amend the Tariff Act of 1930 to protect personally identifiable information and for other purposes (S 758) – This bill would require the Treasury Department to remove personal traveler information, such as Social Security and passport numbers, from transportation manifests before they become accessible to the public. The bipartisan bill was introduced by Sen. Steve Daines (R-MT) on March 9 and passed in the Senate on the same day. It is presently under review in the House.

A bill to repeal the authorizations for the use of military force against Iraq (S 316) – The purpose of this bipartisan bill is to repeal a decades-old AUMF (Authorization for Use of Military Force) against Iraq. This repeal restores Congress’ constitutional responsibility to undertake the traditional process for approving the use of military force. The bill was introduced on Feb. 9 by Sen. Tim Kaine (D-VA) and was co-sponsored by 31 Democrats, 12 Republicans, and three Independents. The bill passed in the Senate on March 29 and is currently under consideration in the House.

Administrative False Claims Act of 2023 (S 659) – Introduced by Sen. Chuck Grassley (R-IA) on March 6, this bill would modify the current provisions of fraud committed against the federal government. The current maximum fraud claim is $150,000; the bill would raise that limit to $1 million, as well as enable the federal government to recoup expenses related to the investigation and prosecution of each case. The Senate passed the bill on March 30 before sending it to the House, where it awaits a vote.

Posted on

New Personal Finance Provisions in the 2.0 Secure Act

4 min read

2.0 Secure ActThe Continuing Appropriations Act, enacted at the end of 2022, included several provisions that impact retirement plans going forward. Specifically, the legislation enacts SECURE 2.0, an updated version of the Setting Every Community Up for Retirement Enhancement Act of 2019. The following provisions are financial planning considerations that affect individuals.

Increases Catch-up Contributions

Beginning in 2024, catch-up contributions to employer retirement plans made by employees who earn more than $145,000 a year (regularly adjusted for inflation) must be classified as after-tax Roth contributions. This is necessary for eligible plans to retain their tax-favored status.

Starting in 2025, catch-up contributions for participants ages 60 to 63 will increase from $7,500 to $10,000 per year for contributors in most qualified retirement plans. Beginning in 2026, the new catch-up contribution will be indexed to inflation.

Allows Employer Contributions to Roth 401(k)

Employers are now able to make post-tax contributions to a Roth option in an employee’s 401(k) plan. Employers also may open a Roth account option in SIMPLE, and SEP IRA plans for employees.

Expands Emergency Distributions from Retirement Accounts

Starting in 2024, there will be a new exception to the rule for early withdrawals from qualified retirement accounts. Distributions used for unforeseeable events, such as a personal or family emergency, will not be subject to the 10 percent early withdrawal penalty. However, the rule applies to only one distribution per year and only up to $1,000. The plan member has the option to repay the distribution within three years. Absent full repayment, no further emergency withdrawals may occur during those three years.

The provision also waives the withdrawal penalty on any amount for individuals certified by a physician to have a terminal illness.

Increases Age for Required Minimum Distributions (RMD)

Starting in 2023, the age that triggers required minimum distributions (and their requisite income tax liability) from qualified retirement accounts increases from 72 to 73. Starting in 2033, the trigger age raises to 75. The RMD rule apples to 401(k), 403(b) and 457(b) plans). Also, starting in 2024, Roth 401(k) accounts will no longer require RMDs.

Reduces Excise Tax on Noncompliant RMDs

If an investor is required to start taking minimum distributions and does not take out the required amount in a single year, he is subject to a tax on the amount not distributed. The tax used to be 50 percent, but starting in 2023, it was reduced to 25 percent. Moreover, if the account owner corrects the course and takes the full distribution within a certain window of time, the tax may be further reduced to only 10 percent.

Allows Emergency Savings Accounts

Starting in 2024, the legislation permits employers to offer an emergency savings account option within its retirement plan. The following provisions apply:

  • Employee contributions are made with after-tax income
  • There is an annual cap of $2,500
  • Participants may make at least one withdrawal per month
  • Up to four withdrawals per year are not subject to fees
  • Emergency savings may be held in an interest-bearing cash-equivalent account
  • Employers may match contributions, but those must be deposited to the participant’s retirement plan investment, not the emergency savings account.
  • The emergency account is portable when the participant leaves the employer and can be rolled into a Roth-defined contribution plan or IRA

Permits Employer Match for Student Loan Payments

Presently – through 2025 – employers may contribute up to $5,250 (tax-free) a year toward worker student loan payments. Starting next year, employers have the option to classify those loan payments as contributions to the company retirement plan, such as a 401(k). This allows workers with student loans the opportunity to pay down that debt with their own income and still receive an employer match toward their retirement plan – so they don’t have to choose one or the other.