Health Careers Journal

Tax Day Up Ahead: Tax Tips For Health Professionals

With the promise (or curse) of tax day up ahead, finances can be weighing heavily on our minds. When finances start to become a distraction to work, family time and your health and wellness it’s time to sort it all out. Follow these tips to help find your financial freedom.

  • Pay down your debt – Set a goal of zero debt excluding your home mortgage. Generally you should work on paying the debt that carries the highest percentage of interest first – paying a smaller bill at lower interest may feel good as you pay it off sooner but you need to weigh that with the fact that it is costing you money in interest. When deciding how much you can afford to pay on your debt, be careful to budget enough each month to allow for expenses. Paying extra on your credit cards each month only to run short and end up racking up more charges isn’t getting you any further ahead. Learning to decipher between “wants” and “needs” will also help those bills from accumulating. Calculate your debt to income ratio here – MSN Debt to Income Calculator.
  • Emergency Fund – Based on your risk aim to accumulate six to nine months worth of expenses. This money would be used to cover daily living expenses if disability, illness or unemployment leaves you with an unexpected loss of your income. This important step can eliminate or decrease the need to rack up new debt.
  • Budget – Budgets are meant to be working tools. Use past and projected expenses as well as accumulated debt to forecast doable budget constraints and then control your spending. If you budget $200 for entertainment for the month and you’ve spent it all – even if there’s a play you’d really like to see – refrain. If you see a big purchase on the horizon – a new appliance or carpet – plan for it and save ahead of time.
  • Retirement Savings – Some experts advise “paying you first”, or make investing in your retirement top priority. Others disagree. Determining your debt load and comparing that to your employer’s retirement plan, together with your accountant you can make a decision that will save you the most money. The key is not to pay more in interest on debt than you would be accumulating in a retirement plan.
  • Keep good records – Keep track of work expenses like uniforms, continuing education credits and certification and licensure expenses – talk with your accountant about those un-reimbursed employee business expenses to see how they may benefit you. Filing away important tax papers as they arise thru the year makes preparing for April 15 a little less stressful.
  • Get an accountant – As healthcare workers, we are the experts in our industry. Assuming that we are experts in every industry – particularly finance – can be damaging to our portfolio. Consult an expert, make a plan and execute it. Find out more about CPAs at www.nsacct.org.
    Consumer debt and living above our means are cited as two of the biggest roadblocks to financial freedom. Controlling the impulse buying of “wants” vs. “needs” is essential to gaining control of your finances. Pay down your debt, save and control your spending with a budget tool – these steps will lead you to healthier finances in 2008 and beyond.

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