FIscal Fridays: Some random stuff I've been thinking about

So I've been pretty terrible with the Fiscal Fridays posts lately. To be honest, there hasn't been much going on. Per Dave Ramsey's "Debt Snowball" instructions, I've been making triple payments on my smallest debt (the loan I took from my dad in college). And now, I'm nearly done making payments--I have about one and a half left. That's about a year and a half earlier than the original repayment plan we set up, which feels pretty amazing. That alone is a year and a half less that I will spend in debt; and when I start making supersized payments on my other loans, I'll reduce my "debt timeline" even more. That feels really amazing.

And because this post would be really terrible if all I did was a not-so-humble brag, I'm going to abruptly change the subject now and talk about taxes for a moment. I got two of my needed tax forms so far: The two W-2s from the two full-time jobs I worked this year; I still need two 1099-MISCs for my freelance work, plus another form or two regarding my retirement plans. And a random, blog-worthy Tax Tidbit (I enjoy alliteration far too frequently) popped into my head. So...

Emma's Tax Tidbit #1:
You can reduce your taxable income--that is, pay taxes on less money than you actually make in a year--by paying into certain programs.

For me, paying into a retirement plan and an employer-sponsored health plan landed me the reduction. So I paid X amount--let's make this easy, I'll say I paid $10--into a 401(k) for the first few months of the year, at my first job. Then, I paid $30 into a 457(b), which is kind of like a 401(k) but for public-sector employees. By doing so, I lowered my taxable income by $40 total. So if I made $100 in 2012, I would now only have to pay taxes on $60 worth. Something similar happened for the first time this year for me because I paid for employer-sponsored health coverage. I don't think that has to do with the Affordable Care Act/Obamacare...but because it was only on the return for the second job I had this year, it might have to do with working in the public sector. I'm going to try to find out (re: ask my dad/Google it) and will get back to y'all there.

Basically, anything you can do to reduce your taxable income is good, because it means you pay less taxes. And that's the really cool thing about the incentive, I think--it's for stuff you should be doing anyway. Like saving for retirement. I don't care how old you are. I don't care if you're flipping burgers for your first job. If your company offers a retirement plan, like a 401(k), pay into it. Even if it's only five or ten bucks a paycheck. The younger you are when you start, the more interest will compound to give you a major nest egg for later. In fact, a person who starts $200 a month when she is 30 cannot catch up to the amount that she would have gotten by retirement age if she had started saving just $100 a month when she was 20.

Also. It's just occurred to me that I should probably list a disclaimer. I am not a financial adviser or a CPA. I have no formal education in finance, or taxes. I only have my own personal thirst for knowledge on how to make my money work for me, not the other way around. I will say that I do a bit of reading on the subject, and I take a LOT of advice from my dad, who probably could get a job as a financial adviser if he really wanted to. He's very smart. Anyway, point is: While I try to be as specific and accurate as possible on these topics, I might on occasion make a mistake. Please don't hate me if you take my advice without researching it for yourself, as it's applied to your situation, and then something bad happens. KThanks :)