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7 Common-Sense Money Moves to Make TODAY Before 2012 Ends

As we near the end of 2012, now is the time that most people start to look ahead and plan financially.

Now is also the time of year when blogs like this one publish tiresome lists of things to do — stocks to buy, tax moves to make and other housekeeping measures.

So allow me to pile on with my seven common-sense money moves to do as we race toward year-end:

1. Make a charitable gift before New Year’s Day.

It’s a no-brainer that you can limit your tax liability by donating to a worthy cause … but make sure you can claim the deduction on your 2012 return by ponying up that cash before Jan. 1. And by the way, the IRS does not treat a pledge like a donation. If you pledge $2,000 to a charity in December but only end up dishing out $500 before 2012 ends, you can only deduct $500. So hurry up if you’re giving.

2. Contribute more to your retirement plan.

You have a little more wiggle room if you’re limiting your tax liability by making a contribution to your retirement. Your 2012 tax year for any IRA or 401(k) contributions lasts all the way to tax day April 15, 2013. There is a limit here, however, since you can only contribute up to $17,000 in a 401(k), 403(b) or profit-sharing plan, with a $5,500 catch-up contribution also allowed if you are age 50 or older. You can put up to $11,500 in a SIMPLE IRA in 2012, $14,000 if you are 50 or older. Beyond that you reap no tax benefits … though planning for retirement is always a good thing to do, so bear that in mind.

3. “Tax loss harvesting.”

This is jargon for selling a loser to bring down your 2012 capital gains. Down 50% in Hewlett-Packard (NYSE:HPQ) this year and not enthusiastic about the company’s short-term outlook? Take the loss in calendar 2012 to offset your other big gainers or to benefit from the tax write-off. You can even buy back the stocks if you wait 31 days … or if you’re clever, find an end-around to buy them back immediately in another form. For instance, if you’re taking a loss in Microsoft (NASDAQ:MSFT), why not buy back the Technology SPDR ETF (NYSE:XLK) that has a 7% stake in MSFT among other — I would argue better — tech stocks too?

4. Consider rebalancing and asset allocation.

As part of your tax efficiency plans, consider reallocating money based on your diversification needs. This is one of those things most people forget to do — and unfortunately those of you who allowed Apple (NASDAQ:AAPL) to get ridiculously overweight in your portfolio have probably learned the hard way in the past three months that letting your winners get too overweight can expose you to big volatility should your highest fliers change direction. Remember to spread your risk around in sectors, asset classes and individual stocks. Now is as good a time as any to make these kinds of rebalancing moves.

5. Workers, review your withholding.

Did you dish out a lot of cash to the tax man last time around and forget to adjust your withholding in April? Well, do it now for tax year 2013 — or else you’ll just continue to get those big bills. On the other side of the coin, it’s worth noting that payroll taxes are slated to increase 2% next year and other “fiscal cliff” measures could drive down your paycheck, so if things are tight you may want to reduce your withholding to make sure you don’t see your regular direct deposits shrink substantially.

6. Homeowners, make an extra mortgage payment.

If your house is significantly underwater or you have reached the part on the amortization curve that you’re mostly paying down principal, there’s no real benefit here. But if you just refinanced recently and you’re paying a big chunk of change in interest, then your extra payment claims you an extra amount you can deduct. Besides, it’s always good to pay a little extra to beat back that debt as fast as you can.

7. Talk with a qualified financial or tax professional today.

Everyone’s life situation is different. Maybe there are business expenses you can write down, or family expenses you need to budget for, or retirement planning that is long overdue. If you have complex questions about your financial future, sometimes the best thing you can do with your money is give a little bit of it to a qualified professional and lean on them for advice.

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Jeff Reeves is the editor of and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at or follow him on Twitter via @JeffReevesIP. As of this writing, he held a long position in Apple but no other stocks named here.

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